Ireland offered “selective treatment” to Apple which saved the tech giant billions in tax, the European Commission has found.
In its final report on the Apple tax ruling, the commission accused Ireland of illegal State aid and claimed the Government did not have “any justification at all for the selective treatment” the multinational received.
The damning report found that the level of tax paid by Apple was “issued on the basis of Irish Revenue’s discretion” as there was “no consistent criteria” relating to the tax system. This meant Apple received a “selective advantage”, the commission found, an advantage other companies did not receive.
The EU commission ordered the Irish government to recoup €13bn in unpaid back-tax in an “immediate and effective” manner. That money must go into an escrow account to be frozen until the matter is cleared.
The Government has already said it will appeal the unprecedented ruling.
The detailed 130-page document published by the commission also revealed the structures put in place by Apple which allowed it to pay minimal taxes here.
The firm has two subsidiaries, Apple Operations Europe (AOE) and Apple Sales International (ASI). Neither of these have any employees and the EU Commission found they were “stateless”, with no physical presence.
Despite this, the report revealed that ASI recorded profits of $25bn in 2014, but it paid less than $10m in tax.
The commission went on to state that it was “unable to identify any consistent set of rules that generally apply on the basis of objective criteria to all non-resident companies operating through a branch in Ireland”.
However, the Department of Finance has condemned the ruling, claiming that the European Commission has misinterpreted Irish tax law.
The department said it has already lodged an application with the General Court of the European Union to annul the whole decision.
“Ireland did not give favourable tax treatment to Apple — the full amount of tax was paid in this case and no State aid was provided. Ireland does not do deals with taxpayers,” it said.
It said the commission had “misapplied” state aid law and that the assertions that an advantage had been granted to Apple was “incorrect”. It has also disputed the finding that Apple received a special deal.
“The commission’s reference system wrongly ignores the distinction between resident and non-resident companies,” it said.
Apple said the commission disregarded “decades” of tax law and was confident the ruling would be overturned.
“It’s been clear since the start of this case there was a pre-determined outcome,” said Apple. “The commission took unilateral action and retroactively changed the rules, disregarding decades of Irish tax law, US tax law, as well as global consensus on tax policy, that everyone has relied on.
“If their opinion is allowed to stand, Apple would pay 40% of all the corporate income tax collected in Ireland, which is unprecedented and, far from leveling the playing field, selectively targets Apple. This has no basis in fact or law and we’re confident the ruling will be overturned.”
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