European Union competition regulators are expected to give a ruling Wednesday on whether Apple Inc AAPL needs to pay $15 billion in Irish back taxes as part of the bloc’s crusade against sweetheart tax deals.
What Happened
The European Commission had determined four years ago that Apple benefited from illegal state assistance under the guise of two Irish tax rulings that brought down its tax burden for 20 years to as low as 0.005% in 2014, Reuters reported.
A legal defeat for EU’s competition authorities could affect pending cases against companies such as Ikea and Nike Inc NKE, which have tax deals with the Netherlands, and Huhtamaki, a Finnish food packaging company, which has one with Luxembourg.
Why It Matters
The EU Competition Commissioner Margrethe Vestager made tax compliance a focal area of her tenure, but oversaw a defeat against Starbucks Corporation SBUX last year as her demand for over $34 million in Dutch back taxes was rejected by the same court, Reuters reported.
The case is also important for Ireland, which is a co-litigant alongside Apple.
The government of Ireland is seeking to protect its status as a low tax regime, which has attracted lucrative foreign investment in technology, finance, and pharmaceutical industries.
Apple is likely to be able to weather an adverse decision by the court, with cash reserves exceeding $190 billion at the end of the current fiscal year’s second quarter.
The defeated parties can appeal Wednesday's ruling at the block's highest judicial authority, the EU Court of Justice.
Price Action
On Tuesday, Apple shares traded 0.74% higher at $391.12 in the after-hours session after closing the regular session 1.65% higher at $388.23.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
