Bilgesu Erdem
In a significant development in the long-running Apple tax saga, the Advocate General of the European Court of Justice (ECJ) has recommended that the EU Commission’s €13 billion tax order against Apple be referred back to the General Court for a new decision.
The Advocate General, Giovanni Pitruzzella, found that the General Court had made a series of errors in law when it ruled in 2020 that the Commission had failed to prove that Apple had received illegal state aid from Ireland. Pitruzzella stated that the General Court had incorrectly assessed the substance and consequences of certain methodological errors in the Commission’s decision.
This recommendation represents a major setback for Apple and the Irish government, which had argued that the tax bill was unjustified. The ECJ is not bound by the Advocate General’s opinion, but it is often followed. If the ECJ upholds the recommendation, Apple will be required to pay the €13 billion tax bill, plus interest.
A Long-Standing Dispute
The dispute between Apple and the EU Commission dates back to 2016 when the Commission ruled that Apple had received illegal tax breaks from Ireland. The Commission found that Ireland had allowed Apple to channel most of its European profits through low-taxed subsidiaries in Ireland, effectively reducing its tax rate to just 1%.
Apple and Ireland appealed the Commission’s decision to the General Court, which in 2020 overturned the ruling. The General Court found that the Commission had not provided sufficient evidence to prove that Apple had received illegal state aid.
Implications of the Advocate General’s Recommendation
The Advocate General’s recommendation has significant implications for both Apple and the EU. For Apple, the potential €13 billion tax bill would be a major financial blow. The company has already paid over €2 billion in interest on the disputed tax bill, and a €13 billion payment would further strain its finances.
For the EU, the Advocate General’s recommendation is a sign of its commitment to cracking down on tax avoidance by multinational corporations. The EU has been increasingly vocal in its criticism of companies that use complex tax structures to minimize their tax liabilities.
The ECJ is now expected to deliberate on the Advocate General’s recommendation. A final ruling is expected in the coming months. If the ECJ upholds the recommendation, Apple will face a significant financial penalty. However, if the ECJ overturns the recommendation, the EU’s efforts to crack down on tax avoidance will be dealt a major blow.
