Apple ordered to pay $14.5bn in Irish back taxes after European probe

US technology giant Apple has been ordered to pay up to €13bn ($14.5bn) in back taxes to Ireland after a European probe. Apple faces the record bill after the European Commission (EC) ruled that a special scheme to route profits through Ireland was illegal state aid. The tech giant’s tax arrangements enabled it to pay a tax rate of as little as 0.005% on its European profits in 2014, according to the probe. That is just €50 in taxes on every €1m of profit. Ireland’s finance minister Michael Noonan said he disagreed “profoundly” with the decision and would seek Cabinet approval for an appeal. The sum to be paid by Apple is 40 times bigger than any previous demand by the EC in such a case.

Member states cannot give tax benefits to selected companies - this is illegal under EU state aid rules.

Commissioner Margrethe Vestager

It could be reduced if other countries seek more taxes themselves from the US tech giant. The probe found that Apple’s profits were routed via Ireland to virtual head offices that had no employees, no premises and carried out no real activities. These profits were not subject to tax in any country under provisions of Irish law that are no longer in force. It meant that one subsidiary, Apple Sales International, paid a tax rate of just 1% in 2003, declining to 0.005% by 2014. Apple said it was confident of winning an appeal and that the ruling would have a “profound and harmful effect on investment and job creation in Europe”.

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.

Commissioner Margrethe Vestager

apple tax