Apple Owes Ireland $14.5 Billion In Taxes, European Commission Says

The European Union says Ireland has given illegal tax benefits to Apple Inc. and must now recover the unpaid back taxes from the US technology company, plus interest.

The Commissions's investigation found that although the standard rate of Irish corporate tax was 12.5 percent, Apple had effectively paid 1 percent tax on its European profits in 2003 and about 0.005 percent in 2014. The deals enabled Apple to channel European sales through Ireland and benefit from an ultra-low tax bill - sliding from 1% of its European profits in 2003 to 0.005% in 2014.

In its investigation, opened in 2014, the commission looked at how Apple reported its profits between two companies it set up in Ireland - Apple Sales International and Apple Operations Europe. "If other countries were to require Apple to pay more tax on profits of the two companies over the same period under their national taxation rules, this would reduce the amount to be recovered by Ireland".

"The Commission's actions could threaten to undermine foreign investment, the business climate in Europe, and the important spirit of economic partnership between the US and the European Union", a US Treasury spokesperson said on Tuesday. "But under the terms of Ireland's tax ruling only around €50 million were considered taxable in Ireland, leaving €€15.95 billion of profits untaxed", it said. In return, Apple brought jobs to Ireland.

Apple was attributing its profits to a "head office" in Cork that had no employees, premises or any economic activity, and paid nearly no tax, said Vestager. "The decision leaves me with no choice but to seek cabinet approval to appeal", he said.

Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years.

After a three-year investigation, it has concluded that the U.S. firm's Irish tax benefits are illegal.

Immediately after Vestager's announcement, the Irish government said it would appeal to the European Court of Justice.

The case is one of the most high-profile in the fight to redraw boundaries on aggressive tax avoidance, a fight which has put the European Union at odds with the USA government. 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.

Online retailer Amazon and fast food chain McDonald's face similar probes over taxes in Luxembourg, while the Apple decision far outstrips a previous finding against coffee chain Starbucks, which has been ordered to pay up to €30 million (A$44 million) to the Dutch state.

After a three-year long investigation, the commission has come to a decision that the U.S. firm's tax benefits are illegal.

Cook confirmed that Apple will appeal the decision.

Apple CEO Tim Cook has denounced the European Commission's decision that Apple's tax benefits in Ireland have been illegal as an "unprecedented" move with "serious, wide-reaching implications".

More than 90 per cent of its cash stockpile is kept outside of the US, to shield it from American taxes. The likely outcome of the appeals process will be a reduced bill that still equates to billions, but also a change to the tax paying agreement Apple has enjoyed until now.



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