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‘Long-Overdue Justice’: EU Court Rules Ireland Let Apple Avoid $14.4 Billion in Taxes
"This ruling exposes E.U. tax havens' love affair with multinationals."
Sep 10, 2024
The European Union's highest court on Tuesday ruled that Apple must pay €13 billion in back taxes to Ireland, determining that the country gave the company illegal tax benefits in the past, in what campaigners called a victory for tax justice.
The E.U. Court of Justice ruling brought to a close a landmark case that began in 2016 when the European Commission ordered Apple to pay the €13 billion ($14.4 billion) based on an unfair tax arrangement the company had with Ireland from 1991 until 2014. A lower court overturned the commission's order in 2020, but Tuesday's ruling, which is final, restores it.
Observers viewed the case as among the most important brought by E.U. Competition Commissioner Margrethe Vestager, an antitrust official who's been in office since 2014.
"It's important to show European taxpayers that once in a while, tax justice can be done," Vestager, who leaves office in two weeks, said following Tuesday's ruling.
Chiara Putaturo, a tax policy adviser at Oxfam EU, said in a statement that "this ruling exposes E.U. tax havens' love affair with multinationals. It delivers long-overdue justice after over a decade of Ireland standing by and allowing Apple to dodge taxes."
Today is a huge win for European citizens and tax justice.
👉In its final judgment, @EUCourtPress confirms @EU_Commission 2016 decision: Ireland granted illegal aid to @Apple.
Ireland now has to release up to 13 billion euros of unpaid taxes.
— Margrethe Vestager (@vestager) September 10, 2024
The European Commission argued that the selective tax benefits that Ireland had offered to two Apple subsidiaries amounted to illegal state aid that hindered competition. The company's tax burden in Ireland, where its European operations have been based since 1980, was as low as 0.005% of its profits in 2014.
In November of last year, Giovanni Pitruzzella, the advocate general of the E.U. Court of Justice, issued an opinion in favor of the commission's position and against the lower court ruling, in a setback for the tech giant. The high court, which is based in Luxembourg, generally agrees with its advocate general following such recommendations, as it ultimately did on Tuesday.
The €13 billion, plus interest, has been held in an escrow account since 2018 and will be released to Ireland, even though the country fought against the commission's order. Ireland said it would respect the court ruling.
Ireland is often characterized a tax haven within the E.U. and hosts the European headquarters for many multinational firms, with critics charging that its tax system drives up inequality.
Tax justice campaigners said Tuesday's ruling should just be a start and that more fundamental reforms are needed at the international and E.U. level.
"Our tax problem is more than just one rotten apple," Tove Maria Ryding, a policy manager at the European Network on Debt and Development, said in a statement.
"The international system for taxing multinational corporations continues to be deeply complex, unpredictable and unfair," she added, arguing that a company's economic activity across many countries, including in the Global South, shouldn't mean tax revenues only for one country such as Ireland.
Ryding praised the United Nations' efforts to establish a global tax convention, calling the proposal a "beacon of hope for a fairer future."
Putaturo of Oxfam likewise called for a fairer tax system in Europe.
"While this ruling will force the tech giant to pay its debt, the root of the issue is far from solved," she said. "E.U. tax havens can still make sweetheart tax deals with big multinationals. The duty to stop this rests on the shoulders of E.U. policymakers. Yet, they have turned a blind eye to tax havens within their borders and the harmful race to the bottom that countries like Ireland are instigating."
Oxfam EU also called for the closing of tax loopholes and the establishment of a wealth tax.
The Apple case was not the only victory for Vestager, the antitrust chief, on Tuesday: The E.U. Court of Justice also ruled that Google had illegally used its search engine dominance to favor its own shopping service, fining the company €2.4 billion ($2.65 billion).
Bloomberg on Tuesday called it a "double boost to the European Union’s crackdown on Big Tech," and said that Vestager's past work had "paved the way" for the U.S. and the U.K. to take action against Google.
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EU Charges Apple With Restricting Competition Under New Antitrust Law
"For too long Apple has been squeezing out innovative companies—denying consumers new opportunities and choices," a European commissioner said.
Jun 24, 2024
European Union regulators on Monday filed preliminary charges against Apple for restricting competition in its App Store, the first case under a landmark antitrust law that came into full effect in March.
Apple's rules of engagement "prevent app developers from freely steering consumers to alternatives channels for offers and content," the European Commission (EC), the executive branch of the E.U. that handles antitrust regulation, wrote in a statement.
The commission's findings follow an investigation, announced in March, of Apple and other tech firms for non-compliance with the Digital Markets Act (DMA), which was designed to allow smaller tech companies to compete and lower prices for consumers.
"For too long Apple has been squeezing out innovative companies—denying consumers new opportunities and choices," Thierry Breton, a European commissioner responsible for digital markets, wrote on social media.
In a reference to Apple's slogan, "Think different," Breton quipped that it should be "Act different."
“Act different” should be their new slogan🍏
For too long @Apple has been squeezing out innovative companies — denying consumers new opportunities & choices.
Today we are taking further steps to ensure AppStore & iOS comply with #DMA pic.twitter.com/e741oV9r9l
— Thierry Breton (@ThierryBreton) June 24, 2024
The DMA was designed to prevent Big Tech firms from using their market power to dominate the industry.
