EU antitrust regulators

Apple slapped with up to 13 billion euro tax bill

EU antitrust regulators order Apple to pay up to 13 billion euros in taxes plus interest to the Irish government after ruling that a special scheme to route profits through Ireland was illegal state aid.

(REUTERS AND EBS) – EU antitrust regulators ordered Apple on Tuesday (August 30) to pay up to 13 billion euros (14.5 billion USD) in taxes plus interest to the Irish government after ruling that a special scheme to route profits through Ireland was illegal state aid.

The European Commissioner in charge of competition, Margrethe Vestager, said two separate tax rulings granted to Apple were at stake.

“The European Commission has today adopted a decision that Apple’s tax benefits in Ireland are illegal. Two tax rulings granted by Ireland have artificially reduced Apple’s tax burden for over two decades in breach of EU state aid rules. Apple now has to repay the benefits worth up to 13 billion euros plus interests,” said Vestager, whose crackdown on mainly U.S. multinationals has angered Washington which accuses Brussels of protectionism.

Vestager said the European executive’s decision should act as a warning to EU member states that they should not grant unfair tax scheme to corporations settling on their soil.

“This decision sends a clear message. Member states cannot give unfair tax benefits to selected companies. No matter if they are European or Foreign, large or small, part of a group or not,” she said.

The massive sum, 40 times bigger than the previous known demand by the European Commission to a company in such a case, could be reduced, the EU executive said in a statement, if other countries sought more tax themselves from the U.S. tech giant.

Apple, which with Ireland said it will appeal the decision, paid tax rates on European profits on sales of its iPhone and other devices and services of between just 0.005 percent in 2014 and 1 percent in 2003, the Commission said.

For Apple, whose earnings of $18 billion last year were the biggest ever reported by a corporation, finding several billion dollars should not be an insurmountable problem. The 13 billion euros represents about 6 percent of the firm’s cash pile.

The European Commission in 2014 accused Ireland of dodging international tax rules by letting Apple shelter profits worth tens of billions of dollars from tax collectors in return for maintaining jobs. Apple and Ireland rejected the accusation.

Ireland also said the disputed tax system used in the Apple case no longer applied and that the decision had no effect on Ireland’s 12.5 percent corporate tax rate or on any other company with operations in the country.

Apple said in a statement it was confident of winning an appeal.

Associated Links

  • Apple
  • Competition law
  • Anti-competitive behaviour
  • Criticism of Apple Inc.