The iPhone maker must pay $14.4 billion in back taxes to the Irish government after the European Union's top court rejected the company's appeal against a landmark 2016 ruling, which CEO Tim Cook denounced at the time as “total political nonsense.”
The European Court of Justice in Luxembourg on Tuesday upheld a European Commission decision that found Ireland had breached state aid law by giving Apple an unfair advantage.
“We are disappointed with today's decision because the Supreme Court has already considered the facts and invalidated this case in its entirety,” an Apple spokesman said.
The company said it would record a one-time income tax charge of up to $10 billion in the fourth quarter ended Sept. 28 as a result of the ruling.
Apple shares fell less than 1% after the open of trading.
In 2016, the European Commission, the EU's executive body, found that Apple had received special tax benefits from Ireland after the Irish government allowed the company to set up a “headquarters” in the city of Cork — even though the headquarters existed only on paper and had no employees or actual operations.
The Irish agreement allowed Apple to pay a low effective tax rate of 0.005% on its European profits for several years.
In 2016, the Commission demanded Ireland recover unpaid taxes and interest from 2003 to 2014.
Both Ireland and Apple appealed the decision, and the Court of Appeal sided with both parties, overturning the original decision, finding that the Commission had not met the legal standard to prove that Ireland had sought to give Apple special treatment.
However, the High Court overturned the ruling on Tuesday.
“Today is a major victory for European citizens and for tax fairness,” said Margrethe Vestager, the EU's top antitrust regulator.
Apple released a statement expressing disappointment with the decision.
“This case is not about how much tax we pay, but which government we should pay our taxes to.” A company representative told The Wall Street Journal.
“We have always paid all taxes due wherever we operate and there have been no special arrangements.”
Ireland has long stood out among EU member states as one of the continent's most business-friendly countries, thanks to its historically low corporate tax rates.
Google, Meta, Microsoft, Amazon, Intel and LinkedIn are among the technology companies that have set up operations in Ireland due to its relaxed tax environment.
Following the ruling, Irish officials said they would soon begin transferring $14.4 billion currently held in escrow accounts to government coffers.
The Irish government denied giving special tax breaks to any companies but said it would respect the court's ruling.
The European Union's top court also upheld a $2.67 billion fine imposed on tech giant Google by antitrust authorities after the company sued the company for anti-competitive behaviour linked to fees charged for comparison shopping services in search results.
