The US Treasury warned that the move risks damaging “the important spirit of economic partnership between the US and the EU”, and Ireland has said it will appeal against the decision.
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Apple booked all the profits on the sale of the iPhone and other Apple products in Europe, the Middle East, Africa and India in Ireland.
In Apple’s case, that meant registering two subsidiaries in Ireland essentially to collect revenue from the company’s sales outside the USA while paying taxes to … no one.
However, Mr Hogan has said Commission decisions are – like those of Cabinet – subject to collective responsibility. But at an earlier Cabinet meeting on Wednesday he failed to persuade a group of independent lawmakers, whose support is vital for the minority government, to agree to fight the ruling that Apple must pay up to €13 billion in tax to Dublin. The review, whose details will be outlined in the coming days, will not look at the country’s 12.5 percent corporate tax rate, one of the lowest in the West.
He also rejected claims that Apple had any kind of special deal with the Irish government.
Apple CEO Tim Cook – the company’s former chief financial officer – has blamed US-EU politics for the ruling, but the EU president has argued that the ruling was based on “facts and existing rules” and wasn’t political, as Cook had implied.
Other lawyers, however, point out that Apple’s weird tax structure – involving companies with no physical head office – means its tax rulings probably do not have many close comparators.
The decision to hit the firm with retrospective taxes was met with indignation from Apple and the USA government.
However, European Competition Commissioner Margrethe Vestager has insisted it was wrong for Apple to have paid the equivalent of 1% corporation tax on its European profits in 2003 and that this was down to 0.0005% by 2014.
Mr Juncker’s remarks appeared created to reassure United States lawmakers, who have bickered for years over the treatment of off-shore income but now fear that the European Commission move will mean more profits earned by U.S. corporations flowing into European tax coffers. In effect, she told the USA that it might get a piece. In a statement, it argued that “it is not appropriate that European Union state aid competition rules are being used in this new and unprecedented way in the area of taxation, which is a member state competence and a fundamental matter of sovereignty”.
“We also accrued several billion in United States corporate tax on a deferred basis”, Sewell said. This has led to USA companies keeping more than $2 trillion overseas to avoid paying the US tax. As more transactions go cross-border, where should the profits be taxed?
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“It would be absurd to choose this territory of state taxation to attack the U.S.”, he said, adding that most of the commission’s punitive measures were against European companies.
