The General Court of the European Union handed Apple (NASDAQ:AAPL) a win in the long-running Irish tax dispute. Apple CEO Tim Cook criticized the tax case as being “politically motivated.” The tax dispute started four years ago in 2016.
The EU’s antitrust division, under Margrethe Vestager, slapped Apple with a 13 billion euro ($15 billion) tax bill in 2016. After years of investigations, Vestager’s antitrust agency concluded that Ireland offered the company an illegal tax advantage. The agency claimed that Apple enjoyed the unlawful tax benefit for years. As a result, the agency required Irish authorities to recover the unpaid taxes from the iPhone maker.
Apple parted with 13 billion euros to cover the disputed tax that the EU’s antitrust agency demanded. Ireland set up a special bank account to hold the tax funds recovered from Apple. Meanwhile, Apple and Ireland put up a joint court fight against the agency over the tax issue. The case, which challenged the EU’s tax claim, went before the EU’s general court.
Apple insists it isn’t a tax cheat. The company said that it paid over $100 million in income taxes around the world in the past decade. Apple said that it has paid tens of billions of dollars in other taxes.
No illegal Apple-Ireland collusion
The EU’s general court ruled that the antitrust agency didn’t prove that Apple had unlawful tax benefits from Ireland. The company and the Irish government welcomed the court’s ruling. However, the fight might not end there. The antitrust agency will study the ruling and might decide to appeal to the EU’s top court.
Apple is just one of many US multinationals in the EU antitrust agency’s crosshairs over tax issues. The agency is also demanding 250 million euros ($290 million) in unpaid taxes from Amazon. According to the agency, Amazon and Luxembourg entered an illicit tax arrangement. Amazon enjoyed tax advantages that other businesses didn’t have for years. Both Amazon and Luxembourg reject the EU’s tax claim. Currently, the matter is in court.
Amazon has its European headquarters in Luxembourg. Meanwhile, Apple, Google, and Facebook have their European headquarters in Dublin, Ireland. Many multinational tech companies have their European bases in Ireland due to the country’s favorable tax rate.
Will Apple get back its tax money?
The EU general court’s ruling raises hope that Apple might get its money back. The 13 billion euros that Ireland recovered from Apple would go back to the company if the court’s ruling stands. Getting the money back would help shore up Apple’s liquidity.
Apple wrapped up the March quarter with $193 billion in cash and $110 billion debt. In addition to investing to expand the business, the company spends its cash to repurchase its shares. Apple puts money back into shareholders’ pockets. Recently, the company added $50 billion to its stock repurchase program, which brought the total to $90 billion. Recouping the nearly $15 billion set aside over the Irish tax issue would help the company expand its stock repurchase program or at least reduce its debt.