European Commission orders Apple to pay billions for tax breaks in Ireland

The multinational technology company has been ordered to pay up to 13 billion euros ($14.5b).

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European Commission orders Apple to pay billions for tax breaks in Ireland Vestager: "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."
By  Alexander Sophoclis Pieri Published  August 30, 2016

Following the completion of a state aid investigation that was initiated back in June 2014, the European Commission has concluded a special scheme undertaken by Apple to pipe profits through Ireland was illegal state aid.

The investigation found that two tax rulings issues by Ireland to Apple have significantly and artificially lowered the tax paid by the multinational technology company in Ireland since 1991.

At the heart of the case, two Irish incorporated companies of the Apple group, Apple Sales International and Apple Operations Europe, recorded virtually all sales profits internally as attributed to ‘head office'.

As a result these profits were credited to the ‘head offices', which were not subject to tax in any country under specific provisions of the Irish tax law, which are no longer active.

The Commissions assessment show that these ‘head offices' not only existed solely on paper, but could also have not generated such profits.

Margrethe Vestager, the Commissioner in charge of competition policy, shared: "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.

She added: "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 per cent in 2014."

The European Commission has ordered the recovery of illegal state aid for a 10-year period preceding its initial request for information in 2013. Furthermore, Ireland is now tasked in recovering unpaid taxes from Apple for the years 2003 to 2014 of up to 13 billion euros ($14.5b).

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