The verdict of the European Court of Justice, affirming the European Commission’s ruling eight years ago, stating Apple should pay Ireland €13 billion plus interest in back taxes, made headlines worldwide. The tech giant stated it would accrue a tremendous hit of €9 billion due to this resolution. Global responses to the case showed diverse attitudes, from lauding the EU and Competition Commissioner Margrethe Vestager, to scrutiny over the future implications for Europe, and Ireland specifically, as a business hub.
The Financial Times reported the ruling as a “significant defeat” for Apple, potentially marking a turning point for the management of multinational firms’ tax actions within the EU and for member states as a whole. The European Commission managed to invoke competition law and state aid regulations to surpass member states’ domestic tax rules, a power typically operated independently by each country.
The New York Times, while acknowledging Apple’s legal loss, underscored the ruling as a major triumph for the EU in its longstanding endeavour to regulate the tech sector. Along with a separate Google-related lawsuit, the resolution demonstrates a crucial trial for the EU’s initiative to clamp down on sizeable multinational entities and their tax issues. The news outlet highlighted how authorities concluded Apple had entered unlawful agreements with the Irish Government, enabling the company to pay almost nil taxes on its European operations in certain years.
Bloomberg underscored the far-reaching implications of the European Court of Justice’s decision, predicting it might prompt a plethora of similar cases. The news outlet cited Margrethe Vestager’s remark that it is just the start of EU’s attempts to tighten its grip on multinational corporations. Vestager, leading the suit against Apple, is expected to soon relinquish her role as a commissioner. However, the likelihood of the EU maintaining a similar stance remains high given the commission’s intention to foster European companies robust enough to go toe-to-toe with US and Chinese contenders.
In assessing the repercussions for the Irish Government following a decision, Reuters indicated that despite the increase in tax revenue for Ireland, they also face a potential public and political backlash. These came hot on the heels of a boom in foreign multinationals largely coming to Ireland due to low tax rates, forming approximately 11% of the country’s total labour force – double the number recorded in 2013 at the height of the Apple tax dispute, according to journalists Padraic Halpin and Conor Humphries. Although this has brought immense gains, they underlined that the Government is now under escalated scrutiny by opposition parties regarding the allocation of the surplus funds, as well as concern over the future impact of the ECJ’s decision on Ireland’s appeal to foreign direct investors.
Furthermore, France’s Le Monde commended Ms Vestager’s tenacity in her proactive pursuit of large corporations concerning their tax activities. The newspaper reported her relentless efforts against tax avoidance by multinationals who have greatly benefited from the obliging tax systems of Luxembourg, The Netherlands, Belgium, and Ireland, regardless of the fact that tax regulations fall under national jurisdiction. Renamed sarcastically as the ‘tax lady’ by US president Donald Trump, Vestager initiated numerous investigations, concluding that illegal state assistance had been granted. In particular, this case concluded that Ireland had restructured their tax laws and willingly tailored its tax legislations to accommodate multi-national companies.
The Journal, in its opinion piece, connected the court’s verdicts on Apple and Google to a notable report on EU competitiveness overseen by former European Central Bank chief, Mario Draghi, published earlier this week. Praising the Draghi report, it stated that the rulings demonstrated Europe’s politicians showing greater eagerness in penalising America’s accomplishments instead of trying to replicate them. This was reinforced by Tuesday’s verdict from the European Court of Justice that approved Brussels decision to impose a supplementary €13 billion tax payment on Apple and a €2.42 billion antitrust fine on Google.