Tuesday

19th Mar 2024

Apple's tax deal illegal, EU commission tells Ireland

  • The European Commission is investigating Apple's tax arrangements in Ireland, as well as cases in the Netherlands and Luxembourg. (Photo: EUobserver)

Ireland's tax arrangement with software giant Apple constitutes illegal state subsidy, the European Commission has said.

In a letter made public on Tuesday (30 September), but sent to the Irish government in June, the EU executive stated that its "preliminary assessment" was that Ireland's agreement with Apple did "confer an advantage" on the firm.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"That advantage is obtained every year and on-going, when the annual tax liability is agreed upon by the tax authorities," the commission added, before concluding that there was "no indication that the contested measure can be considered compatible with the internal market."

The commission launched an investigation in June into the tax arrangements for Apple, as well as car manufacturer Fiat in Luxembourg and Starbucks in the Netherlands. The investigations are all ongoing, with the governments required to provide details about tax payments, the number of employees, and income declared by the respective companies.

The investigations are likely to last several years.

Should it win its case, the Commission has the power to force firms to pay a sum equivalent to the "unlawful aid" they received from governments.

Apple was revealed to be paying a tax rate of 3.7 percent, and a total of less than €20 million in taxes to the Irish tax authorities between 2010 and 2012 on their profits made outside the US, by designating their office in the city of Cork as the firm's international headquarters.

In question are the validity of agreements between the Irish tax authorities and Apple in 1991 and 2007 which calculate how much tax Apple is expected to pay. The EU executive states that the special tax rulings for individual companies must not result in them getting preferential treatment, and paying less than rival firms.

However, Apple denied that it was receiving special treatment from the Irish government, insisting that it had received "no selective treatment from Irish officials over the years".

"We're subject to the same tax laws as the countless other companies who do business in Ireland," the company added in a statement on Tuesday.

For its part, Ireland's finance ministry issued a statement that it was "confident that there is no breach of state aid rules" in its dealings with Apple.

Meanwhile, in its letter to Luxembourg's government, the Commission signalled that the Duchy's tax arrangement with car manufacturer Fiat were also in breach of state aid rules.

The EU executive estimates that tax avoidance and evasion in the EU costs about €1 trillion each year, while the bloc's competition chief, Joaquin Almunia, has described the practice of "aggressive tax planning" as "socially untenable" and contrary to the principles of the EU's single market.

With governments across Europe anxious to increase their tax revenues, a number of ministers have promised to close the loopholes that allow companies to pay minimal taxes.

Ireland on the defensive in Apple tax row

Ireland has come under fire for its low-tax regime amid US revelations that Apple and other large corporations are using EU-based subsidiaries to avoid paying taxes.

Dublin to scrap 'double Irish' tax loophole

Ireland is to scrap its controversial tax loophole, as EU countries agree new legislation to claw back the €1 trillion lost to tax cheats each year.

Apple faces massive Irish tax bill

The EU executive will announce how much the tech giant must pay back to Ireland, two years after it ruled that tax decisions in Dublin amounted to illegal state aid.

Borrell: 'Israel provoking famine', urges more aid access

70 percent of northern Gaza is facing famine, new data shows. There is one shower per 5,500 people, and 888 people per toilet. 'How can you live in these conditions?" asked Natalie Boucly of UNRWA at the European Humanitarian Forum.

Opinion

Potential legal avenues to prosecute Navalny's killers

The UN could launch an independent international investigation into Navalny's killing, akin to investigation I conducted on Jamal Khashoggi's assassination, or on Navalny's Novichok poisoning, in my role as special rapporteur on extrajudicial executions, writes the secretary-general of Amnesty International.

Latest News

  1. Borrell: 'Israel provoking famine', urges more aid access
  2. Europol: Israel-Gaza galvanising Jihadist recruitment in Europe
  3. EU to agree Israeli-settler blacklist, Borrell says
  4. EU ministers keen to use Russian profits for Ukraine ammo
  5. Call to change EIB defence spending rules hits scepticism
  6. Potential legal avenues to prosecute Navalny's killers
  7. EU summit, Gaza, Ukraine, reforms in focus this WEEK
  8. The present and future dystopia of political micro-targeting ads

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Join EUobserver

EU news that matters

Join us