While the 13 billion-euro figure represents the EU’s estimate of how much Ireland should claw back from Apple, the commission said the actual figure could be less if other nations used the information gleaned by the European Union to claim a share of taxes. He added that the commission’s antitrust regulator has gone too far in suggesting that Apple has unfairly avoided almost all corporate taxes for the last 10 years.
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“Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years”, said Competition Commission Margrethe Vestager, whose crackdown on mainly USA multinationals has angered Washington which accuses Brussels of protectionism.
In fact, the tax treatment in Ireland enabled Apple to avoid taxation on nearly all profits generated by sales of Apple products in the entire EU Single Market. Apple has 5,500 jobs in the Irish city of Cork, which accounted for a quarter of the total number of jobs made available in Europe.
Ireland has positioned itself over the past two decades as an attractive place for worldwide companies, especially those in the technology sector, to set up their European headquarters, largely due to its low corporate tax rate.
And yet the country’s government said it would appeal the decision, arguing it had granted no favorable treatment to Apple.
The company was paying tax in Switzerland, according to the statement released by the EC.
Apple said in a statement that it had followed the law and paid every cent of the taxes it owed. After Apple pays tax in the country profits are then shifted to a tax haven overseas, accoording to a EC diagram (below).
In a letter addressed to customers today, APPLE says the EU’s decision will have “serious, wide-reaching implications”.
The commission’s investigation found that Ireland had “artificially reduced Apple’s tax burden for over two decades”, she said.
The White House also weighed in today, with Press Secretary Josh Earnest saying he was “concerned about a unilateral approach” and said it could “undermine progress that we have made collaboratively with the Europeans to make the worldwide taxation system fair”, Reuters reported.
In the US, Dellaware acts as one of the largest (and least known) tax havens in the world.
Apple could owe over $26 billion to the U.S. tax authorities, of the $74 billion in earnings it shifted to Ireland between 2009 and 2012, according to the senate committee’s findings (pdf, p. 2).
“If my effective tax rate was 0.05%, then falling to 0.005%, I would have the feeling that maybe I should have a second look at my tax bill”. Apple and Ireland rejected the accusation.
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That last tax rate meant that for each 1 million euros in profits, Apple paid just 50 euros in taxes, Vestager told a news conference. Cook has complained that high US taxes have discouraged the company from bringing those earnings home. But spending it would mean bringing it back to the USA and paying taxes on it.
