iPhone maker Apple (AAPL) has lost a decade-long case in the European Union related to the recovery of 13 billion euros ($14.4 billion) in a “sweetheart” tax deal in Ireland. The European Court of Justice (ECJ) upheld the European Commission’s (EC) 2016 order, asking the Irish Tax authorities to usurp up to 13 billion euros in taxes from Apple. Following the news, AAPL shares slipped 1.3% in pre-market trading as of the time of writing.
Apple’s Prolonged Fight with EC over Tax Bill
The lawsuit dates back to 2014, when the EC had opened a probe into Apple’s tax payments in Dublin, citing gross underpayment of taxes earned on profits from 2003 to 2014. The EC had cited at the time that Apple, whose EU headquarters are in Ireland, received illegal tax benefits from the country for years. The EC alleged that Apple illegally benefited from two Irish tax rulings for over two decades that reduced its tax burden to 0.005% in 2014.
In 2019, Apple and Ireland appealed the EU’s decision, and in 2020, won the favor of the EU General Court, the second highest court in the bloc. The EU General Court stated that the EC had failed to substantiate its illegal tax benefit accusations in Apple’s case. This was followed by the EU’s appeal to the lower court’s verdict, pushing the ruling further higher to the ECJ. The ECJ’s decision remains final and puts into context the increasing regulatory crackdown on big tech companies.
In response to the ECJ’s verdict, Apple said that it was disappointed with the decision since the earlier court had ascertained the facts and categorically annulled the case. Apple noted that its income was already subject to taxation in the U.S. and that the EC was “trying to retroactively change the rules and ignore that, as required by international tax law.”
Is Apple a Buy or Sell?
Wall Street remains divided on Apple stock amid intense competition in the Chinese smartphone market and heightened regulatory probe of big techs. On TipRanks, AAPL stock has a Moderate Buy consensus rating based on 25 Buys, nine Holds, and one Sell rating. Also, the average Apple price target of $249.48 implies 12.9% upside potential from current levels. Year-to-date, AAPL shares have gained 15.2%.
