[Source – standardmedia.co.ke]
Brussels, September 10, 2024 — European Union antitrust chief Margrethe Vestager celebrated two significant victories today as Europe’s highest court upheld her actions against Apple and Google in landmark rulings. EU’s Vestager scores major win with these decisions, marking a pivotal moment in the EU’s efforts to enforce fair competition and tax justice.
Apple’s Tax Deal Under Scrutiny
The Court of Justice of the European Union backed the European Commission’s 2016 decision that ordered Apple to pay €13 billion ($14.4 billion) in back taxes to Ireland. This ruling stemmed from claims that Apple benefited from two Irish tax rulings over two decades, which drastically reduced its tax burden to as low as 0.005% in 2014.
The court affirmed that Ireland provided Apple with illegal state aid, which must now be recovered. The ruling addressed the favorable tax treatment afforded to Apple’s Irish subsidiaries, which contrasted sharply with the tax obligations of local companies.
In response, Apple expressed disappointment, arguing that it had already paid $577 million in taxes in Ireland between 2003 and 2014, aligning with the country’s tax laws at the time. Apple contended that the European Commission’s decision attempts to retroactively alter the rules and overlooks the taxes paid in the U.S. Apple also disclosed that it anticipates a one-time income tax charge of up to $10 billion for the fiscal quarter ending September 28.
EU’s Vestager scores major win as Ireland, known for its attractive low tax rates that attracted numerous tech giants, had contested the EU’s decision, asserting that its tax treatment of intellectual property was consistent with OECD guidelines. Despite this, Ireland has adjusted its stance on global corporate tax rules, including dropping its resistance to a higher corporate tax rate, which has since led to increased tax revenue from multinational firms.
Google Faces Uphill Battle
Apple, Google Lose EU Top Court Battles
In a separate case, the court dismissed Google’s appeal against a €2.42 billion fine imposed by Vestager in 2017. This fine was part of a series of penalties against Google for anti-competitive practices, specifically for using its search engine to unfairly promote its own price comparison service over smaller European competitors.
The court found that Google’s actions were discriminatory and did not reflect genuine competition. Google expressed its disappointment, noting that the case involved specific circumstances and that the company had made necessary changes in 2017 to comply with the European Commission’s regulations.
Over the past decade, Google has accumulated €8.25 billion in antitrust fines from the EU. The company is also contesting two other significant fines related to its Android operating system and AdSense advertising service. Additionally, Google is grappling with new antitrust charges that could force it to divest parts of its lucrative ad tech business due to allegations of preferential treatment of its own services.
Ongoing and Future Investigations
EU’s Vestager scores major win as these rulings, which are final and cannot be appealed, reinforce the EU’s ongoing scrutiny of tax arrangements. Investigations into Inter IKEA’s Dutch tax agreements, Nike’s Dutch tax deals, and Huhtamaki’s Luxembourg tax arrangements further illustrate the EU’s commitment to enforcing fair competition and tax practices across the continent.
