Pictured: An Apple store in Hong Kong, China. (Credit: saiko3p - stock.adobe.com)

Both Apple and Ireland had contested the European Commission’s 2016 decision that Apple had been granted unlawful aid which Ireland is required to recover.

The Commission decided that companies belonging to the Apple Group had, from 1991 to 2014, received tax advantages that constituted State aid granted by Ireland.

The dispute centred on two Apple Group companies, Apple Sales International (ASI) and Apple Operations Europe (AOE), which were incorporated under Irish law but not tax resident in Ireland.

In 1991 and 2007, Ireland issued two tax rulings approving the method by which ASI and AOE proposed that their chargeable profits in Ireland should exclude profits generated by the sales of Apple products outside the USA as a result of intellectual property licences held by the companies.

The Commission, holding these rulings to be unlawful, ordered Ireland to recoup €13 billion in back taxes for the period from 2003 to 2014, the longest period possible under EU law.

This sum has been sitting in an escrow fund since 2018 pending the resolution of the subsequent legal challenge from Ireland and Apple.

In 2020, the EU’s General Court annulled the Commission’s decision, holding that the Commission had not sufficiently established that those companies enjoyed a selective advantage.

The General Court’s decision has today been set aside by the CJEU, which gave final judgment in the matter and confirmed the Commission’s 2016 decision.

In a statement, Ireland’s Department of Finance said: “The Irish position has always been that Ireland does not give preferential tax treatment to any companies or taxpayers.

“The CJEU has found that the tax paid was insufficient and that a greater amount of taxation was required to be recovered. Ireland will of course respect the findings of the court regarding the tax due in this case.

“Today’s judgment provides the final determination in this case and the process of transferring the assets in the escrow fund to Ireland will now commence in the manner prescribed in the deed governing the operations of the escrow fund.

“The Apple case involved an issue that is now of historical relevance only; the Revenue opinions date back to 1991 and 2007 and are no longer in force; and Ireland has already introduced changes to the law regarding corporate residence rules and the attribution of profits to branches of non-resident companies operating in the State.

“Ireland is an active participant in international tax discussions and has also made necessary changes to its taxation regime as international tax rules have developed over time.”

Margrethe Vestager, the European Commission’s executive vice-president for competition, described today’s ruling as “a win for the level playing field in the single market, and for tax justice”.

She said the main take-aways from the ruling are that EU member states “have the exclusive competence to define their corporate taxation system”, but also that the Commission “can exercise control to avoid that undertakings receive unfair tax advantages through rulings that derogate from national law, domestic case law or administrative practice”.

Ms Vestager added: “Once member states have exercised their fiscal sovereignty, the tax administration needs to abide by its own rules. The Commission carries the burden of proving that member states deviated from their own parameters. This is what the court has confirmed today in [the] Apple case.”