EU’s Apple ruling leaves Ireland with ‘too much money’

If you were to visit Dublin and take a short trip down the Liffey towards the Docklands, you’d see some buildings made of mostly glass and steel along its banks. These buildings, in proud letters, would display famous names like Pfizer, Meta, and Apple. These multinationals flocked to Ireland because of the low corporate tax and financial regulation present in the country. This means Ireland has generated a substantial amount of revenue, leading to the unique first world problem of having “too much money” – a challenge few countries are lucky enough to have. This situation was further compounded by a recent European Court of Justice (ECJ) ruling, which determined that Apple owed Ireland €13 billion in back taxes. Margrethe Vestager, European Commissioner for Competition, referred to the arrangement between Ireland and Apple as an “illegal sweetheart deal”.

In 2014, Helena Malikova, a European civil servant, was tasked by Vestager to investigate Apple over concerns that Ireland and the tech giant were violating Article 107(1) of the Treaty on the Functioning of the European Union. This article states that state aid which distorts competition and affects trade between member states is generally incompatible with the EU’s internal market, unless exceptions are explicitly made.

Two years later, the European Commission found that Apple had received tax benefits from Ireland, allowing the company to pay a corporate tax rate that started at 1% and was eventually reduced to just 0.005%. Ireland’s reputation for complex tax arrangements was well known, with terms like the ‘Double Irish’ commonly used to describe the strategies multinational companies employed to minimise their tax payments.

The case is a landmark moment in the EU’s efforts to regulate multinational tech giants

After the rulings, Apple swiftly got to work on appealing the €13 billion, with CEO Tim Cook claiming that it was “total political crap.” The company prepared by stocking the money they owed into an escrow account ready for transfer. This appeal process went on until last month, a decade after the investigation began. The final ruling was in the EC’s favour, noting that “Ireland granted Apple unlawful aid, which Ireland is required to recover.”

The tech giant has commented on the matter, saying that the EC “retroactively [changed] the rules and ignored that … our income was already subject to taxes in the US.” Nevertheless, the €13 billion will be adding to Ireland’s already huge budget surplus, fuelling further calls to invest in housing and infrastructure, even though Ireland spent €10 million trying to avoid receiving the money out of fear that spending it would raise inflation.

The case is a landmark moment in the EU’s efforts to regulate multinational tech giants. Last month, Google won an appeal against paying a €1.5 billion fine, imposed due to its attempts to monopolise online advertising, but this is only a fraction of the €8.25 billion of fines they had already paid.

With the tech industry currently booming, we can expect to see more and more regulation introduced and fought over in the courts. The Apple case, however, is a key moment in the history of EU tax law, given the sheer amount of back taxes that will be paid and, perhaps more importantly, that it shows the EU can take on these incredibly powerful companies and win.