Apple tax ruling: EU tax havens’ love affair with multinationals exposed

Chiara Putaturo is available for interview and comment. 

How did we get here?

• In 2016, the European Commission ruled that a tax arrangement between Apple and Ireland from 2003 to 2014 gave Apple an unfair advantage to unjustifiably reduce its tax bill. This arrangement allowed Apple to pay only 0.005 percent of its annual profit in taxes. As a result, the Commission ordered Apple to pay €13 billion in unpaid taxes to Ireland, plus interest. 
• Apple challenged the Commission in court, with the General Court (lowest court) initially overturning the Commission’s decision.
• The Commission appealed the decision and in November 2023, the Advocate General recommended setting aside the General Court’s judgement and suggested a new decision. His opinion is not binding.
• Today, the European Court of Justice (highest court) ruled in favour of the European Commission.
   

Ireland has economic indicators typical of tax havens. According to a 2024 report by the European Commission, Ireland has higher outbound royalty payments, such as payments on copyright works and franchises, than the rest of the EU combined.

Ireland is planning reforms to circumvent the EU minimum tax, changing the way companies can claim relief under certain credit programs that are not subject to the minimum tax. During negotiations at the OECD and EU level, Oxfam advocated to remove any exemptions.  

Apple’s profits almost doubled in 2021 compared to 2019, making it one of the biggest corporate winners of the pandemic. In 2023, Apple’s value reached $3 trillion, making it the highest-valued company in the world. This figure is greater than France’s GDP.

In the recent report Inequality Inc., Oxfam shows how corporate windfall profit and monopolies contribute to the concentration of wealth and power into the hands of the richest. 

The EU and EU countries' attempts at tax reforms include: 
 

• In 2021, the European Commission proposed rules to stop shell companies – letterbox companies used to dodge taxes – in Europe. EU countries are negotiating the text, with reports that Luxembourg raised the most objections to the proposal. 
• In September 2023, the European Commission presented BEFIT (Business in Europe: Framework for Income Taxation) - a set of EU corporate tax rules. The proposal does not include the redistribution of taxable profits among EU countries according to the real economic activities of companies, as originally envisaged. 
• In November 2023, all EU countries – including Ireland – voted against a UN resolution to create a tax convention. In August 2023, EU countries abstained from a vote on the draft Terms of Reference (ToR) of the convention. The convention includes the proposal for an equitable taxation of multinational enterprises. Both the resolution and the draft ToR passed.