Europe’s second-highest court rejected an European Union order for iPhone maker, Apple, to pay €13 billion euros in Irish back taxes, dealing a blow to the bloc’s attempts to crack down on sweetheart tax deals.
Meaning the American firm will not have to pay Ireland € 13 billion in tax making up for several years of underpayments. The court said there was not enough evidence to prove that Ireland had given the corporation illegal tax breaks in order to make its territory more appealing.
However the European Commission will have 14 days to appeal the decision at the European Court of Justice.
EU Competition Commissioner Margrethe Vestager, the lead person behind the campaign said that she’s going to study today’s judgement and decide what should be done next.
According to the European Commission, Ireland allowed Apple to attribute all its EU earnings to an Irish head office, which supposedly existed only on paper.
The European Commission said “this essentially allows Apple to bypass tax on EU revenues and considers it to be illegal aid given to Apple by the Irish state. Ireland, for its part, has a low corporate tax rate in order to attract firms to the country to create new jobs.
“The country acts as Apple’s base for all its operation in Europe, the Middle East and Africa.
“While the situation is problematic for other European countries, the issue, ultimately, will not be solved until the EU can sort out digital taxes with the United States, which is very protective of its companies at the moment.
“On the digital tax front, the EU, last week, asked the United States to come back to the table. The bloc said it would prefer to figure out the issue but if an agreement couldn’t be formed it would be open to an EU-U.S. deal”, it said.