Apple has been accused of tax avoidance from the period 1991-2015 and experienced a lengthy investigation by the EU Commission. It was alleged that Apple avoided tax on almost all sales within the EU’s single market and set a base in Ireland instead of the product’s point of sale to avoid paying a higher tax rate. According to the EU Commission, Apple paid a paltry tax rate of 1% in 2003 which dropped to 0.005% in 2014. The EU Commission finally came to a rather damning verdict and instructed Apple to pay up to 13 billion Euros in unpaid taxes. The investigation showed Ireland granted illegal tax breaks to Apple which clearly contravened the European rules. The EU Commission ruled:
“The European Commission has concluded that Ireland granted undue tax benefits of up to €13 billion to Apple.”
“This is illegal under EU state aid rules, because it allowed Apple to pay substantially less tax than other businesses. Ireland must now recover the illegal aid.”
“The commission can order recovery of illegal state aid for a 10-year period preceding the commission’s first request for information in 2013. Ireland must now recover the unpaid taxes in Ireland from Apple for the years 2003 to 2014 of up to €13 billion, plus interest.”
“The tax treatment in Ireland enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire EU Single Market. This is due to Apple’s decision to record all sales in Ireland rather than in the countries where the products were sold.”
“This structure is however outside the remit of EU state aid control. If other countries were to require Apple to pay more tax on profits of the two companies over the same period under their national taxation rules, this would reduce the amount to be recovered by Ireland.”
Commissioner Margrethe Vestager was scathing in her comments of both Apple and the Irish government:
“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.”
Thank you The Guardian for providing us with this information.
