European Court of Justice advisor backs €13bn Apple tax bill 

The case is now likely to rumble on for a further number of years

The opinion serves as a major blow to the Irish Government and to Apple, who has consistently reiterated its confidence in winning the long-running case.(AP Photo/Kathy Willens, File)

The advocate general of the European Court of Justice has come out in favour of the EU Commission's €13bn tax order to Apple, adding that judges should back the ruling issued by EU competition regulators to the tech giant seven years ago.

The European Commission in its 2016 decision said the amount related to Irish back taxes which the iPhone maker should pay. A lower tribunal had upheld Apple's challenge.

"The judgment of the General Court on 'tax rulings' adopted by Ireland in relation to Apple should be set aside," Advocate General Giovanni Pitruzzella at the EU Court of Justice (CJEU) said in a non-binding opinion.

The advisor's opinion is massively influential and provides a clear indication of how Europe's highest court will rule in the almost decade-long case next year.

The opinion serves as a major blow to the Irish Government and to Apple, who has consistently reiterated its confidence in winning the long-running case.

It is the non-binding opinion of Mr Pitruzzella that it is necessary for the General Court to carry out a new assessment which means the case is likely to rumble on for a number of further years.

In a statement today in reaction to the non-binding decision Apple said: "We thank the court for its time and ongoing consideration in this case. The General Court’s ruling was very clear that Apple received no selective advantage and no State aid, and we believe that should be upheld."

Speaking in Paris, Taoiseach Leo Varadkar said that he hadn't yet studied the recommendation but said that Ireland had never done specific tax deals with companies.

"There are two things I can say is that this legal process is not over yet. It could be years before the final decision is made on this matter. It's going to be in the courts for quite some time yet. But I really want to emphasise the position of the Irish government, which is one that we've held all along. We have low corporation tax rates. We've had it for quite some time, but we've never had special deals with individual companies."

The Taoiseach said that the case will not impact Irish policy going forward as it is "an entirely historic case".

"This is about taxes charged or not charged 10 or 20 years ago and at this stage since then, our tax system has changed considerably. A lot of loopholes that were there are long gone. And we're part of the international agreement now to bring it a minimum of 15%.

"So it has no impact on now or the future. In terms of who owns the money, the money that is now set aside in an escrow account. That'll be decided by the courts. But there's many more steps to this legal process. And I think it'd be more than a year or two before there is a final decision."

Tánaiste Micheál Martin said: “We await the court's deliberation of this. This has been a fairly long legal saga at the European level from 2016 onwards, so I think we have to await the outcome of the court’s decision.

Asked if the Government would consider appealing the case, Mr Martin said that it needs to be taken “one step at a time” and that the court needs to make its decision first.

Mr Martin said that he isn’t worried about the impact of the decision on future investment in Ireland.

“I think, more broadly speaking, any interaction I’ve had with Chief Executive Officer and board members of senior multinational companies who are located in Ireland, and I’ve met many of them over the last four or five years, they’ve been very pleased with the performance of their companies in Ireland.

“They’ve been very pleased with the pro-enterprise environment within Ireland and the manner in which Government interacts and works with companies.”

European Commission ruling

In 2016, the European Commission found that Apple received illegal state aid from Ireland over a more than ten-year period between 2003 and 2014, with it being declared that the iPhone maker owed the Irish exchequer more than €13bn in unpaid taxes.

The verdict followed a three-year investigation by the Commission, which found that Apple received illegal state aid from Ireland in the period, with the findings of investigation focused on two tax rulings from Revenue in 1991 and 2007 - the year the first iPhone was launched.

The investigation also found that Ireland's tax rules gave Apple an “unfair and select advantage” over other companies in Ireland, allowing the US tech giant to funnel almost all of its European sales through several tax-exempt subsidiaries in its Irish operations.

The commission also declared that Apple held valuable intellectual property (IP) beyond the reach of Ireland's Revenue Commissioners, with it also finding that these subsidiaries should not have been tax-exempt.

However, both Apple and successive Irish governments have continually argued that the tax was not due, with both parties appealing the decisions to the EU General Court, which overturned the Commission’s finding in a July 2020 ruling.

The EU’s General Court ruled that the European Commission “did not succeed in showing to the requisite legal standard” and that Apple had received tax advantages from Ireland, ruling in favour of the tech giant.

The decision was subsequently appealed to the European Court of Justice by the Commission, which is the highest court in Europe, with the first hearing taking place in May this year.

During the latest appeal case, Apple representatives confirmed that it paid almost €580m in corporate tax to the Irish exchequer between 2003 and 2014, which it claims represented 12.5% of the profits the company generated here.

The tech giant has said the debate over its taxes was never about how much they owe, but where they owe it. 

In a statement, the Minister for Finance Michael McGrath said: "My department and the State’s legal team will consider the full Opinion of the Advocate General in detail. It has always been, and remains, Ireland’s position that the correct amount of Irish tax was paid and that Ireland provided no State aid to Apple."

"We now await the judgment of the Court of Justice of the European Union on this matter."