The European Union will make a key ruling on September 10, 2024, regarding Apple’s controversial tax deal with Ireland. The 2004 agreement allowed Apple to pay lower taxes, a move the EU later declared illegal. This decision could force Apple to release $14.5 billion, currently held in an escrow account.
The Background
In 2004, Ireland made a 10-year tax deal with Apple. The agreement let the tech company use two subsidiaries under the “Double Irish” loophole. This allowed Apple to avoid taxes on intellectual property by listing the assets as intangible, with minimal profit in the secondary subsidiary. Although the loophole closed in 2014, Apple benefited from it until 2020.
The EU Commission, led by Margrethe Vestager, ruled the arrangement illegal in 2016 after a lengthy investigation. Though Apple left the deal, it continues to challenge the findings. Ireland, on the other hand, argues that the EU’s decision interferes with its national tax rights.
Financial Impact for Apple
If the court rules against Apple, the company may need to pay $14.5 billion in back taxes. This sum covers the 10 years during which Apple benefited from the tax loophole. In 2020, a lower EU court sided with Apple and Ireland, but the EU appealed the ruling. The final court decision, due soon, could reshape Apple’s tax responsibilities in Europe.
Broader Implications
A ruling against Apple could have wide-ranging effects, not just for the company but for other multinationals. If the EU wins, it might lead to increased scrutiny of similar tax arrangements across the region.
