The European Union (EU) has on Tuesday directed Apple to pay a record sum of 13 billion euros ($14.5 billion) in back taxes in Ireland.
This is even as the union stated that deals allowing the US tech giant to pay almost no tax were illegal, in a crackdown on fiscal loopholes that also risks inflaming tensions with the U.S. Treasury.
On Tuesday, the EU regulator revealed that the world’s richest company benefited from selective tax treatment that gave it an unfair advantage over other businesses, a statement that has angered Washington.
Ireland has been seeking to attract multinationals by offering extremely favourable tax conditions, known as sweetheart deals, but EU Competition Commissioner Margrethe Vestager said Apple’s broke EU laws on state aid.
“This decision sends a clear message. Member states cannot give unfair tax benefits to selected companies, no matter if European or foreign, large or small,” Vestager said, adding that “this is not a penalty, this is unpaid taxes to be paid.”
The tax repayment order – by far the largest in EU history – follows a 3-year inquiry into whether Dublin’s tax breaks for Silicon Valley titan Apple were against the law.
Reacting to the ruling, Apple and the Irish government disclosed that they would appeal against the European Commission verdict, while the US Treasury said it could undermine its economic partnership with the EU.
Apple said: “we will appeal and we are confident the decision will be overturned.”
“It will have a profound and harmful effect on investment and job creation in Europe.”