- The European Commission has ruled that Apple and Ireland have agreed to illegal tax orders. Using a complex network of lower tax payments, the multinational paid only a small percentage of its profits in Europe for several years in Ireland in terms of corporate taxes: 1% of its profits in 2003 and 0.005% in 2014 (the company tax in Ireland is 12.5%).
The European Commission has ordered Apple to pay back €13 billion plus interest. The figure corresponds to the years 2003 to 2014. In 2014, the European Commission began investigating Apple’s taxes, and the law allows it to go back ten years. However, the Commission finds that Apple has benefited from illegal tax orders since 1991.
EU Competition Commissioner Margrethe Vestager explains that what Apple has to pay is not a fine, but unpaid taxes. Vestager adds that the countries of the European Union cannot provide tax benefits to companies.
The company redirected profits to two subsidiaries in Ireland (Apple Sales International and Apple Operations Europe) and from there to a “head office”. These offices existed only on paper, they had no activity, so the European Commission has ruled that they could not have these imputed profits. Thanks to this network, Apple paid almost no taxes, only a small percentage in Ireland and the rest for what it earned in Europe, nowhere.
Both the company and the Irish Government have announced that they will appeal to the European Court of Justice.