US may seek some of Apple's €13bn tax money; Michael Noonan hits out at EU Commission

CEO of Apple Tim Cook has written an open letter to the customers of Apple regarding the recent decision of the European Commission.

  • EU's Competition Commission rules that Ireland gave illegal tax benefits to Apple worth up to €13bn.
  • Revenue Commissioners told to recover the unpaid billions.
  • Finance Minister Michael Noonan "profoundly disagrees" with verdict.
  • The Government and Apple expected to appeal the ruling.
  • Apple accuses European Commission of threatening future investment and job creation on the continent.
  • Apple's chief financial officer calls Commission's assessment 'a completely made-up number'.

Update 6.30pm: The United States has indicated it might seek some of the €13bn that Apple is being forced to pay to Ireland.

It is after the European Commission said other countries might be able to stake a claim to the money, if it can prove the tax should have been paid there instead.

Michael Noonan says the comment shows that Ireland was never supposed to levy the tax on Apple in the first place.

This evening the White House press secretary Josh Earnest hinted some of the tax should have been paid in America.

He said: "It's also possible that the kinds of payments that were contemplated by the EU decision today, at the end of the day are merely a transfer of revenue from US taxpayers to the EU.

"I think that is the crux of our concerns about the fairness of this kind of approach."

Update 5.55pm: Fianna Fáil finance spokesperson Michael McGrath said that this ruling is part of a broader power struggle.

He declared that there is, "no doubt that as a country we find ourselves in the middle of a wider strategic clash between the US and Europe."

In a statement from The Labour Party, Brendan Howlin requested a detailed briefing on the findings for opposition parties, saying: "The headlines circulating the globe today undoubtedly have implications for our national reputation in the short term - a reputation that we have worked might and mane to repair over recent years."

"We must be very cautious about automatically accepting any ruling that could be regarded as an effort by the European Commission to determine Ireland’s tax policy by the back door," he added.

Update 4.05pm: The Finance Minister Michael Noonan has accused the European Commission of trying to influence tax policy through the back door.

The Cabinet is to meet in the morning with a decision likely to launch an appeal.

Minister Noonan has told CNBC he does not believe the Commission's role is to look at Ireland's tax policies.

He said: "We think the Commission is getting involved in what is the competence of sovereign governments in Europe.

"The European treaties say that individual countries are responsible for taxation policies and this is an approach through the back door to try and influence tax policy through competition law and we don't agree with that."

Update 2.55pm: Apple executives have accused one of Europe's most powerful watchdogs of getting her sums wrong in calculating the jaw-dropping bill for unpaid tax.

The company's chief financial officer, Luca Maestri, claimed the tech giant paid $400m in tax in 2014 in Ireland as he joined chief executive Tim Cook to offer a doom-laden view of the fallout.

He claimed Competition Commissioner Margrethe Vestager's assessment that Apple paid just €50 in tax for every one million euro it made that year was nonsense.

EU Competition Commissioner Margrethe Vestager.
EU Competition Commissioner Margrethe Vestager.

"It is a completely made-up number," he said.

Apple executives said the Commissioner's assessment of the Irish Government's 25-year-old tax advice was "legal mumbo jumbo".

Mr Maestri said: "We really believe that the impact of this decision will be devastating for the European economy."

Apple also dismissed the prospect of a €6bn interest bill being piled on top of the unpaid tax.

The company went further in its defence, accusing the Commissioner of misunderstanding its corporate structure, describing the entire operation at its original home of Cupertino, California as its crown jewels and head office.

Brian Sewell, Apple's general counsel, slammed Commissioner Vestager's ruling on the 1991 tax advice as "astounding, stunning and very troubling".

"We think on the facts and the law we are going to win," the lawyer said.

"We are trying to sound the alarm that what the Commission is doing has real consequences."

Earlier: In the 800 word letter Mr Cook accuses the European Commission of launching an effort to rewrite Apple's history in Europe, ignoring Ireland's tax laws and upending the international tax system.

He also highlighted the danger of the ruling to potentially hurt future investment and job creation in Europe.

However, the Apple CEO also took the time to emphasize Apple's commitment to investing in Ireland and "serving our customers with the same level of passion and commitment".

"As responsible corporate citizens, we are also proud of our contributions to local economies across Europe, and to communities everywhere.

"As our business has grown over the years, we have become the largest taxpayer in Ireland, the largest taxpayer in the United States, and the largest taxpayer in the world."

Mr Cook also said he hoped and believed "the facts and the established legal principles upon which the EU was founded will ultimately prevail" in clearing the name of the multi-national company.

"We are confident that the Commission’s order will be reversed.

"At its root, the Commission’s case is not about how much Apple pays in taxes. It is about which government collects the money.

"Taxes for multinational companies are complex, yet a fundamental principle is recognized around the world: A company’s profits should be taxed in the country where the value is created. Apple, Ireland and the United States all agree on this principle."

Mr Cook accused Brussels of taking unprecedented action, with serious and wide-reaching complications.

"Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe," he said.

"Using the Commission's theory, every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed."

He warned about how US multinationals and others will view the prospect of setting up shop on European soil if the retrospective multi-billion euro bill stands once several years of legal wrangling play out.

Mr Cook said: "It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been.

"This would strike a devastating blow to the sovereignty of EU member states over their own tax matters, and to the principle of certainty of law in Europe."

And with Apple claiming it did not get a opportunity to defend itself during the watchdog's investigation, Mr Cook went direct to customers.

"Taxes for multinational companies are complex, yet a fundamental principle is recognized around the world: A company's profits should be taxed in the country where the value is created. Apple, Ireland and the United States all agree on this principle," he said.

"In Apple's case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States. European companies doing business in the US are taxed according to the same principle. But the Commission is now calling to retroactively change those rules."

Read the full letter here.

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