The European Commission has been trying to collect back taxes from Apple for years. Apple seemed to be avoiding the situation, but there could be a new twist in the case.

The boxing match between Apple and the European Commission is entering the next round. Apple appeared to have pulled off a technical knockout in 2020, but the European Court of Justice now rules that the blow was below the belt. There is a lot of money at stake for the iPhone manufacturer: The European Commission is demanding thirteen billion dollars in back taxes from Apple.

history class

To understand the entire story, we actually have to go back to the 1980s. In 1980, Apple was one of the first American technology companies to open a foreign branch in Europe. For this, the computer manufacturer chose the promised land of milk and Guinness. Ireland appeased Apple with some favorable tax laws that will later attract many big tech companies to Dublin.

Apple was given permission to split its European branch into two divisions, a sales unit and an operations unit. This agreement allowed Apple to deduct income from intellectual property licenses from taxes. Apple had to give up less profit year after year. The European Commission initially allowed this, but changed course in 2018 and demanded a sum of thirteen billion dollars from the iPhone manufacturer.

The case came to the European Court of Justice, which ruled in favor of Apple in 2020. The court found nothing illegal in the agreement that Apple had concluded with the Irish tax authorities. Then it became clear that the commission would not stop there. Giovanni Pitruzzella, Advocate General of the Court, opens the door for a new trial. In a press statement, Pitruzzella said legal errors had been made in the previous ruling and a new ruling was appropriate.

Big sum

Apple may still have to raise the required amount. Thirteen billion euros is a lot of money even for Apple: it would destroy more than half of a quarter’s net profit. Rest assured that the iPhone maker won’t back down without a legal battle. Domestically, Apple was fined $25 million by the US court for discrimination in its hiring process.