EU tax investigation concludes, Apple hammered with $14.5 billion bill
On Tuesday, the European Commission handed down its biggest tax penalty yet, ordering Apple to pay 13 billion euros ($14.5 billion) in back taxes — but both Ireland and Apple are appealing the ruling.
The European Commission has declared that tax rates on European profits were illegally low at 0.005 percent in 2014, and 1 percent in 2003. The ultimate amount to be paid to Ireland may drop, as other nations in the European Union demand a piece of the demand.
"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.
The European Commission is the European Union's antitrust and tax agreement investigative body. The agency has been examining Apple's tax deals with Ireland since 2013, alleging that the Irish government provided Apple favorable terms in order to attract jobs and money.
The Commission also declared that the tax arrangement between Ireland and Apple was "reverse engineered" on-the-fly when it was created, guaranteeing a minimal tax bill.
Ireland's government generally disagrees with the European Commission's assessment, and said that the tax system under fire by the Commission no longer applies, and is irrelevant. Apple claims that it pays Ireland's 12.5 percent tax rate on the revenue it generates in the country.
Both Ireland and Apple have announced intentions to file an appeal against the commission's ruling.
"The European Commission has launched an effort to rewrite Apple's history in Europe, ignore Ireland's tax laws and upend the international tax system in the process," Apple said in a statement. "The Commission's case is not about how much Apple pays in taxes, it's about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe."
The U.S. government has examined the matter as well. In the middle of August, a study ordered by U.S. Treasury Secretary Jack Lew declared that that the European Commission is turning into a "supranational tax authority," and undermining "tax certainty."
Amazon, Google, Ikea, McDonalds, and Starbucks are all facing European Commission tax probes for similar reasons in other countries.
Regardless of the ultimate determination, Apple has said that they will remain in Ireland.