EU Court Sides With Apple Over $14.8 Billion in Back Taxes

Josh Edelson /AFP/ Getty Images
Apple CEO Tim Cook

The General Court annulled a 2016 decision, and the European Commission could now appeal at the EU's top court.

Apple won a key round in a legal battle with the European Union as the General Court, the EU's second-highest court, in a Wednesday ruling sided with the U.S. technology giant over $14.8 billion (13 billion euros) in back taxes that antitrust officials had ordered the company to pay.

The European Commission, the EU's executive arm, had in 2016 ruled that Apple's tax dealings with the Irish government violated European law and set what then its highest fine ever. Margrethe Vestager, the European commissioner for competition, said back then that the iPhone maker got undue tax benefits in Ireland, essentially providing state aid to the corporation.

Apple, led by CEO Tim Cook, and the Irish government have argued that, because the tech firm's products and services are created, designed and engineered in the U.S., the bulk of its financial benefit is created there and that the Irish tax scheme is legal. Apple also said it paid Ireland's 12.5 percent rate on all the income that it generates in the country.  

In a hearing at the General Court last year, Apple's legal team said that the European Commission's decision had "defied reality and common sense."

Now, the General Court annulled the decision, arguing that the European Commission had failed to show "to the requisite legal standard" that Apple was granted an illegal advantage.

The Commission could appeal Wednesday's ruling at the EU's top court, the European Court of Justice.