Ireland has been told by the European Union that it must recover $14.5 billion from people in unpaid taxes from Apple.
Ireland does not want to recoup the taxes as it puts their special deal for multinationals in peril and the government have vowed to fight the decision.
The finding was publicized by the European Union’s competition arm in a landmark ruling.
The EU stated that Apple had been given preferential treatment by the Irish state and estimated that Apple were only paying one percent taxation far below the 12.5 percent Ireland claimed.
The Irish payback was 5,500 jobs in Ireland and the European headquarters of the greatest brand name in the tech industry. That may now be in jeopardy.
However, Tim Cook, the Chief Executive Officer of Apple, published an open letter, earlier today on the company's site, reiterating its "committment" Ireland.
Cook wrote "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."
He added "The Commission’s move is unprecedented and it has serious, wide-reaching implications. It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been. This would strike a devastating blow to the sovereignty of EU member states over their own tax matters, and to the principle of certainty of law in Europe."
His open letter ended saying "We are committed to Ireland and we plan to continue investing there, growing and serving our customers with the same level of passion and commitment. We firmly believe that the facts and the established legal principles upon which the EU was founded will ultimately prevail."Read more Irish tech news here
Apple were effectively paying taxation on almost all their profits in Europe by routing the payments for their products through Ireland where the tiny tax rate based on givebacks and special deals were allowed. The commission stated that this was achieved by channeling sales through a ‘so-called’ head office in Ireland with “no employees, no premises and no real activities,” Commissioner Margrethe Vestager said.
This gives Apple a “significant advantage” over other businesses the commission found.
“Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules,” said Vestager. “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.”
Watch back: European Commissioner for Competition press briefing in Brussels on Apple Ireland tax probe ruling. https://t.co/3Aj51kDS5i— RTÉ News (@rtenews) August 30, 2016
The US authorities however were also not pleased by the massive fine which they saw as an intrusion on American business practices overseas,
“As we have said, we believe that retroactive tax assessments by the Commission are unfair, contrary to well-established legal principles, and call into question the tax rules of individual Member States,” the Treasury said in a statement. “The Commission’s actions could threaten to undermine foreign investment, the business climate in Europe, and the important spirit of economic partnership between the US and the EU. We will continue to monitor these cases as they progress, and we will continue to work with the Commission toward our shared objective of preventing the erosion of our corporate tax bases.
Minister for Finance Michael Noonan stated Ireland would appeal the decision "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...”