(qlmbusinessnews.com Wed. 11th Sept, 2024) London, UK —
Tech Giants Face Major EU Fines: Apple and Google Ordered to Pay Billions
Apple has been instructed by the European Union's highest court to pay €13 billion (£11 billion) in unpaid taxes to Ireland, bringing an end to a prolonged eight-year legal battle. The European Commission first accused Ireland of providing Apple with illegal tax advantages in 2016, a claim Ireland has consistently refuted.
Following the European Court of Justice's (ECJ) decision, the Irish government has stated it will comply with the ruling, despite its long-standing opposition. Apple expressed disappointment with the outcome, accusing the European Commission of attempting to “retroactively change the rules.”
In a related development, a separate ECJ ruling also concluded a lengthy case involving Google, ordering the company to pay a €2.4 billion (£2 billion) fine for abusing its market dominance.
European Commission's Victory in Tax Disputes
Margrethe Vestager, the EU’s antitrust chief, hailed both rulings as significant victories for “European citizens and tax justice.” The ECJ confirmed the European Commission's 2016 decision, stating that Ireland had unlawfully aided Apple and must now recover the back taxes.
The original dispute, which covered the period from 1991 to 2014, centred on the tax arrangements for two Apple subsidiaries based in Ireland. The arrangements were deemed illegal because they provided benefits that were unavailable to other companies, effectively giving Apple an unfair advantage.
Ireland appealed the decision in 2020, resulting in a temporary victory when a lower court of the ECJ overturned the ruling. However, this decision was nullified by the higher court, which found legal errors in the earlier judgment.
Apple argued that the case was never about the amount of tax owed but rather which government should receive it. The company stated, “We have always paid all taxes owed and have never had a special deal,” and criticised the Commission for “trying to retroactively change the rules.”
Ireland's Reluctance to Claim the Tax Windfall
Despite the ruling, Ireland has spent years fighting to avoid reclaiming the €13 billion from Apple. The Irish government argues that the potential tax revenue loss was a worthwhile trade-off to attract large multinational companies to the country.
Ireland, which boasts one of the lowest corporate tax rates in the EU, serves as Apple's base for Europe, the Middle East, and Africa. Although corporation tax rates are set at the national level and not within the EU's jurisdiction, the bloc does have the authority to regulate state aid. The Commission argued that by applying very low tax rates to Apple, Ireland was providing the company with an unfair subsidy.
The ruling represents a major victory for the European Commission's efforts to prevent large corporations from exploiting tax rules. The Irish government acknowledged that the matter is now “of historical relevance only” and that the process of reclaiming assets from Apple will begin.
Tove Maria Ryding from the European Network on Debt and Development welcomed the decision but noted, “our tax problem is more than just one rotten apple.” She argued that the case highlighted the need for a fundamental reform of the corporate tax system to make it fairer, more transparent, and predictable.
A Costly Day for Tech Giants
The ruling against Apple is not the only blow to tech giants. The ECJ also ordered Google to pay a €2.4 billion fine for abusing its dominance in the market with its shopping comparison service. This follows the European Commission's original decision in 2017 to impose the fine.
Google, which had been appealing the penalty, expressed disappointment but noted that it had already made changes in 2017 to comply with the Commission's decision. At the time, this was the largest fine ever imposed by the Commission until a record €4.3 billion fine was levied against Google the following year for using its Android operating system to unfairly promote its own apps.
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