Apple has been found to have illegally benefited from €13 billion (around £11.1 billion) in tax benefits from the Irish government, with the European Commission demanding that Ireland recovers the cash back from the company.
Like most multinationals, Apple's corporate structure is deliberately opaque. Part of this involves setting up national subsidiaries in countries where corporate and income tax rates are lower, then funnelling profits through these subsidiaries in order to reduce the amount of tax owed. Apple's Dublin-based Irish subsidiary exists for exactly this reason, but the European Commission has found that Apple Sales International and Apple Operations Europe have benefited from hefty tax breaks that the Irish government had no legal right to offer.
In the conclusion to an investigation begun in June 2014, the European Commission has found that two tax rulings made in Ireland - one in 1991 and one in 2007 - existed purely to offer the company a selective tax treatment which runs counter to European Union state aid rules. According to the Commission's findings, the tax rulings gave Apple tax breaks equivalent to paying just 1 percent corporation tax in 2003 dropping to 0.005 percent in 2014. That gaffe is on the Irish government, but Apple is hardly innocent: the Commission has also found that its practice of attributing profit to its Irish head offices is misleading in the extreme: 'the Commission's assessment showed that these "head offices" existed only on paper and could not have generated such profits,
' the EC statement explained.
The result: Apple managed to dodge taxation on what the Commission claims was 'almost all profits generated by sales of Apple products in the EU Single Market.
' Admitting that 'this structure is however outside the remit of EU state aid control,
' the Commission is nevertheless to order recovery of illegal state aid for the ten-year period preceding its first request for information filed in 2013. As a result, Ireland is being made to recover the unpaid taxes for Apple's business through 2003 to 2014 inclusive, a sum of €13 billion plus interest.
Full details of the Commission's findings can be read in the official press release