An “unfair” tax advantage granted to Apple by Ireland over the years means the company could owe more than $14.5 billion in unpaid taxes, the European Commission announced today. Both Apple CEO Tim Cook and the Irish Finance Ministry said they plan to appeal that decision.
Officials with the European Commission said their investigation, first launched in 2013, found a deficiency stemming from Ireland’s past methods for splitting company profits between different entities for tax purposes. In Apple’s case, most of the company’s profits were counted as being “stateless” rather than Europe-based, meaning they were not subjected to the same levels of taxation, according to the officials.
In 2011, for example, commission officials said that Ireland-based Apple Sales International reported $17.8 billion in European Union profits, most of which went untaxed, with an effective Irish tax rate of $557 for every $1.1 million in profit. In 2014, Ireland’s effective tax rate on that division of Apple was even lower, amounting to $56 per $1.1 million in profits, the commission said.
EC: Ireland Gave ‘Illegal State Aid’
“Apple’s tax benefits in Ireland are illegal,” European Commissioner Margrethe Vestager said in a press conference held in Brussels today. The commission’s investigation found that Ireland had “artificially reduced Apple’s tax burden for over two decades,” she said.
Those tax policies amounted to “illegal state aid” that gave Apple an unfair advantage over other companies operating in Europe, Vestager added. Apple has had a presence in Ireland since 1980, when it opened a factory in Cork. However, the commission can only seek back taxes for the past decade. The tax deficiency identified by Vestager covers the years 2003 through 2014.
Almost all of Apple’s tax bill is due to the fact that Ireland attributed most of the company’s European profits to the “so-called head office” rather than…