Apple's $14bn EU tax battle takes new turn as court calls for re-examination

Advocate General's recommendation could set precedent for EU tax avoidance clampdown

A woman looks at the screen of her mobile phone in front of an Apple logo outside its store in Shanghai, China July 30, 2017. REUTERS/Aly Song     TPX IMAGES OF THE DAY
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The EU's top court adviser has put the spotlight on the legal battle between Apple and the bloc over a €13 billion ($14 billion) tax payment, suggesting a previous ruling in favour of Apple may have been flawed.

Advocate General Giovanni Pitruzzella at the EU Court of Justice, or CJEU, called for a new examination of the technology company's victory in a lower court regarding its tax arrangements in Ireland.

Apple's initial win came in 2020 when the EU's General Court supported Apple's challenge against the European Commission's 2016 decision.

Following the recommendation, the company's shares dipped slightly by 0.29 per cent to $182.36 in pre-market trading.

The commission had stated that Apple benefitted from two Irish tax rulings, which significantly reduced its tax burden, an assertion Apple firmly contested.

“We thank the court for its time and continuing consideration in this case,” an Apple representative said, repeating the company's stance that it received “no selective advantage and no state aid.”

However, Mr Pitruzzella found what he considers “errors of law” in the general court's decision, arguing it did not properly evaluate the commission's decision regarding the tax rulings.

“The judgment of the general court on 'tax rulings' adopted by Ireland in relation to Apple should be set aside,” he said in his opinion, which, although non-binding, is influential and often indicative of the CJEU's final decision.

While the recommendation to annul the previous ruling is not final, the CJEU tends to follow such opinions in the majority of cases.

A binding ruling from the top EU tribunal is expected in the following months, which could enforce the sizeable tax bill on Apple.

Until then, the contested funds have been held in an escrow account.

The legal entanglement is part of a broader clampdown led by EU antitrust chief Margrethe Vestager, who has been focused on what she considers unfair state aid in the form of beneficial tax deals between EU countries and multinational companies.

Although Ms Vestager is currently on leave, pursuing a bid for the presidency of the European Investment Bank, her work on tax fairness has previously had mixed results in court, with decisions going both for and against her efforts.

The decision in this case will not only affect Apple but could also influence how tax laws are applied to other multinationals operating in Europe.

It could further affect the tax dealings of EU member states and their ability to attract foreign investment through tax incentives.

Updated: November 09, 2023, 1:37 PM