Apple's multi-billion dollar European Union tax dispute has become a major risk once again. The EU's top court said the company's previous victory against Brussels in a 13-billion-euro ($14-billion) tax case should be scrapped. The tax investigation comes after tax arrangements between Apple and Ireland - allowed the company to pay limited to zero corporate tax for over a decade.
On Thursday, Giovanni Pitruzzella, advocate general for the EU Court of Justice (CJEU), said the EU’s second-highest court's (the General Court) previous ruling, throwing out the EU’s order for Apple to pay $14 billion in back taxes to Ireland, “should be set aside."
Financial Times pointed out the opinion of the advocate general is non-binding but influential in terms of final judgments issued by CJEU.
The tax case against Apple was first initiated in 2016 following a two-year investigation by Margrethe Vestager of the European Commission, who announced at the time: "Ireland granted illegal tax benefits to Apple." The EU's 2016 decision said Apple took advantage of two Irish tax laws that lowered its tax liability to as low as 0.005% in 2014.
In 2020, the General Court sided with Apple, ruling that regulators failed to meet legal standards to show Apple benefited from an unfair advantage in Ireland.
But it was today's opinion issued by Pitruzzella that said the lower court had "committed a series of errors in law" and "failed to assess correctly the substance and consequences of certain methodological errors." As a result, he said the court needed "to carry out a new assessment."
With that being said, Apple's EU tax risk becomes a major problem (again). However, Apple shares are flat in premarket trading - as investors currently ignore the emergence of the tax issue.
Apple responded to Pitruzzella's opinion by telling AFP News, "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."
Irish Finance Minister Michael McGrath released a statement that said Dublin had done nothing wrong:
"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. We now await the judgment of the Court of Justice of the European Union on this matter."
While the 2020 ruling sure seemed like Apple would get back its $15 billion sitting in escrow, Pitruzzella's opinion now suggests otherwise.
CJEU is expected to release a new ruling on the tax dispute sometime next year.