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Apple Wins Landmark 13 Billion Euro Tax Appeal Against the EU

By Danny Vena – Jul 15, 2020 at 10:53AM

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It's a major victory for the iPhone maker in its ongoing battle with European antitrust regulators.

Apple (AAPL 1.92%) has landed an important win in a tax case against the European Union (EU). The General Court of the European Union -- its second-highest court -- shot down a 2016 decision by the EU that handed Apple a bill for 13 billion euros in back taxes (about $14.85 billion at current exchange rates), alleging that the Irish government had provided the company with an unfair subsidy.

At the time, the European Commission -- the EU's antitrust regulator -- charged that Apple had been on the receiving end of illegal tax benefits granted by Ireland that allowed it to pay "substantially less tax than other businesses over many years," and ordered the country to recoup the unpaid taxes.

A gavel near a laptop with piles of 100 dollar bills and a scale nearby.

Image source: Getty Images.

The Commission alleged that the arrangement between Ireland and Apple constituted illegal state support of the company, and that these deals allowed Apple to pay just 1% of its profits in taxes for the years in question.

In court hearings, Apple's lawyers argued that the EU's charges "defied reality and common sense." CEO Tim Cook went even further at the time, questioning the logic of the decision saying, "They just picked a number from I don't know where," and labeled the decision "total political crap." 

In the case, the Irish government sided with Apple against the EU, disputing the allegations and maintaining that "that there was no special treatment provided to ... Apple." It asserted that "the correct amount of Irish tax was charged in line with normal Irish taxation rules." 

The General Court appears to have agreed with that view. It issued a harsh rebuke of the European Commission in its annulment of the decision, saying that there was no proof that Apple was given any special treatment.

The EU now must decide if it will appeal the decision to the European Court of Justice, the bloc's highest court.

Danny Vena owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has a disclosure policy.

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