The European Commission has ordered Ireland to collect up to €13 billion ($14.5 billion) from Apple, plus interest, ruling that the tech giant received illegal tax benefits from the Irish government. The decision brings a close to one phase of an ongoing investigation into taxt deals carried out by US multinationals across Europe.
In a press release announcing the decision, the European Union's antitrust regulator said Apple's two tax deals with the Irish government "substantially and artificially lowered" the tax that Apple has paid to Ireland since 1991. The 1991 rulings allowed Apple to declare profits generated by two Irish subsidiaries — Apple Sales International and Apple Operations Europe. In the ruling announced today, the EC said that the profits reported by these companies "did not correspond to economic reality," and that Ireland's tax deal was illegal because it gave Apple "a significant advantage over other businesses that are subject to the same national taxation rules."
"Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules," Commissioner Margrethe Vestager, head of EC competition policy, said in a statement. "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. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014."
European regulators have launched several investigations into so-called "sweetheart deals" that some member states offer to multinational companies. The arrangements allow companies to shift profits and exploit loopholes in order to pay lower effective tax rates. Tuesday's decision against Apple, first reported on Monday, comes after the Commission issued a similar ruling against Starbucks and Fiat in 2015, ordering both companies to pay up to €30m in unpaid taxes to the Netherlands and Luxembourg, respectively.