European Court of Justice Rules Apple to Pay 13 Billion Euro Fine
Unfair Tax Benefits Received in Ireland Confirmed
'Tax Haven' Ireland Shows Unexpected Budget Surplus
The European Court of Justice (ECJ), the highest court of the European Union (EU), has issued a ruling imposing an astronomical fine on Apple, putting Ireland, unexpectedly sitting on a 'money pile,' in a difficult position. On the 11th (local time), the Financial Times reported, "Ireland is struggling with how to use the unexpected budget surplus." In particular, since this money is the result of Ireland's corporate tax benefits provided to big tech companies being judged as illegal subsidies, it is an unfavorable situation for Ireland, which has gained a reputation as a 'tax haven.'
Following the ECJ ruling the day before, Ireland will receive 13 billion euros (approximately 19.25 trillion KRW) in back taxes from Apple. In 2016, the EU Commission ordered Ireland to collect 13 billion euros in back taxes plus interest, totaling 14.3 billion euros (approximately 21.11 trillion KRW), stating that the tax benefits Apple received in Ireland violated EU state aid rules and were unfair. Apple opposed this, claiming it had already paid corporate taxes in the United States and called it 'double taxation,' and the Irish government also sided with Apple. This was because Ireland had benefited by attracting multinational companies through low tax rates. In July 2020, the General Court, the court of first instance, ruled in favor of Apple and Ireland. According to the FT, the legal costs incurred by the Irish government in pursuing the lawsuit alongside Apple, despite not intending to collect the back taxes, amounted to 10 million dollars (approximately 13.3 billion KRW).
However, the ECJ's final ruling overturned the lower court's decision, ending the dispute over the astronomical fine with a victory for the EU Commission. Margrethe Vestager, EU Commissioner for Competition, welcomed the decision, calling it "a huge victory for European citizens and tax justice," and stated, "The Commission will continue legislative and enforcement work to counter aggressive tax avoidance strategies." Meanwhile, an Apple spokesperson expressed regret, saying, "We pay all the taxes we owe wherever we do business, and there were never any special deals."
Meanwhile, the Irish government is reportedly under public pressure to use the back taxes collected from Apple to address housing shortages, energy crises, water supply, and infrastructure issues. However, Jack Chambers, Ireland's Minister for Finance, avoided direct comments on the use of the tax revenue, stating, "The exact amount of tax to be collected as a result of this ruling has not yet been determined."
This year, the Irish government is expected to achieve a budget surplus of 8.6 billion euros (approximately 12 trillion KRW) due to increased corporate tax revenues from global tech and pharmaceutical companies operating within the country. In other words, with cash already overflowing in the treasury, an astronomical amount will be added. The opposition party demands using the surplus tax revenue to stimulate the economy, but concerns have also been raised that excessive fiscal spending could lead to economic overheating.
Following this ruling, there is speculation that EU authorities may launch additional investigations into the corporate tax rates applied to Apple and other global big tech companies by member state governments. Adam Craggs, a partner at law firm RPC, told the FT, "This ruling will further fuel the debate that Ireland provides a tax haven for multinational corporations."
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