Apple ordered to pay up to €13bn after EU rules Ireland broke state aid laws

Apple has been ordered to pay 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 Guardian reports. 

The commission said Ireland’s 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 EU’s single market by booking the profits in Ireland rather than the country in which the product was sold.

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 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.”

The €13bn, plus interest to be recovered, covers the 10 years before the commission first requested information in 2013. Apple changed its tax arrangements with Ireland in 2015.

Ireland’s finance minister, Michael Noonan, said Dublinwould appeal against the ruling.

He said: “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 the sovereign member state competence of taxation.”

Apple’s chief executive, Tim Cook, recently dismissed the investigation as “political crap” and promised to appeal if the commission ruled his company owed back taxes.

The commission has been examining Apple’s tax deals with Ireland for three years. The deals have allowed the US company to pay very little tax on income earned throughout Europe. The commission opened a formal inquiry in 2014 after initial findings concluded that the arrangements amounted to state aid incompatible with the single market.