Apple must pay €13 billion in back taxes to the Irish government after the European Court of Justice rejected Apple’s appeal of a landmark 2016 ruling.
The European Court of Justice in Luxembourg on Tuesday upheld the decision by the European Commission that Ireland broke state-aid law by giving Apple an unfair advantage.
Apple fought the commission’s efforts to force a backdated payout through a series of legal challenges, but the EU’s top court said its ruling on Tuesday was final.
“Today is a big win for European citizens and for tax justice,” Margrethe Vestager, the EU’s top antitrust regulator, said.
Four years ago, Apple won its appeal against a European Commission ruling that it owed Ireland €13 billion (£11 billion) in taxes. The General Court of the European Union decided that the European Commission did not prove that the Irish government had given the U.S. tech company a tax advantage.
The commission, the executive arm of the EU, had concluded in August 2016 that the Irish government granted illegal benefits to Apple and ordered it to recover 13 billion euros in unpaid taxes.
At the time, the commission said Ireland had enabled Apple to pay “substantially less tax than other businesses over many years,” which meant that the U.S. firm was allowed to pay an effective corporate tax rate of 1% on its European profits in 2003, which fell to 0.005% in 2014.
The Irish government and Apple decided to appeal the commission’s decision, with the company arguing the order to repay taxes “defies reality and common sense.”
However, the European Commission decided to appeal the decision and take it to the EU’s highest tribunal.
This case was a centerpiece of the EU’s crackdown on taxation in recent years. It could impact how the Brussels institution deals with other companies over taxation matters.
“We are disappointed with today’s decision as previously the general court reviewed the facts and categorically annulled this case,” an Apple spokesperson said.
Apple said it would record a one-time income tax charge of up to $10 billion in the fourth quarter ending Sept. 28 as a result of the ruling.
In light of the ruling, Irish officials said they would soon begin transferring the €13 billion in funds, which are currently held in an escrow account, into government coffers.
