All profits from Apple’s European sales had been recorded by Apple Sales International in Ireland, which paid nearly no tax under a sweetheart deal with the Irish state.
The commission found Apple guilty of avoiding “taxation on nearly all profits generated by sales of Apple products in the entire European Union. due to Apple’s decision to record all sales in Ireland rather than in the countries where the products were sold”. The country’s finance ministry argues that the full amount of taxes due were paid by Apple and no state aid was provided.
The European Commission has finally ruled in its investigation into the tax affairs of computing giant Apple, and says that Ireland has to recoup up to €13 billion in back taxes from the USA firm.
Apple, which with Ireland, has already said it will appeal the decision, paid a tax rate on European profits of between 0.005 and 1 percent, the Commission said.
Apple is claimed to have received the illegal benefits since 1991, but investigators are only able to demand the Irish government recover up to ten years in unpaid taxes, dating back from the EC’s first request for information in 2013.
Irish finance minister Michael Noonan said that he “disagrees profoundly” with the commission’s findings, and has said Ireland is now seeking to appeal the decision.
“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″.
“The most profound and harmful effect of this ruling will be on investment and job creation in Europe”, he said.
For example, if other countries were to require Apple to pay more taxes on the profits recorded by Apple Sales International and Apple Operations Europe for this period.
When asked about the EU’s concerns about an unfair playing field within Europe, Earnest says he won’t discuss internal European Union business, but that President Barack Obama is committed to ensuring American companies and taxpayers are treated fairly.
The final tax bill could be lower if Apple decides to pay taxes to other countries, or funnel more of its profit to its US companies.
The Commission concluded that Apple had avoided paying nearly all tax on hundreds of millions of euros in profits in Europe over the last decade.
The EU is also probing the tax arrangements of Amazon and McDonald’s.
In the letter, Cook says Apple expects the EU’s ruling to be reversed after its appeal.
“All companies, big or small, should pay taxes where they make their profits”.
Apple employs 5,500 workers, or about a quarter of its European-based staff in the Irish city of Cork, where it is the largest private-sector employer. “Ireland does not do deals with taxpayers”.
“Member States can not give tax benefits to selected companies”, Commissioner Margethe Vestager says in that statement.
“Illegal aid harms competition”, she said.
Apple’s local representatives were unable to offer comment at this time.
He accused European regulators of trying to undermine the integrity of Ireland’s tax system and subverting rights reserved for sovereign EU states.
“Only a fraction of the profits of Apple Sales International were allocated to its Irish branch and subject to tax in Ireland“.