Apple has been told to repay €13 billion ($14.5 billion) in back taxes to Ireland, following years of alleged tax evasion. The tech giant effectively “stores” about two-thirds of its profits in Ireland, but according to Forbes, only 3.5 percent of Apple employees are located in Ireland. This has led to ongoing accusations that Apple uses Ireland as a tax haven.
The European Commission found that Ireland had granted illegal tax benefits to the company. According to European Commission representative Margrethe Vestager, “This selective treatment allowed Apple to pay an effective corporate tax rate of 1% on its European profits in 2003 down to 0.005 per cent in 2014.”
E.U. member states are forbidden from giving this kind of beneficial treatment to individual companies. Apple’s new €13 billion tax bill is the biggest in E.U. history, and Irish campaigners are hoping the money will be invested in public housing.
Unsurprisingly, Apple opposes the decision. Last year, CEO Tim Cook described accusations of tax evasion as “total political crap,” saying, “Apple pays every dollar of tax we owe.” In response to the EU tax order this week, Cook wrote that the company would continue to invest in Ireland while continuing to push for international tax reform:
The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws, and upend the international tax system in the process.
He added:
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.
Cook confirmed that Apple will appeal the decision. You can read his full letter here.