European commission says Apple got illegal help with tax breaks but CEO Tim Cook says ruling threatens investment in Europe
Apple has been ordered to pay a record figure of up to 13bn (11bn) in back taxes to Ireland after the European commission ruled that deals between Apple and the Irish tax authorities amounted to illegal state aid.
The commission said Irelands tax arrangements with Apple between 1991 and 2015 had allowed the US company to attribute sales to a head office that existed on paper only and could not have generated such profits.
The result was that Apple avoided tax on almost all profits from sales of its products across the EUs single market by booking the profits in Ireland rather than the country in which the product was sold.
Apple and Ireland have rejected the commissions account and said they intend to appeal against the ruling. The figure of 13bn plus interest 40 times the previous record for such a case is the equivalent of the annual budget for the Irish health service. Irish campaigners are also calling for the windfall to be invested in public housing.
The taxable profits of Apple Sales International and Apple Operations Europe did not correspond to economic reality, the commission said. Apple paid an effective tax rate of 1% in 2003 on profits of Apple Sales International. The rate dropped to 0.005% in 2014.
Margrethe Vestager, the European competition commissioner, said: Member states cannot give tax benefits to selected companies this is illegal under EU state aid rules. The commissions investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years.