EU Commission Orders Apple to Repay $14.5 Billion in Illegal Tax Benefits

Apple tax scheme ireland

Ireland has been granting Apple undue tax benefits; therefore, the iPhone maker has to pay up to €13 billion ($14.5 billion) in back taxes to the Irish government, the European Commission has ruled today.

After two years of in-depth investigation of Apple’s tax affairs in Ireland, the EU Commission has concluded that two tax rulings issued by Ireland to Apple have “substantially and artificially lowered” the tax the iPhone maker has paid in the country since 1991.

Commissioner Margrethe Vestager, in charge of competition policy, said: “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. 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 Irish ruling gave the green light for Apple to establish the taxable profits for two Irish incorporated companies of the Apple group (Apple Sales International and Apple Operations Europe), which didn’t correspond to economic reality, since almost all sales profits recorded by the two Irish companies were internally attributed to a “head office”, which existed only on paper, the press release issued by the EU Commission reads.

The issue is that these “head offices” existed only on paper so they couldn’t generate such profits, and that those profits allocated to these “head offices” were not subject to tax in any country under specific provisions of the Irish tax law, which are no longer in force.

Therefore, a calculation of the tax rate Apple has effectively been paying shows that Apple’s tax rate declined from 1% in 2003 to 0.005% in 2014 on the profits of Apple Sales International. Since tax sweetheart deals are illegal under EU state aid rules, the Commission has instructed Ireland to recoup the illegal state aid it gave to Apple between 2003 and 2014. The amount outlined by the commission is $14.5 billion, plus interest.

Technology enthusiast, rocker, biker and writer of iPhoneinCanada.ca. Follow me on Twitter or contact me via email: istvan@iphoneincanada.ca

  • Ashley Mann

    Don’t buy into Apples marketing. It’s just another technology company with a CEO using and exploiting tax loop holes. The next time anyone from Apple tells you how much they care, remember how Apple chose to not pay tax to benefit people, to benefit society. This is the real Apple. This is the real Tim Cook. At the up coming Keynote, look past his smile and see him for what he has chosen to do: he chose for Apple to not pay taxes, money that could benefit all people in every country. Seeing the real Tim Cook is this light makes one thing very clear: he doesn’t give a shit about you or anyone else.

  • Harold Mitchell

    Absolutely agree….look how he’s kowtowing to the Chinese government, not caring a bit about China’s human rights abuses…all in aid of the mighty dollar. Although this is his right as CEO of a multinational company, he is a complete HYPROCRITE to act as a benevolent master of all human rights causes while his actions betray this fictional self portrayal.

  • Jeremy Spencer

    Or $18.9B CAD

  • Flash

    I’m guessing you guys have zero clue how to run a company – again, Apple is the spotlight yet Samsung, Microsoft and any other multinational company has the same practices – the whole point of a corporation is to make money for its share holders.

  • Dany Quirion

    Anyone running a corporation would do the exact same, its all about your shareholders.

  • anon

    It might be how a CEO runs a company but is it morally right? Harold Mitchell is right, Tim Cook is a hypocrite. He preaches fairness but milks the system any which way he can. Legal? Yes. Moral? No.

  • Dany Quirion

    Apple has bene doing it for decades why blaming it all on Tim? Steve started it

  • Brad Fortin

    How, exactly, is Tim Cook responsible for China’s human rights abuses? Isn’t that China’s responsibility? or the responsibility of the companies committing the abuses, like Foxconn/Pegatron?

  • Bafoon

    And you know what tools you have to combat this “fraud”. Don’t buy apple products; don’t visit apple websites; reduce your consumption of apple media; thereby reducing their social media standing and sales throughput. They loose money, and hurts them the most. And eventually, maybe, shut down.

    You can do this – starting today – DO IT ASHLEY, DO IT! SHOW US THE MORAL RIGHTOUS WAY!! GTFO and never come back, brother!

  • Bafoon

    Can you name me 3 socially and morally responsible CEO’s?

    And are you a moral person? Please answer honestly.

  • Harold Mitchell

    Taxes paid will benefit the citizens of Ireland for, amongst other things, social programs. Tim Cook fancies himself as a lead player on the world stage in the promotion of human rights. But behind the word and self promotion look at the deeds. Look how he’s kowtowing to the Chinese government, not caring a bit about China’s human rights abuses…all in aid of the mighty dollar. Although this is his right as CEO of a multinational company, he is a complete HYPROCRITE to act as a benevolent master of all human rights causes while his actions betray this fictional self portrayal.Edit (in 16 minutes)

  • Brad Fortin

    You’ve said absolutely nothing that answers my questions.