The European Commission has hit Apple with a record-breaking tax penalty of up to €13bn after finding the US tech group enjoyed a quarter of a century of illegal state support from Ireland that distorted competition in Europe. FT.com explains the dispute.
European Commission - State aid: Ireland gave illegal tax benefits to Apple worth up to €13 billion | europa.eu 30 August 2016: "The European Commission has concluded that Ireland granted undue tax benefits of up to €13 billion to Apple. This is illegal under EU state aid rules, because it allowed Apple to pay substantially less tax than other businesses. Ireland must now recover the illegal aid. Commissioner Margrethe Vestager, in charge of competition policy, 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. 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."..."
Vestager said under the tax avoidance scheme Apple was allowed to allocate almost all sales profits to a head office that “only existed on paper.” She said this head office “has no employees, it has no premises, and it has no real activities ... [and] was subject to no tax in Ireland or elsewhere.”
Customer Letter - Apple (IE) | apple.com: "... The Commission’s move is unprecedented and it has serious, wide-reaching implications. It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been. This would strike a devastating blow to the sovereignty of EU member states over their own tax matters, and to the principle of certainty of law in Europe. Ireland has said they plan to appeal the Commission’s ruling and Apple will do the same. We are confident that the Commission’s order will be reversed ..."--Tim Cook, Apple Inc.
See also:
- Apple’s $14.5 Billion EU Tax Ruling: What You Need to Know | Bloomberg.com
- Apple ordered to pay up to €13bn after EU rules Ireland broke state aid laws | TheGuardian.com
- Apple Finds Out It Took the Tax Game Too Far | Bloomberg.com
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