Ireland “will respect” an order to recover more than 13 billion euro in back taxes from Apple, following a decision of Europe’s top court.

The European Court of Justice (CJEU) decision restores a 2016 European Commission ruling that Ireland gave undue tax benefits to Apple, which would be illegal under EU state aid rules.

Ireland and Apple, which had long argued the correct amount of tax was paid, fought the commission on the matter and in July 2020 the General Court of the European Union annulled the decision.

However, the European Commission subsequently appealed against that decision to the CJEU, saying the lower court’s ruling was legally incorrect.

On Tuesday, the CJEU agreed the General Court had “erred” in its decision and ordered the judgment should be set aside, restoring the commission’s original ruling.

The Irish Government said it will “respect the findings”, but added: “The Irish position has always been that Ireland does not give preferential tax treatment to any companies or taxpayers.”

An Apple representative said the company was “disappointed” with the decision.

“This case has never been about how much tax we pay, but which government we are required to pay it to,” they said.

“We always pay all the taxes we owe wherever we operate and there has never been a special deal.

“Apple is proud to be an engine of growth and innovation across Europe and around the world, and to consistently be one of the largest taxpayers in the world.

“The European Commission is trying to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to taxes in the US.

“We are disappointed with today’s decision as previously the General Court reviewed the facts and categorically annulled this case.”

In the interim, the 13.1 billion euro has been held in an escrow fund pending the outcome of the case.

The money, with interest, is due to be returned to the Irish exchequer. However, other member states may make claims that they are owed a share of the total.

The commission’s original position was that tax rulings issued by Ireland to Apple in 1991 and 2007 substantially and artificially lowered the tax paid by the iPhone manufacturer in the country since the early 90s, in a way which did not correspond to economic reality.

As a result, competition commissioner Margrethe Vestager said in 2016 that Ireland had granted illegal tax benefits which enabled the company to pay substantially less tax than other businesses over many years.

An EU investigation found Apple had paid an effective corporate tax rate of 1% on its European profits in 2003, down to 0.005% in 2014 – 50 euro for every one million euro of profit.

The process involved Apple recording almost all sales profits of two Irish incorporated companies to a head office, which the commission said only existed on paper.

The companies, fully owned by Apple, held the rights to use the firm’s intellectual property to manufacture and sell its products outside North and South America.

The commission said this situation allowed Apple to avoid taxation on almost all profits generated by sales of its products in the entire EU single market.

It said this was due to Apple’s decision to record all sales in Ireland rather than in the countries where the products were sold.

The findings were disputed by the Irish State, which said all tax owed had been collected, and Apple, which had come under scrutiny in the US for its tax practices years earlier.

At the time, Apple chief executive Tim Cook branded the EU findings “political crap”, maddening and untrue.

The company maintained that no state aid had been received and that it had paid taxes on the profits in question in the US.

The Irish Government, which was also used to defending a low 12.5% corporation tax rate, argued that Europe had overstepped the mark in attempting to dictate tax laws and enforce retrospective taxes decades later.

Ireland and Apple fought the commission on the matter and in July 2020, the General Court of the European Union annulled the decision.

The General Court found the commission had not shown there was an advantage deriving from the adoption of the tax rulings.

However, the commission subsequently appealed the decision to the CJEU, with Ms Vestager saying the lower court’s ruling contained errors of law.

On Tuesday, the CJEU said it confirms the European Commission’s 2016 decision: “Ireland granted Apple unlawful aid which Ireland is required to recover.”

Ms Vestager described the finding as a “huge win for European citizens and tax justice”.