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Apple hit with €13bn EU tax penalty
The European Union’s antitrust regulator has demanded that Ireland recoup roughly €13 billion ($14.5 billion) in taxes from Apple Inc, after ruling that a deal with Dublin allowed the company to avoid almost all corporate tax across the entire bloc for more than a decade—a move that could intensify a feud between the EU and the US over the bloc’s tax probes into American companies.
Brussels/Paris: The European Union’s antitrust regulator has demanded that Ireland recoup roughly €13 billion ($14.5 billion) in taxes from Apple Inc, after ruling that a deal with Dublin allowed the company to avoid almost all corporate tax across the entire bloc for more than a decade—a move that could intensify a feud between the EU and the US over the bloc’s tax probes into American companies.
The tax payment is the highest ever demanded under the EU’s longstanding state-aid rules that forbid companies from gaining advantages over competitors because of government help.
In a statement on Tuesday, Apple said it would appeal the decision. Chief Executive Tim Cook, in an open letter, said: “Apple follows the law and we pay all the taxes we owe.”
Irish Finance Minister Michael Noonan said, “I disagree profoundly with the Commission’s decision,” adding that the country would appeal the decision in order “to defend the integrity of our tax system.”
The European Commission said the tax arrangements Ireland offered Apple in 1991 and 2007 allowed the company to pay around 1% to almost zero tax on its European profits for more than 10 years, between 2003 and 2014, by designating only a tiny portion of its profit to a taxable Irish branch.
“The commission’s investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years,” said European antitrust commissioner Margrethe Vestager, adding that Apple’s structure in Ireland “did not have any factual or economic justification.”
Cook fired back that “The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process.”
Shares in Apple fell more than 2% in premarket trading in Europe shortly after the decision was announced. Vestager said that Apple would be expected to pay taxes in Ireland in the future based on the ruling, something that could entail billions in extra tax payments a year for the company going forward.
The US Treasury Department has sharply criticized the EU’s tax investigations, arguing that the bloc unfairly targets American companies and acts inconsistently with international tax norms.
On Tuesday, a spokesperson said the Treasury Department was disappointed with the commission’s decision and reiterated that “retroactive tax assessments by the commission are unfair, contrary to well-established legal principles, and call into question the tax rules of individual member states.”
