Apple has told Wall Street investors it will need to book as much as a $10 billion (€9.1 billion) tax charge in the final three months of its financial year to the end of this month, following a shock ruling by the EU’s highest court that it must settle a long-disputed multibillion-euro Irish tax bill.
The one-time charge will increase the Californian group’s effective tax rate for the period, it said in a stock exchange statement on Wednesday.
The move is being taken to reconcile issues that have arisen as a result of the European Court of Justice (ECJ) ruling earlier in the day that the European Commission had been correct in deciding eight years ago that Apple owed Ireland €13 billion, plus interest, in back taxes.
The matter had ended up in the top European Union (EU) court, as the iPhone maker and the Irish State had consistently argued through years of legal wranglings with the commission that the taxes were not owed and that Government did not give sweetheart tax deals to company.
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Apple said immediately after the ECJ ruling that the case “has never been about how much tax we pay, but which government we are required to pay it to”. It said that it has already paid $20 billion in tax to the US on the very same profits the commission claimed should have been taxed in Ireland.
The Irish Government has held the disputed tax bill, plus interest, in an escrow account since 2018. It initially amounted to €14.3 billion, but had fallen to €13.8 billion by the end of last year.
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The decline was largely down to the fact that the money is mainly invested in European government bonds, which fell in value in recent years. But it reflected how €246 million was transferred in 2021 to pay tax in another jurisdiction, as allowed under the terms of the escrow arrangement.
The ECJ on Tuesday “set aside” a ruling by the second-highest court, the General Court, four years ago, which had quashed the commission’s decision that Apple owed the Republic €13 billion in taxes. The long-running dispute is the world’s largest ever antitrust case.
The ECJ said that the lower court in Luxembourg had “erred” when it ruled the commission had not proved its case sufficiently.
In a statement on Tuesday, the Government said it will “respect the findings” of the court.
The Department of Finance said the judgment provides the final determination in the case and that the process of transferring the money, which has been held in escrow, to Ireland will now begin.
Tánaiste Micheál Martin insisted, however, that the money Ireland will now receive will not be used for “day-to-day spending”.
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