In a long-standing dispute over tax repayments amounting to billions, the US corporation Apple has suffered a setback. In its closing arguments published on November 9, 2023, Attorney General Giovanni Pitruzzella recommends to the European Court of Justice (ECJ) to overturn a previous decision of the EU court in favor of Apple. As a result, the US corporation faces the prospect of a tax repayment of up to €14.3 billion.
According to the European Commission, Ireland granted Apple favorable tax conditions over the years to attract the company as an employer. However, this was deemed an anti-competitive subsidy in a decision from August 2016.
Therefore, Apple was supposed to repay the saved taxes, totaling €13 billion, to Ireland, including interest. Both Apple and Ireland filed lawsuits against the Commission’s decision (Cases T-892/16 and T-778/16).
Victory for Apple in the first instance
In the first instance, Apple won before the EU court in Luxembourg. In July 2020, the judges annulled the demand. Subsequently, the European Commission requested the ECJ to overturn the decision.
In his opinion (PDF), Pitruzzella accuses the EU court of “a series of legal errors.” This includes the question of whether profits from the exploitation of intellectual property can be attributed to the Irish subsidiaries Apple Sales International (ASI) and Apple Operations Europe (AOE). Ireland had decided not to tax the profits from the use of corresponding licenses.
According to the Attorney General, the court also “incorrectly” assessed the existence and consequences of some methodological errors that the European Commission believed to have found in the Irish tax decisions (tax rulings). For these reasons, the EU court is to reconsider the case.
The opinions of the Advocates General are not binding on the ECJ judges. A judgment is expected in a few months.
Ireland already collected the tax repayment in 2018. As long as the legal proceedings are not finally concluded, the money is held in escrow. The amount consists of a tax repayment of €13.1 billion and interest of €1.3 billion.
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