Apple Shares Jump After EU Court Scraps $15 Billion Back Tax Payment To Ireland

Europe's second-highest court said Apple doesn't have to pay some €13 billion in back taxes the European Commission had claimed it owed to the Republic of Ireland.
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Apple Inc.  (AAPL) - Get Report shares jumped higher Wednesday after Europe's second-highest court ruled in favor of the tech giant in a long-running battle over $15 billion in unpaid taxes.

The General Court said that a 2016 ruling against Apple, in a case brought by the European Commission's competition authorities, should be annulled "because the Commission did not succeed in showing to the requisite legal standard that there was an advantage" in Apple's tax arrangement with the Republic of Ireland that would have violated EU rules.

The original order from the European Commission had called on Apple to pay €13 billion ($15 billion) in back taxes to the Irish government after authorities said the two had agreed an unfair tax agreement as part of Apple's investment in the Republic.

"We thank the General Court," Apple said in a statement "We are pleased they have annulled the Commission’s case. This case was not about how much tax we pay, but where we are required to pay it. We’re proud to be the largest taxpayer in the world.”

Apple shares were marked 1.6% higher in early trading following the European court ruling, which can be appealed, to change hands at $393.92 each.

The Irish government has always denied that it reached an unfair agreement on tax payments with Apple, and in fact lobbied against the $15 billion payment since the Commission made its first order more than four years ago.

Apple, for its part, accused the EU of 'retroactively" changing the rules with respect to calculating taxes on profits, arguing the payments should be made in the United States, not in Europe.

Apple will post earnings for the three months ending in June, its fiscal third quarter, on Thursday July 30, with analysts looking for a bottom line of $2 per share on sales of $51.5 billion, based on early Street estimates.

Apple beat Street estimates for both its top and bottom line over the second quarter, which ended in March, posting sales of $58.3 billion and earnings of $2.55 per share.

Apple said services revenues rose 17% to a record $13.3 billion as shelter-in-place orders attracted new subscribers to the group's suite of cloud-based offerings such as Apple Music and Apple Pay. However, it said a lack of near-term certainty has forced the group to start its second consecutive quarter without providing financial guidance to investors, although it did forecast a currency headwind of $1.5 billion owing to the strength of the U.S. dollar.