LONDON — Apple won a major legal victory on Wednesday against European antitrust regulators as a European court overruled a 2016 decision that ordered the company to pay $14.9 billion in unpaid taxes to Ireland.
The decision, which can be appealed to the European Union’s top court, is a setback for the region’s efforts to clamp down on what the authorities there believe is anti-competitive behavior by the world’s largest technology companies.
The case stems from Apple’s use of Ireland as its base for its European operations. In 2016, the European Union’s top competition regulator said Apple had used illegal deals with the Irish government to keep its tax bills low. They said the deals amounted to illegal state aid.
As part of the ruling, the authorities ordered Ireland to recover 10 years of back taxes, worth 13 billion euros, about $14.9 billion at current conversion rates.
Apple and Ireland appealed the judgment, arguing the tax arrangements were consistent with European laws. Apple had called the effective tax rate used by the European regulators “a completely made-up number.”
The appeal has put Ireland in the position of seeking not to collect billions in taxes at a time when its government is facing a budget deficit as a result of emergency spending responding to the pandemic. The country has long faced criticism from other countries for its low corporate taxes.
Apple praised the decision, saying its corporate tax structure is set up so much of its taxable income flows through its headquarters in the United States, where its products are created, rather than Europe.
“This case was not about how much tax we pay, but where we are required to pay it,” said Josh Rosenstock, a company spokesman. “We’re proud to be the largest taxpayer in the world as we know the important role tax payments play in society.”