The European Commission has scored a major victory in its multi-year legal dispute with Apple, as the Court of Justice of the European Union (ECJ) confirmed that the company must repay €13 billion in "illegal" tax benefits it obtained in Ireland. This surprising ruling further boosts the European Commission's efforts to prevent multinationals from obtaining unfair tax benefits.
The dispute began in 2016 when the European Commission ruled that Apple received illegal state aid from Ireland in the form of tax breaks that applied to profits made outside the United States. Following this decision, Ireland had to request reimbursement of the said amount. Apple argued that it was a political decision with no legal basis. Nevertheless, the ECJ has now definitively ruled in favor of the Commission, overturning a previous lower court ruling from 2020 that favored Apple.
The European Commission claimed that Ireland allowed Apple to pay tax at an extremely low rate between 2003 and 2014, allowing the company to pay just 0.005 % tax in 2014, while other companies paid significantly higher rates. According to the Commission, this advantage gave Apple an unfair competitive position.
Impact on other multinationals
European competition commissioner Margrethe Vestager, known for her strict oversight of big business, has proposed fines for several multinationals such as Amazon, Fiat and Starbucks, also over similar cases of allegedly unfair tax benefits. Vestager, who is leaving office this year, was a key driver of the case, pushing for greater equality in corporate tax obligations across the European Union.
Nevertheless, some similar cases, such as against Fiat, ultimately failed. But Apple has become an example of a company that, because of its size and influence, has ended up at the center of these efforts, which could have far-reaching consequences for future legal proceedings related to tax breaks for multinationals in Europe.
Apple denies the allegations
Apple has consistently denied allegations of wrongdoing, with CEO Tim Cook repeatedly saying it was a politically motivated case. According to him, Apple did not receive any state aid and paid all taxes in accordance with Irish law.
However, the European Commission stood by its request and filed an appeal in 2020 against a lower court ruling that was in Apple's favor. The ECJ has now decided that there were legal errors in the lower court's ruling and has ruled in favor of the Commission, which means that Apple must repay the aforementioned €13 billion.
Global trends: Pressure on tech giants
The pressure on the big tech giants is not limited to Europe alone. Google is facing a number of proceedings around the world, including in the US, where it is being investigated by the US judiciary for monopolistic practices in the advertising sector. This example also shows how global regulators are increasingly focusing on the activities of large technology companies and their impact on the global economy.
With this ruling, the European Commission received additional confirmation that its efforts to prevent unfair tax practices are correct and justified. Time will tell whether this ruling will change the way multinationals do business in Europe.
For some time, the European Union has implemented strict regulations on artificial intelligence, which is becoming a key part of new tech devices such as Google Pixel smartphones and the latest iPhone 16. These tech giants are incorporating advanced artificial intelligence (UI) features into their latest models, but the E.U. already sets limits on how these technologies can be used on the European market. For example, the new iPhone 16 and Google Pixel do not come to Europe with the full range of features that are available in the United States or Asia. Limitations include everything from user privacy to the use of data for machine learning, which means that UI systems based on processing large amounts of data in real time will not function fully. This raises many questions about the future of smart devices in Europe. Will technological progress be limited by strict regulations, or will companies adapt and develop technologies that comply with European regulations? It seems increasingly likely that the EU will insist on strict controls on the use of UI, especially from the point of view of data protection and transparency of algorithms, which could stop the arrival of some of the most advanced features that would otherwise change the user experience of smart devices in the future.
