The European Commission said on Tuesday (30 August) that US tech company Apple must repay €13 billion in back taxes after ruling that a series of Irish tax deals were illegal.
“Two tax rulings granted by Ireland have artificially reduced Apple’s tax burden for over two decades, in bridge of EU State Aid rules,” EU Competition Commissioner Margrethe Vestager said in a statement.
According to Vestager, Apple’s “selective treatment” in Ireland gave the US tech giant a “significant benefit compared to other companies.”
Both rulings allocated the profits between Apple’s Irish branch, which is subject to the normal 12.5% Irish corporate tax, and the company’s head office, Vestager told reporters at a press conference.
“Or I should say so-called head office,” she continued, “because it only existed on paper: It has no employees, it has no premises, and it has no real activities”. This allowed Apple’s head office to be subject to no tax, whether in Ireland or elsewhere, Vestager said.
Indeed, until 2013, Irish law allowed for “stateless companies” which are not subject to taxation. And a “vast majority of profits” generated by Apple was attributed to the so-called head office.
“The effective tax rate fell to a bare 0.005% by 2014,” Vestager said, explaining that Apple only paid €50 per million in profits.
Irish government, Apple to appeal ruling
The Irish government reacted straight after the announcement, saying that Ireland has “no choice” but to appeal against the European Union ruling.
“The decision leaves me with no choice but to seek cabinet approval to appeal the decision before the European Courts,” Ireland Minister for Finance Michael Noonan said in a government statement.
Apple also issued a statement, saying that they will “appeal and we are confident the decision will be overturned“.