EU warns Apple’s tax breaks in Ireland may be illegal

The European Commission is building a case that Apple’s generous tax arrangement in Ireland constitutes unlawful state aid.

In a 21-page report published Tuesday, European Union regulators warned Apple may have to pay back taxes if the breaks granted to it by the Irish government are found to violate EU law. Though its findings are still preliminary, the group has concluded that the Irish government gave Apple special treatment over other companies, which may in turn have given the country an advantage over the rest of the European Union.

“The Commission is of the opinion that through those rulings the Irish authorities confer an advantage on Apple,” Joaquín Almunia, vice-president of the European Commission, wrote in the report. “That advantage is obtained every year and on-going, when the annual tax liability is agreed upon by the tax authorities in view of that ruling.”

Almunia asked Ireland to provide more information about its dealings with Apple. The company insisted it had been taxed fairly.

“Apple has received no selective treatment from Irish officials over the years,” the company said in a statement on Tuesday, according to the New York Times. “We’re subject to the same tax laws as the countless other companies who do business in Ireland.”

EU regulators are scrutinizing tax rulings from the Irish government in 1991 and 2007 for Apple Operations Europe and Apple Sales International, two overseas subsidiaries. The Irish government left a tax agreement struck with Apple in 1991 in place until 2007, far longer than most European countries would have allowed. In the intervening years, Apple’s sales skyrocketed as its tax liabilities in Ireland remained unchanged.

Although vast sums of money are at stake, the case could take years to resolve, the New York Times noted.

Apple’s tax practices have also come under fire on U.S. soil. Apple CEO Tim Cook was forced to defend the company’s tax practices at a U.S. Senate hearing last year.

“We pay all the taxes we owe — every single dollar,” he told the Senate’s Permanent Subcommittee on Investigations.

Apple’s tax arrangement in Ireland is being scrutinized by the EU. Last year, Apple CEO Tim Cook testified before the U.S. Senate about the company’s practices. (Photograph by Chip Somodevilla/Getty Images)


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  • Russell

    “We pay all the taxes we owe — every single dollar,” he told the Senate’s Permanent Subcommittee on Investigations.”

    From 1997 to 2013, Apple has been getting a 50% tax break from Cupertino.
    In 2014 it has been lowered to 35%. Based on 2012 revenues, they’re receiving a $4.4 million a year rebate. Before that it was $6.2 million.

    I wonder how the thousands of other business owners in Cupertino feel if they knew a company as rich as Apple continues to get such a discount while they don’t.