European Commission orders Ireland to recover €13 billion from Apple

The European Commission has ordered Ireland to recover €13 billion from Apple, after ruling that it had granted unfiar tax benefits to the US technological giant 

The European Commission has ordered Ireland to recover €13 billion from US giant Apple
The European Commission has ordered Ireland to recover €13 billion from US giant Apple

The European Commission has ordered Apple to repay €13 billion to Ireland, after concluding that the country granted undue tax benefits to the US giant.

In a ruling following a three-year investigation, the EC said that “selective treatment” allowed Apply to pay a corporate tax rate of 1% on European Union profits in 2003, down to 0.005% in 2014 – significantly lower than the standard rate of 12.5%.

 “Member states cannot give tax benefits to selected companies – this is illegal under EU state aid rules,” Competition Commissioner Margrethe Vestager said. “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.”

Both Ireland and Apple said that they disagreed with the EC’s decision and would appeal against it.

“I disagree profoundly with the Commission,” Irish finance minister Michael Noonan said in a statement. “The decision leaves me with no choice but to seek cabinet approval to appeal. This is necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into sovereign member state competence of taxation.”

Apple warned that the Commission’s decision would be harmful for jobs.

“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 company said in a statement. “The Commission’s case is not about how much Apple pays in taxes, it’s about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe.

“Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned.”

US authorities have criticised the investigation into Apple and similar probes into other US firms.

The US Treasury Department said last week that the EC was in danger of becoming a “supra-national tax authority” overriding the tax codes of its member states. It accused Brussels of using a different set of criteria to judge cases involving US companies and that potential penalties were “deeply troubling”.

The EC last year ordered the Netherlands to recover €30 million from Starbucks, while Luxembourg were told to recover a similar amount of money from Fiat.