Win: Apple Finally Forced to Pay Dodged Taxes

In 2016, under pressure from unions and campaigners, the European Commission argued that a preferential tax deal given to Apple by the Irish government represented unlawful state aid under EU law. The Commission estimated that the total amount of unlawful aid to be recovered was worth EUR 13 billion. Following a long and complex legal battle launched by Apple, the Court of Justice of the EU has now confirmed the Commission's decision.

Ireland has for decades granted Apple and other major corporations special and favourable tax treatment, allowing Apple to formally register in Ireland large amounts of profits while the real economic activity was for the most part taking place in other countries. This scheme was based on the artificial use of intellectual property rights, through which Apple entities around the world were paying large fees to Ireland. In Ireland, the applicable rate was extremely low, allowing the Apple Group to reduce its tax bill worldwide, depriving higher tax countries from much needed public revenues.

This win against Apple by the EU Commission should be welcomed on principle, as large corporations and Ireland will have to thoroughly review some of their most aggressive tax schemes. However, the amount of tax revenue this scheme allowed Apple to dodge will not be returned to where it belongs (ie where workers who produced the wealth are located or where sales actually occurred). Above all, this lengthy and costly legal battle shows how inappropriate the current rules are to prevent tax dodging. For one high profile case won, how many are never brought to Court?

PSI and EPSU have been at the forefront of exposing corporate tax dodging at the European level. In 2015, we launched a report on McDonald’s tax affairs in collaboration with affiliates in the US and across the EU and more recently we helped expose how tax lobbyists had drafted government positions on tax reform. Tax campaigning by PSI affiliates was key in pushing the EU to implement a limited form of Country-By-Country reporting.

But the EU Commission must address the underlying disease instead of just treating the symptoms. This is why PSI affiliates are leading the fight for deep reform to the global rules on taxation. There is an urgent need to revise current transfer pricing rules towards a unitary taxation approach, which is the only way to effectively tax global players like Apple. To do so requires building political pressure on the EU-27 states and the commission, which are facing strong lobbying pressure from corporations to oppose reform at the UN and other forums.