The European Court of Justice made a historic decision when it said Apple had to return €13 billion ($14.4 billion) in tax breaks it got from Ireland. This decision overturns a 2020 decision that sided with Apple and backs up the European Commission’s 2016 decision that Ireland gave Apple illegal state aid.
The court said that Ireland gave Apple an unfair tax edge because it only had to pay 1% tax on its European income, and that rate dropped as low as 0.005% in 2014. This tax deal gave the tech giant a lead over its competitors.
Apple doesn’t agree with the decision. It says that the European Union is trying to change tax rules from the past, and its income was already taxed in the U.S.
The European Union is cracking down on corporate tax methods in general, but this move is part of a bigger plan to target big U.S. tech companies in particular. But the EU has lost similar cases before, like when Luxembourg and the Netherlands made tax decisions that hurt Amazon and Starbucks.
For future EU cases about corporate tax dodging in member states, this decision sets a strong example. However, problems still exist because tech giants are continuing to fight back.