BRUSSELS — Apple will have to pay up to 13 billion euros ($14.5 billion) in back taxes, plus interest, to Ireland after the European Union found Tuesday that it received illegal tax benefits over 11 years.
The ruling is the latest and biggest salvo in the EU executive Commission’s battle to have multinationals pay their fair share in the region.
EU Competition Commissioner Margrethe Vestager said that a three-year investigation found Ireland granted such lavish tax breaks to Apple that the multinational’s effective corporate tax rate on its European profits dropped from 1 per cent in 2003 to a mere 0.0005 per cent in 2014.
That last tax rate meant that for each million euros in profits, Apple paid just 50 euros in taxes, Vestager told a news conference.
“Member states cannot give tax benefits to selected companies—this is illegal under EU state aid rules,” Vestager said.
“Ireland must now recover the unpaid taxes in Ireland from Apple for the years 2003 to 2014 of up to 13 billion euros ($14.5 billion), plus interest,” the Commission said in a statement.
The Irish government denied granting favourable fiscal treatment to the maker of the iPhone and other consumer electronics products, computer software and online services. “Ireland’s position remains that the full amount of tax was paid in this case and no state aid was provided,” the Irish statement said. “Ireland does not do deals with taxpayers.”
The Irish finance minister, Michael Noonan, said he would seek approval from the Irish Cabinet to appeal the EU Commission’s ruling to European courts.
“It is important that we send a strong message that Ireland remains an attractive and stable location of choice for long-term substantive investment,” Noonan said. “Apple has been in Ireland since the 1980s and employs thousands of people in Cork.”
There was no immediate reaction from Apple, headquartered in Cupertino, California. A statement from the U.S. government was expected later Tuesday.
In a white paper made public last week, the U.S. Treasury Department accused the European Union of using a different set of criteria to judge cases involving American companies, calling the potential penalties “deeply troubling.”