Why it matters: This is a major blow to European competition commissioner Margrethe Vestager, who wants USA -based companies to pay what she sees as their fair share of taxes in Europe.
The General Court determined the EC was wrong to declare that Apple was given a "selective economic advantage and, by extension, State Aid" and faulted in its line of reasoning.
Authorities said the arrangement amounted to an illegal subsidy, and ordered Ireland to recover 10 years of back taxes, worth 13 billion euros, or about $14.9 billion at current conversion rates. In another case, the court also threw out her ruling against a Belgian tax scheme for 39 multinationals.
The Irish Government opposes any effort to force it to change its taxation practices, which have tempted some of the world's leading financial and technology firms to set up base in Dublin.
The court said the EU's competition authority "did not succeed in showing to the requisite legal standard that there was an advantage".
Meanwhile, the EU Commission was to unveil new plans to combat tax fraud only hours after the ruling in Luxembourg. We will carefully study the judgment and reflect on possible next steps.
The European Commission has been overruled in a legal case where the Irish government argued that Apple was not given unfair and illegal tax advantages by the country. As a result of the rulings, in 2011, for example, Apple's Irish subsidiary recorded European profits of US$ 22 billion (c.a. €16 billion) but under the terms of the tax ruling only around €50 million were considered taxable in Ireland. It shouldn't take over half a decade to decide what a multinational corporation should pay in tax.
The EU's lower court previous year overturned a ruling that had ordered Starbucks to pay €30 billion in Dutch back taxes. Google and Amazon have other court appeals pending as they seek to overturn decisions that they broke European competition laws.
Both Apple and Ireland appealed that ruling leading to Wednesday's decision. "The Commission stands fully behind the objective that all companies should pay their fair share of tax".
In many cases, multinationals can pay taxes on the bulk of their revenue across the EU's 27 countries in the one European Union country where they have their regional headquarters.
DW business reporter Arthur Sullivan called the ruling a "big blow" for the European Union, but said it was important to distinguish between this specific case and the wider fight against tax avoidance. It also deprives the public purse and citizens of funds for much needed investments - the need for which is even more acute during times of crisis.
The Eurodad network of 49 civil society organisations said that the ruling showed how tough any tax policy remains. "It is another reason to move ahead with digital taxation at the OECD".