Apple's €13 billion Irish tax bill overturned by EU court

The ruling is a fresh blow to the European Commission's campaign to crack down on tax avoidance schemes

Apple will not have to pay €13 billion (£11.6 billion) in back taxes to the Irish government after winning an appeal at the European Union's second-highest court. 

The Union's General Court said it had overturned the European Commission's decision because it had not proven Apple had broken competition rules.

The EC ruled against the iPhone maker in 2016, claiming Ireland had allowed it to attribute nearly all its European earnings to an Irish head office that existed only on paper, enabling it to avoid paying tax on EU revenues.

The Commission said it constituted illegal aid given to Apple by the Irish state, with its government arguing that Apple should not have to repay the taxes as the loss was worth it to attract large companies to Ireland. 

"This case was not about how much tax we pay, but where we are required to pay it," Apple said in a statement. "We're proud to be the largest taxpayer in the world as we know the important role tax payments play in society."

The Commission does have the right to appeal the decision in the European Court of Justice, but this will be a blow to its campaign to crack down on alleged tax avoidance.

Margrethe Vestager has spent much of her time in office fighting tax schemes that she has argued were "anti-competitive", but this is another loss in that regard. Last year it lost a case against coffee chain Starbucks, which was accused of owning €30 million in back taxes to the Netherlands. There are also rulings on Ikea and Nike's tax arrangements in the same country due soon. 

The EU will study the court's judgment and consider its next steps, Vestager said in a statement.

"If member states give certain multinational companies tax advantages not available to their rivals, this harms fair competition in the EU," she said.

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