European Commission gets slapped down over Apple Ireland tax ruling

Legal gavel and smartphone

Four years ago the EC ruled Ireland broke the rules by letting Apple get away with paying hardly any tax. Now a European court has overturned that decision.

Tax law is fairly soporific stuff, so we’ll keep this short and sweet. In 2016 the European commission said Apple had paid Ireland €13 billion too little tax between 1991 and 2007 because of an accounting loophole that allowed it to funnel most of its profits through an Irish-registered head office. However, that head office was, somehow, not tax-registered anywhere, so no profits were paid on that profit.

That does seem very dodgy but, it seems, no more so than all the other tax loopholes clever corporate accountants use to save their employers money. That is the essence of the recent judgment by the General Court of the European Union, which annulled the original EC decision on the grounds that it failed to prove that Ireland provided unlawful state aid.

“According to the General Court, the Commission was wrong to declare that Apple Sales International (ASI) and Apple Operations Europe (AOE), had been granted a selective economic advantage and, by extension, state aid,” said the ruling. “Furthermore, the General Court considers that the Commission did not prove, in its alternative line of reasoning, that the contested tax rulings were the result of discretion exercised by the Irish tax authorities and that, accordingly, ASI and AOE had been granted a selective advantage.”

This seems to say that, while Ireland may well have granted Apple a spectacularly benign tax environment from which to dodge tax across the whole of Europe, that was neither illegal, nor was it selectively applied just to Apple. The EC may appeal, but this is why we have law and due process; if you can’t prove something is illegal then it isn’t, and that’s that.

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