Apple judgement shows EU must immediately address corporate tax reforms

Published: 15th July 2020

The General Court of the European Union ruled this morning (Wednesday 15 July 2020) that the European Commission was incorrect in its decision that 13 billion Euros in unpaid taxes by Apple constituted illegal state aid from the Irish government. The General Court ruling relates to an appeal by Apple and Ireland against a 2016 EU decision that required the US company to pay 13 billion Euros in unpaid taxes to Ireland.

Chiara Putaturo, Oxfam’s Inequality and Tax Policy Advisor said:

“Despite today’s ruling, there is no disputing the fact that Apple received significant tax reductions through tax rulings issued by the Irish tax authorities.

Cases such as this highlight the extreme nature of corporate tax avoidance in the EU, costing governments hundreds of billions of Euros every year – money that could be used to deliver essential services, such as health and child care, which are even more critical in the wake of the COVID-19 pandemic. It is now time for the European Commission to bring in effective measures to address the continued existence of corporate tax avoidance.

The repeated cases of tax avoidance investigated by the European Commission highlight that this one-by-one approach is not sufficient to counter wide-spread tax avoidance. The overturning of the European Commission’s decision in this state aid case make it clear that fundamental and urgent tax reforms at a EU and global level are needed. These includes a digital service tax, a minimum effective tax rate, effective measures against tax havens and new rules that require companies to disclose where they generate their profits and where they pay their taxes, for each country they operate in. This would give governments and civil society the ability to hold companies to account.

“The billions raised through corporate tax has the potential to benefit all citizens of a country, while clear and transparent tax systems would go some way towards restoring people’s frayed trust in a global tax system that favours large multinationals.”

Notes to editors

  • According to the European Commission, tax rulings may involve state aid within the boundaries of EU rules if they are used to provide selective advantages to a specific company or group of companies. Tax rulings are used in particular to confirm transfer pricing arrangements. Transfer pricing refers to the prices charged for commercial transactions between various parts of the same group of companies, in particular prices set for goods sold or services provided by one subsidiary of a corporate group to another subsidiary of the same group. Transfer pricing influences the allocation of taxable profit between subsidiaries of a group located in different countries.
  • The European Commission’s investigation into Apple’s tax deal with Ireland shows that, since the early 1990s, Apple has received significant tax reductions through tax rulings issued by the Irish tax authorities. According to the Commission, Apple’s subsidiaries in Ireland in some years paid as little as 0.005 percent of their annual profit in taxes. The Commission ruled in 2016 that Ireland had granted Apple an unfair advantage over other companies through its tax deals with two Apple subsidiaries, and it ordered Apple to pay EUR 13 billion in so far unpaid taxes. Ireland and Apple challenged the decision in court.
  • In September 2019, the General Court of the EU confirmed a decision by the European Commission which qualified a tax deal between Luxembourg to Fiat as illegal while it overturned a similar decision on a tax deal between Starbucks and the Netherlands. A court judgement is also expected on tax deals by Luxembourg with Amazon. The Commission is also carrying out in-depth investigations concerning tax rulings issued by the Netherlands in favour of Nike and Inter IKEA.
  • Today (Wednesday 15 July 2020) the EU plans to launch a Action Plan for fair and simple taxation to support Europe’s strategy for the coronavirus recovery, a communication on tax good governance in the EU and beyond, and a proposal to revise EU rules on automatic exchange of tax information.

Contact information

Cass Hebron | Oxfam EU | | desk +32-2-234 1115
Caroline Reid | Oxfam Ireland | | +353 87 912 3165

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