Apple will appeal the decision with the support of the Republic of Ireland.
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The multinational corporation is said to have secured a tax advantage not available to other companies, which ultimately amounted to state aid and breached European Union antitrust law.
Both Apple and Ireland’s Finance Minister Michael Noonan have vehemently rejected the EU Commissioner’s ruling.
The commission left him with “no choice” but to move toward an appeal before the European Union courts. Cook says the ruling could lead to job losses in Europe.
Tech giant Apple has been handed a landmark €13 billion bill by the European Commission in relation to unpaid taxes in Ireland.
“The commission’s case is not about how much Apple pays in taxes, it’s about which government collects the money”.
Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe.
Cody said Apple’s profits “that are not generated by their Irish branches – such as profits from technology, design and marketing that are generated outside Ireland – can not be charged with Irish tax under Irish tax law”. “We will appeal and we are confident the decision will be overturned”, the company said after the commission’s decision.
The EC ordered Starbucks and Fiat Chrysler to repay millions in taxes last October and is also investigating the tax arrangements in Europe of Amazon, McDonald’s and Google.
The huge bill for back taxes – to which interest must be added – was far from what was expected.
Ireland’s tax collection agency, the Revenue Commissioners, insists that Apple hasn’t dodged a penny of lawfully calculated tax in Ireland.
However, the US Treasury Department warned that EU’s Apple ruling threatened the existing bilateral “spirit of economic partnership”.
The EU’s pursuit of Ireland’s tax arrangement with Apple has riled the US Treasury which last week accused the Commission of being close to becoming a “spura-national tax authority” by overriding the tax agreements of its member states.
“We will continue to monitor these cases as they progress, and we will continue to work with the Commission toward our shared objective of preventing the erosion of our corporate tax bases”. It also added fuel to arguments that the region has been using its regulatory powers to put pressure on US firms.
While Apple’s tax troubles are grabbing the headlines today, it’s not the only firm in the EU’s firing line. Apple’s major European hub, based on the outskirts of Cork, is now being expanded and will employ an 1,000 people by 2017.
“The irony is that there will be domestic pressure to accept this money, but what Ireland knows is that, in this instance, the decision makes it much less attractive to invest in”, Mr Crofts said.
The arrangement was terminated previous year when Apple Sales International and Apple Operations Europe changed their structures, the inquiry found.
Apple fell as much as 2.3 per cent in early USA trading and was down 2 per cent on the news in Frankfurt.
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Naeem Aslam, chief market analyst at broker Think Markets, said: “This is really an eye popper for other firms which also have a favourable deal with Ireland and have their operation in this country”. “It’s unusual to think that Ireland would not want to collect more taxes from Apple, but Ireland’s primary concern here is protecting domestic investment and jobs”.
