Apple’s fight against a $14 billion EU tax bill suffers a setback

Luxembourg — A European tribunal made legal errors when it ruled in favor of Apple over a €13 billion ($14 billion) tax order and should review the case again, an adviser to Europe’s top court said Thursday, in a potential setback for the iPhone maker.

The tax case against Apple (AAPL) dates back years and was part of a crackdown by the European Union’s antitrust chief Margrethe Vestager on deals between multinationals and EU countries that regulators saw as unfair state aid.

In a 2016 decision, the European Commission, the EU’s executive arm, said Apple had benefited from two Irish tax rulings for more than two decades that artificially reduced its tax burden to as low as 0.005% in 2014.

Apple challenged the ruling, and the EU’s General Court upheld the challenge in 2020, saying regulators had not met the legal standard to show Apple had enjoyed an unfair advantage.

But Advocate General Giovanni Pitruzzella at the European Court of Justice (ECJ) — the EU’s highest court — disagreed, saying judges should set aside the General Court ruling and refer the case back to the lower tribunal.

“The judgment of the General Court on ‘tax rulings’ adopted by Ireland in relation to Apple should be set aside,” he said in a non-binding opinion.

He said the General Court had committed a series of errors in law.

“It is therefore necessary for the General Court to carry out a new assessment,” Pitruzzella said.

The ECJ, which will rule in the coming months, follows around four in five such recommendations.

Ireland reiterated that it had not provided any state aid to Apple.

“It is important to bear in mind that this opinion does not form part of the Court of Justice of the European Union judgment but is considered by the Court when arriving at its final ruling,” Ireland’s finance minister Michael McGrath said in a statement. “It has always been, and remains, Ireland’s position that the correct amount of Irish tax was paid and that Ireland provided no state aid to Apple.”

Although Apple and Dublin appealed against the tax order, Apple nevertheless had to hand over the full amount, which Ireland has been holding in an escrow account.

“We thank the court for its time and ongoing consideration in this case. The General Court’s ruling was very clear that Apple received no selective advantage and no state aid, and we believe that should be upheld,” an Apple spokesperson said.

Vestager has a mixed record defending her tax cases in court, with judges backing challenges by automaker Stellantis, Amazon and Starbucks.

Her biggest legal victory to date came in September when the General Court upheld her decision against a €700 million ($749 million) Belgian tax scheme for 55 multinationals. Her tax crackdown has forced EU countries to scrap such sweetheart deals.