Brussels is forcing Apple to pay back billions of euros in taxes after the competition watchdog ruled the tech giant broke antitrust laws by agreeing a so-called sweetheart tax deal in Ireland.
Apple has been handed a tax bill of up to €13bn (£11.1bn) by the European Competition Commission following a two year investigation into its arrangements in Ireland led by the hardline chief of the antitrust watchdog, Margrethe Vestager. She said its affairs in Ireland amounted to state aid.
The long-running saga, one among many pitting the European authorities against US tech companies, has drawn the ire of US Treasury officials who cautioned the crackdown on companies would create a "chilling effect" on cross border investment in an unprecedented critique last week.
Handing down the decision today, Vestager 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 one per cent on its European profits in 2003 down to 0.005 per cent in 2014.
The EU has ordered Ireland to recover the unpaid taxes from up to a decade before the investigation began, covering the period from 2003 to 2014.
The bill is the latest handed out following a landmark case against Starbucks and Fiat last year, which paved the way for further scrutiny of corporate tax arrangements across Europe.
However, Vestager said in a press conference that the issue differed slightly from these cases as it was not about transfer pricing but allocation of profits.