"In football terms, this is about getting your players onto the pitch. Imagine how easy it would be for one of the teams to win their game tonight if they made sure that the rival team couldn't even get into the stadium. This is in fact what we often see in the digital world: many companies get stuck in their changing room," Margrethe Vestager, an EC official in charge of competition policy, said in a speech delivered Monday about the law.
The DMA was also designed to give regulators a way to streamline antitrust efforts so they don't get bogged down in years of litigation, a process that could be tested in the current Apple case.
The EC sent its findings to Apple on Monday and the company now has a chance to respond to the charges, with the commission scheduled to reach a final decision by next March. Monday's action was akin to the "halfway stage" in a traditional antitrust lawsuit in which a company is issued a statement of objection and a chance to reform its practices, The Guardianreported.
If the findings are finalized, Apple would have one year to comply or face a penalty of up to 10% of global revenues. The company took in $383 billion last year. However, E.U. regulators aim for dialogue that leads to compliance, rather than issuing a penalty, according to The Guardian.
The DMA has kept the EC busy. In addition to the charges, the commission also announced on Monday a new investigation into Apple's iOS business terms, including the "core technology fee" it charges for every download of the app after 1 million downloads in a year.
"The developers' community and consumers are eager to offer alternatives to the App Store," Vestager, the commission official, said regarding the newest probe. "We will investigate to ensure Apple does not undermine these efforts."
Big Tech companies including Apple, which have been deemed "gatekeepers" by E.U. regulators, have challenged the DMA in court to try to limit the law's scope.
Apple's antitrust battles are not limited to Europe. "The charges underscore the risk to the company's business from increased regulatory scrutiny around the world," The New York Times reported.
The U.S. Department of Justice and sixteen states filed a landmark antitrust suit against the company in March alleging that the company "illegally maintains a monopoly over smartphones by selectively imposing contractual restrictions on, and withholding critical access points from, developers." The United Kingdom and Japan have also recently investigated and taken legal action against the company.
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Trump's $48 Billion Tax Cut for Big Corporations Would Exceed Size of K-12 Budget
The 100 largest U.S. corporations would receive an annual tax cut of $48 billion under the GOP frontrunner's plan, according to a new analysis.
Jun 13, 2024
As former President Donald Trump prepared to meet with top corporate CEOs on Thursday, an analysis estimates that the GOP frontrunner's proposed giveaway to the nation's most profitable corporations would exceed the size of the federal K-12 budget for the current fiscal year.
Conducted by Brendan Duke and Will Ragland of the Center for American Progress Action Fund (CAPAF), the analysis shows that cutting the corporate tax rate from 21% to 15%—as Trump and his advisers have proposed—would give the largest 100 U.S. companies an annual tax cut of $48 billion.
Those companies—including tech behemoths such as Microsoft, Apple, and Alphabet—collectively reported $1.1 trillion in profits in their most recent annual reports.
For 10 of the largest U.S. corporations—including JPMorgan Chase, whose CEO will be in attendance at a private meeting with the former president on Thursday—Trump's tax plan would deliver a $23.3 billion handout, according to the new analysis.
"This nearly $25 billion in annual tax cuts for just 10 corporations is more than double what the federal government spends on cancer and Alzheimer's research combined," Duke and Ragland noted.
NEW: Trump world's proposed corporate income tax cuts would give the largest 100 US companies alone a nearly $50 billion tax break.
That's larger than the US Department of Education's K-12 education budget.
from @Brendan_Duke and me. https://t.co/p6xzv5Gy8I pic.twitter.com/n9l533hNGB
— Will Ragland (@citizenwillis) June 12, 2024
During his first year in office in 2017, Trump signed into law a tax measure that slashed the corporate rate from 35% to 21% and delivered huge gains to wealthy individuals while doing little for workers. Major companies spent their windfalls from the law on stock buybacks, increased dividends for investors, and executive bonuses rather than worker wages or other business-related investments.
Earlier this year, The Washington Postreported that "Trump has told allies that he is keenly interested in cutting corporate tax rates again," and congressional Republicans are eager to pursue another round of tax giveaways should they win control of the Senate and the White House in November.
Several CEOs whose companies would benefit substantially from another corporate tax cut are expected to join Trump at a closed-door Business Roundtable meeting in Washington, D.C.
Duke noted on social media Thursday that Cisco CEO Chuck Robbins is the current chair of the Business Roundtable. Cisco would receive an estimated $1.1 billion in tax cuts if Trump and his Republican allies in Congress succeeded in lowering the corporate tax rate to 15%.
Proctor & Gamble, whose CEO chairs the Business Roundtable's Tax and Fiscal Policy Committee, would get a $660 million tax cut, according to CAPAF's analysis.
"Cutting the corporate tax rate from 21% to 15% would cost roughly $1 trillion over 10 years based on Joint Committee on Taxation (JCT) and U.S. Treasury estimates," Duke and Ragland observed. "The benefits of this tax cut will accrue to a handful of large corporations: Even though roughly 500,000 companies pay corporate taxes, just 350 paid 70% of the entire corporate tax collected in 2019."
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