The European Commission has ruled that tax benefits given to Apple by the Irish government were illegal under EU rules, allowing Ireland to recover €13 billion in back-taxes.
The ruling, announced on Tuesday, concluded that two tax rulings issued by Ireland to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991. The tax rules gave Apple a significant advantage over other businesses that are subject to the same national taxation rules and therefore breached EU competition policy.
EU commissioner Margrethe Vestager clarified in a press conference that the €13 billion was not a fine, it was “unpaid taxes.” She said in a statement:
“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.”
Ireland’s finance minister Michael Noonan vowed to appeal the decision, commenting that, “The decision leaves me with no choice but to seek cabinet approval to appeal.”
“This is necessary 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 competence of taxation.”
However, an appeal may be hard to win. The Commission has given a string of similar rulings to other countries; in October 2015, the EU Commission concluded that Luxembourg and the Netherlands had unfairly granted selective tax advantages to Fiat and Starbucks. Earlier this year the Commission concluded that Belgium had offered selective tax advantages to 35 multinationals under its “excess profit” tax scheme that were illegal under EU state aid rules.
Apple (NASDAQ:AAPL) shares decreased in price after the ruling, currently down 0.11 percent at 106.82 (1157GMT).