The European Commission announced on Tuesday that Apple had benefited from special tax arrangements in Ireland, and the member state must seek to recover $14.5 billion in unpaid taxes, covering 2003 to 2014.
Apple publicly criticized the decision, claiming it would lead to a “profound and harmful” impact on European investment. Ireland’s finance minister Michael Noonan also disagreed with the report, announcing that he would seek to appeal the decision.
“Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules,” said commissioner for competition Margrethe Vestager in a statement. “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.”
Apple’s arrangement gave it very favorable tax rates. The commission’s investigation found that the company paid an effective corporation tax rate on European profits of one percent in 2003, but this dropped to just 0.005 percent in 2014.
“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 sent to the BBC. “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.”
It’s not the first time Apple has clashed heads with authorities over tax codes. In December, the company publicly agreed to pay Italy $348 million in back taxes, after an investigation into whether the company was filtering its revenue in the country through Ireland. Later that month, CEO Tim Cook criticized the American tax code in an interview with Charlie Rose on 60 Minutes.
“I disagree profoundly with the Commission,” Noonan said in a statement. “The decision leaves me with no choice but to seek cabinet approval to appeal. This is necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation.”
Photos via Getty Images / Andrew Burton