Ireland should collect 13bn Euros from Apple

European Commission has ruled that Ireland should recover up to £11bn (€ 13bn) from Apple in back taxes. Further to a three-year investigation, it has concluded that the US firm’s Irish tax benefits are illegal.

The Commission also said Ireland enabled the company to pay substantially less than other businesses, in effect paying a corporate rate of no more than 1%. Ireland and Apple both said they disagreed with the record penalty and would appeal against it.

“Member states cannot give tax benefits to selected company – this is illegal under EU state aid rules”, said Commissioner Margrethe Vestager.  The standard rate of Irish Corporate tax is 12.5%. The commission’s investigation concluded that Apple had effectively paid 1% tax on its European profits in 2003 and about 0.005% in 2014.

Ms. Vestager said that the tax agreement reached between Ireland and Apple meant that the company’s taxable profits “did not correspond to economic reality”.

Apple said the decision would be harmful, for jobs. “The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process. The Commission’s case is not about how much Apple pays in taxes, it’s about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe.  Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned” the company said in a statement.

Last year, the commission told Netherlands to recover €30m (£25.6m) from Starbucks, while Luxembourg was ordered to claw back a  similar amount from Fiat.

The US Treasury said last week that the European Commission was in danger of becoming a “supranational tax authority”, and the latest ruling could “undermine foreign investment, the business climate in Europe and the important spirit of economic partnership between the US and the EU.”

Margrethe Vestager, the Danish commissioner who is leading the charge against Apple, is eyeing up to take on Google.