Apple will fight an EU demand for 13 billion euros in back taxes in Ireland. The United States has warned that the EU’s order could damage trans-Atlantic economic ties.
Apple CEO Tim Cook said he believed that courts would overturn Tuesday’s ruling requiring Apple to fork over $14.3 billion in back taxes to Ireland. Cook called the ruling a “devastating blow to the sovereignty of EU member states over their own tax matters” – echoing the concerns expressed by Irish officials about the decision.
Following an investigation launched in 2013, the European Union concluded that Ireland had advantaged Apple over its competitors with a sweetheart tax deal. Tuesday’s judgment represents estimated taxes and interest from 2003 to 2014.
Irish Finance Minister Michael Noonan disagreed with the ruling, calling it “an exercise in politics by the Competition Commission.”
Trans-Atlantic tensions are on the rise as the EU launches anti-trust investigations into such US companies as Google, Amazon and McDonald’s. In October, the EU ordered the US coffee giant Starbucks to repay 30 million euros in back taxes to the Netherlands.
White House spokesman Josh Earnest said Tuesday’s judgment “threatens to undermine progress that we have made collaboratively with the Europeans to make the international taxation system fair.”
A Treasury spokesman said the ruling “could threaten to undermine foreign investment, the business climate in Europe, and the important spirit of economic partnership between the US and the EU.”
‘This selective treatment’
EU Competition Commissioner Margrethe Vestager said Ireland had allowed Apple to funnel profits worth tens of billions of dollars through the country in order to avoid paying corporate taxes. “This selective treatment allowed Apple to pay an effective corporate tax rate of 1 percent on its European profits in 2003, down to 0.005 percent in 2014,” Vestager said at a press conference in Brussels on Tuesday.
“This decision sends a clear message,” Vestager said. “Member states cannot give unfair tax benefits to selected companies – no matter if European or foreign, large or small.”
Apple had $200 billion in cash and readily marketable securities at the end of June, and the case will likely drag out for years in EU and possibly Irish courts. On Tuesday the company announced that it could place “some amount of cash” in an escrow account.
The company’s bill dwarfs the previous EU record for a state aid case: 1.3 billion euros for Germany’s Nurburgring race track.
mkg/gsw (Reuters, AFP, dpa, AP)