The European Court of Justice on Wednesday annulled a European Commission decision ordering Apple to pay back €13 billion ($14.8 billion) plus interest for evading taxes in Ireland.
The European Commission decided in 2016 to impose a record high punishment on the US tech giant.
According to the EU body, Ireland had given Apple “tax sweetheart deals” since 1991, and this “treatment allowed Apple to pay an effective corporate tax rate of 1% on its European profits in 2003 down to 0.005% in 2014.”
This practice could be considered state aid which put Apple in an unfairly advantaged position compared to other firms and resulted in a €13 billion loss in tax income, the European Commission stated in 2016.
Both Apple and the Irish state brought the case to the EU court, denying the sweetheart deal charge. The Irish government insisted that changes in its tax system would result in job losses in the country.
The court admitted that the contested parts of the Irish tax system are of an “incomplete and occasionally inconsistent nature” but concluded that a “selective economic advantage” had not been proven.
Maintaining fair competition in the EU’s internal market is one of the bloc’s few exclusive competencies. It allows the European Commission to decide on state aid rules and also fine companies for breaching EU law.