In a crucial legal victory for the European Commission, the European Court of Justice (ECJ) has upheld the Commission’s decision that Apple must repay up to €13 billion in back taxes to Ireland. This ruling, issued in September 2024, reaffirms the Commission’s original 2016 judgment, marking a significant step in the European Union‘s effort to crack down on favorable tax arrangements for multinational corporations.
The full ECJ statement can be accessed here.
Background: The legal battle, one of the highest-profile state aid cases in Europe, stems from a 2014 investigation into Apple’s tax deals with Ireland. The European Commission concluded that Ireland had granted the tech giant unlawful tax benefits over two decades, allowing Apple to substantially reduce its effective tax rate. In 2016, the Commission ordered Apple to repay €13 billion in unpaid taxes, asserting that the arrangement violated EU state aid rules, which prohibit unfair advantages that distort competition within the bloc.
Both Apple and the Irish government challenged the ruling, and in 2020, the EU General Court annulled the Commission’s decision, siding with Apple. However, following the Commission’s appeal, the ECJ has now overturned that verdict, reinstating the requirement for Apple to repay the substantial tax sum.
Implications: The ECJ’s judgment sends a strong signal to multinational corporations operating within the EU: favorable tax deals that could undermine fair competition will not be tolerated. This decision underscores the EU’s determination to enforce tax compliance and maintain a level playing field in the Single Market, particularly for powerful tech giants that have benefited from complex cross-border tax arrangements.
The ruling may also set an example for future cases, encouraging the European Commission in its ongoing efforts to challenge tax avoidance and state aid violations across member states. Businesses operating in the EU, especially those leveraging preferential tax regimes, will need to reassess their strategies and ensure that their arrangements comply with EU competition law.
For Ireland, the decision reignites a politically sensitive issue. While the government has stated it will begin the process of transferring the disputed funds from escrow, it remains steadfast in its position that Apple was not granted preferential treatment. The broader implications for Ireland’s tax policies—historically a cornerstone of its appeal to global corporations—are still unfolding, but the ruling could lead to increased scrutiny of similar tax arrangements.
At Gecić Law, our competition team is exceptionally equipped to guide multinational corporations through the complexities of state aid and competition law in the EU. With extensive expertise in Southeast Europe and beyond, we offer strategic legal solutions that ensure compliance with both local and EU regulations, positioning our clients to navigate this increasingly stringent regulatory environment with confidence.
By Veljko Milutinovic, Of Counsel, Gecic Law
