The General Court of the European Union has annulled a 2016 order that said the U.S. tech giant Apple owed Ireland $14.9 billion in taxes.
The court ruled that the European Commission did not prove that the Irish government had given the company a tax advantage.
“The Commission didn’t succeed in showing to the requisite legal standard that there was an advantage for the purposes of Article 107(1) TFEU,” the General Court said.
In June 2014, the European Commission launched an investigation into Apple’s tax treatment in Ireland. In 2016, the Commission concluded that Ireland granted the company undue tax benefits and allowed it to pay substantially less tax than other businesses. “Ireland must now recover the illegal aid,” the Commission said at the time.
Apple chief executive officer Tim Cook has said the ruling had, “no basis in fact or in law” and was an “obvious targeting of Apple.”
The Irish finance ministry, in a statement, said, “The correct amount of Irish tax was charged taxation in line with normal Irish taxation rules.”
Apple paid an effective corporate tax rate of 1% on its European profits in 2003. That tax rate fell to 0.005% in 2014.
The ruling comes as the commission has tried, and failed, to crack down on tax deals across member countries, which European Competition Commissioner Margrethe Vestager has tried to make a priority during her tenure.
Last year, the General Court overturned an order for Starbucks to pay $34 billion in Dutch taxes.
Vestager said she was studying the ruling before making a decision on possible next steps.
“Its defeat is very similar to its defeat in the Starbucks cases, that is it won on matters of legal principle and lost due to the allocation of evidentiary onus,” said Dimitrios Kyriazis, Head of Law Faculty at the New College of Humanities in London. “It is more likely that the Commission will re-adopt a decision against Ireland and Apple and try to show exactly how the tax rulings granted AOE and ASI a selective advantage.”
Drew Angerer/Getty Images