Apple’s Victory in the EU

EU’s General Court Rules in Favor of Apple and Irish Government

Apple (AAPL) won an important court case against the European Commission yesterday. In August 2016, the European Commission raised concerns that Apple had been granted special tax privileges by the Irish government. The company was accused of illegally avoiding paying $14.9 billion in taxes between 2003 and 2014. The Irish government and Apple challenged the commission’s ruling.

Yesterday, the General Court, Europe’s second-highest court, ruled in Apple and Ireland’s favor, saying the commission did not meet legal standards for displaying that Apple was given partial treatment. When news of Apple’s victory broke, the company’s shares rose 2% in premarket trading.

A Larger Conversation

European tax policy surrounding Big Tech has been highly debated in recent years. As Europe’s economy reels from coronavirus fallout and governments look for sources of revenue, questions about taxing large tech companies have taken on even more importance.

EU lawmakers have long debated whether or not the bloc should have a digital tax on large tech companies. Lawmakers in favor of this tax want to make sure tech companies do not have an unfair advantage over more traditional businesses, and want to raise revenue for governments. The General Court’s ruling complicates these discussions.

Looking Ahead

Already, several EU countries, like France, have implemented taxes on all tech companies. Margrethe Vestager, a member of the European Commission in charge of competition, has said that the EU as a whole may also adopt these policies unless changes are made by individual countries.

While the victory for Apple in Ireland is helpful for the company in the short term, it will add fuel to the fire for tech-industry critics in Europe. Some say this case is a signal that tax reform is needed in Europe. Big changes could be on the horizon, and investors will be carefully watching to see how discussions among European lawmakers unfold.

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