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The European Commission this week has found Apple guilty of receiving undue tax benefits from Ireland worth up to €13-billion.
“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 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014,” ruled Commissioner Margrethe Vestager.
It was now up to Ireland to recover this amount, the Commission added.
“The Commission can order recovery of illegal state aid for a ten-year period preceding the Commission’s first request for information in 2013. Ireland must now recover the unpaid taxes in Ireland from Apple for the years 2003 to 2014 of up to €13-billion, plus interest,” it explained.
The European Commission noted that Ireland’s tax treatment allowed the Cupertino company to avoid taxes on almost all profits generated by products sold in the European Union at large.
The European Commission will require Apple to pay back €13-billion in tax benefits
“This is due to Apple’s decision to record all sales in Ireland rather than in the countries where the products were sold.”
The European Commission stressed that the ruling doesn’t call into question Ireland’s general tax system or its corporate tax rate.
It’s not the first time that the Commission has ruled against international firms dodging taxes in the EU either.
“In October 2015, the Commission concluded that Luxembourg and the Netherlands had granted selective tax advantages to Fiat and Starbucks, respectively,” it explained.
It found that both companies received tax breaks of between €20-million and €30-million each.
Featured image: Alex Zanutto via Flickr