The European Union’s antitrust body has slapped a fine on Apple worth up to €13 billion ($14.5 billion), plus interest, following a three-year investigation into the corporation’s sweetheart tax pact with the Irish government. Apple and Ireland are likely to appeal against the decision.
E.U. competition commissioner Margrethe Vestager has ruled that deals between the company and the Irish tax authorities in 1991 and 2007 contravened E.U. rules on state aid, which outlaw preferential treatment for individual companies. The deals enabled Apple to channel European sales through Ireland and benefit from an ultra-low tax bill — sliding from 1% of its European profits in 2003 to 0.005% in 2014. Now Apple will have to pay back the money they pocketed from those arrangements, covering the period 2003 to 2014, with the Irish government ordered to calculate the exact amount, and recover the unpaid taxes, plus interest.
Vestager said in a statement Tuesday: “Member States cannot give tax benefits to selected companies — this is illegal under E.U. 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% on its European profits in 2003 down to 0.005% in 2014.”
Other U.S. companies and the U.S. government have been following the case with growing unease. The U.S. Treasury said last week the E.U. executive arm, the European Commission, would be acting as a “supra-national tax authority” if it overrides the tax decisions of individual countries. The move could spark a trade war between the two political blocs.
Tuesday’s E.U. antitrust action can be seen within the context of a general clamp-down on alleged wrong-doing by U.S. corporate giants across Europe. For example, there were legal moves against Google in France in May, and in Spain in June, both related to alleged tax evasion, and separate action by the E.U. against Google in July concerning alleged anticompetitive behavior.