Ireland gave Apple $14.5 billion in illegal tax breaks says European Commission

Ireland is in big trouble with the European Commission (EC) over tax breaks that it gave Apple to lure the tech giant to set up shop in the country. According to the EC, the tax breaks that Ireland gave to Apple are worth up to €13 billion or $14,518,205,000 in USD to be exact. The EC says that tax breaks of this sort are illegal under EU state rules.

Commissioner Margrethe Vestager, in charge of competition policy, said, "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."

The EC report found that the illegal tax breaks given to Apple have substantially and artificially lowered the tax that Apple paid in Ireland since 1991. These breaks were given to two firms that are incorporated in Ireland and are part of the Apple group and known as Apple Sales International and Apple Operations Europe. The assessment of the EC shows that these two firms had profits recorded and attributed to a head office, but the head offices existed only on paper.

The findings of the EC means that Ireland will have to recover unpaid taxes from Apple for the years 2003 to 2014, the amount could total the roughly $14.5 billion in underpaid taxes plus interest on the amount. The EC goes on to say that the tax breaks given to Apple by Ireland allowed Apple to avoid taxation on almost all of the profits it generated by sales of its products in the entire EU single market. This is because Apple recorded all sales in Ireland rather than the countries where the products were actually sold.

SOURCE: Europa