Apple and Google lose billions in back taxes, EU fines across the pond

MARGRETHE VESTAGER:

“Today is a big win for European citizens and for tax justice.”

SIMONE DEL ROSARIO:

That big win for the European Union is a Big L for Apple. Apple is forced to cough up nearly $14.5 billion in back taxes to Ireland.

It’s the end of an 8-year legal battle. The European Court of Justice ruled Tuesday the tech giant got too sweet of a deal from Dublin to be the home of its European headquarters. And now it’s all going sour.

It stems from something known as the “Double Irish” scheme. For U.S. companies that operate in multiple countries, it was a way for them to shield non-U.S. profits from U.S. corporate tax. But they didn’t pay much in Ireland either, that money would get funneled from Ireland to a tax haven.

Don’t get me started on a “Double Irish with a Dutch Sandwich.” I’m gonna Irish exit before we get too deep into these tax terms.

The Double Irish scheme was alive and well until 2014 when the EU and US pressured Ireland to close the loophole. But existing companies that used the scheme grandfathered in until 2020.

In 2016, the European Commission first ruled Ireland illegally provided state aid to Apple by not collecting 13 billion euros in taxes between 2004 and 2014. European Competition Commissioner Margrethe Vestager also claimed Apple paid just 0.005% in taxes in 2014.

Apple CEO Tim Cook hit back, saying it was “total political crap” and claimed they paid $400 million in taxes in 2014, making them the highest taxpayer in Ireland.

He made the comments to the Irish Independent in 2016, saying, “No one did anything wrong here and we need to stand together. Ireland is being picked on and this is unacceptable.”

Eight years later, Vestager on Tuesday said her victory against Apple made her cry. It’s the final ruling by the court and cannot be appealed despite Apple claiming “the European Commission is trying to retroactively change the rules.”

MARGRETHE VESTAGER:

“Today marks a step forward, and it’s encouraging. It’s encouraging for us to do more. The Commission will continue its work on harmful tax competition and aggressive tax planning, both in terms of legislative proposals, but also enforcement.”

SIMONE DEL ROSARIO:

Other international businesses like Amazon and Starbucks have beat similar charges in the EU. But the Commission’s case against Ireland and Apple proved stronger after getting documents where Irish officials were rather upfront about just how good Apple’s deal was.

The Competition Commission also notched a smaller victory Tuesday as the Luxembourg-based court upheld a $2.7 billion antitrust fine against Google.

MARGRETHE VESTAGER:

“The Google Shopping case is a landmark in the history of regulatory actions against big tech companies. It was one of the first significant antitrust cases brought by a competition agency against a major digital company. And I think this case marked a pivotal shift in how digital companies were regulated and also perceived.”

SIMONE DEL ROSARIO:

The fine’s been in limbo since it was levied back in 2017. At the time, the commission accused Google of giving prominent placement to its own comparison shopping service and burying its rivals in the same results. At the time, Google had a 90% market share for search in the EU.

In the ruling, the judges made clear they weren’t punishing success, a defense often used in antitrust cases.

MARGRETHE VESTAGER:

“In essence, the Google Shopping case was a catalyst for change. Inspiring more vigilant and proactive approach to regulating big tech and of course, of course, ensuring also a fairer digital marketplace.”

SIMONE DEL ROSARIO:

Google is a frequent target of the competition committee and has been fined more than 8 billion Euros in the last ten years. They are still waiting for final rulings on challenges to cases involving the Android operating system for mobile phones and its advertising platform.

Google is also in trouble at home. For more on the monopoly charges against the search giant, search “Google antitrust” for stories like this at SAN.com.