EU Hits Apple With $14.5bn Over “Unpaid Taxes”

©The Telegraph

The European Union on Tuesday ordered Apple to pay Ireland unpaid taxes of up to $14.5 billion, saying the American tech giant received illegal state aid.

Apple runs its European operations from Ireland, which has a 12.5 percent corporate tax rate. But its agreement with the Irish government that allowed Apple to pay a tax rate of just 1 percent or even less – .0005 percent, in some years – according to the European Commission, following a two-year investigation.


The commission ruled that Apple owes $14.5 billion in back taxes as a result of questionable tax deals it agreed upon with Ireland in 1991 and 2007. The E.U. also accused Ireland of giving Apple illegal state aid.

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,” European Commissioner Margrethe Vestager, who is in charge of competition policy, said in a statement from Brussels.

“This decision sends a clear message, member States cannot give tax benefits to selected companies. This is illegal under EU state aid rules.

“This is not a penalty, this is unpaid taxes to be paid,” Vestager added.

Apple and the Irish government immediately said they would appeal against the European Commission ruling, while the US Treasury said it could undermine its economic partnership with the EU.


“Apple follows the law and pays all of the taxes we owe wherever we operate,” Apple said in a statement.

“As responsible corporate citizens, we are also proud of our contributions to local economies across Europe, and to communities everywhere. As our business has grown over the years, we have become the largest taxpayer in Ireland, the largest taxpayer in the United States, and the largest taxpayer in the world.

“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. The opinion issued on August 30th alleges that Ireland gave Apple a special deal on our taxes. This claim has no basis in fact or in law. We never asked for, nor did we receive, any special deals. We now find ourselves in the unusual position of being ordered to retroactively pay additional taxes to a government that says we don’t owe them any more than we’ve already paid.

“Ireland has said they plan to appeal the Commission’s ruling and Apple will do the same. We are confident that the Commission’s order will be reversed.

“Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe.


Ireland’s finance minister, Michael Noonan, said: “This is necessary to defend the integrity of our tax system, to provide tax certainty to business and to challenge the encroachment of E.U. state aid rules into the sovereign member state competence of taxation.”

Meanwhile, across Europe, how much U.S. multinational firms are paying in taxes is coming under increasing scrutiny in recent months.

French authorities recently raided the Paris headquarters of two U.S. corporate giants, Google and McDonald’s. And European authorities have accused the Netherlands of allowing Starbucks to avoid more than $30 million in taxes.


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