Apple ordered to pay over €13bn in European tax ruling

Commissioner Margrethe Vestager
Commissioner Margrethe Vestager

The European Commission has concluded that Ireland broke EU state aid rules by granting undue tax benefits of up to €13 billion to US tech giant Apple, which must now be collected from the firm with interest.

At a press conference, the Commission said it had ordered Ireland to recover the unpaid taxes from Apple for the years 2003-14.

The Commission can only order recovery of illegal state aid for a ten-year period preceding its first request for information in 2013.

Commissioner Margrethe Vestager, in charge of competition policy, stressed in response to press questions: “This is not a penalty - this is unpaid taxes to be paid.”

According to the European Commission, the tax treatment in Ireland enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire European single market.

Ms Vestager explained: “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.”

The state aid investigation launched in June 2014 found that two tax rulings issued by Ireland to Apple “substantially and artificially” lowered the tax paid by Apple in Ireland since 1991.

The rulings endorsed a way to establish the taxable profits for two Irish incorporated companies - Apple Sales International and Apple Operations Europe - which did not correspond to economic reality.

Almost all sales profits recorded by the two companies were internally attributed to a “head office” which existed only on paper.

These profits were not subject to tax in any country under specific provisions of Irish tax law which are no longer in force.