Apple may owe the E.U. billions in back taxes

Apple may be ordered to pay billions in back taxes to Ireland.

After a three-month investigation, the European Union informed Ireland that the tax deal it struck with Apple may amount to illegal state aid. The deal—which was struck by Apple Founder Steve Jobs in the 1980s, before the European Union existed—is considered state aid by the European Commission, the executive body of the E.U.

In a 21-page report, the Commission detailed its allegations against Apple and Ireland, stating that “the Commission’s preliminary view is that the tax ruling of 1990 (effectively agreed in 1991) and of 2007 in favor of the Apple group constitute state aid.”

According to CNBC, Apple has paid a tax rate as low as 2 percent in some years, thanks to its deal in Ireland, where the corporate tax rate is 12.5 percent. That number is more attractive to companies compared to higher rates among other E.U. countries, and to the 35-percent corporate rate in the U.S. (which many corporations don’t pay, thanks to loopholes).

For its part, Ireland believes it is in the clear. Brian Meenan, a spokesman for the country’s Department of Finance told the New York Times, “we believe we’re not in breach of any rules.” 

In a statement to Business Insider, Apple says it hasn’t received any special treatment or deals from Ireland.

“Our success in Europe and around the world is the result of hard work and innovation by our employees, not any special arrangements with the government. Apple has received no selective treatment from Irish officials over the years. We’re subject to the same tax laws as the countless other companies who do business in Ireland. 

Since the iPhone launched in 2007, our tax payments in Ireland and around the world have increased tenfold. To continue that growth and the benefits it brings to the communities where we work and live, we believe comprehensive corporate tax reform is badly needed.”

Last year, a U.S. Senate subcommittee said that Apple didn’t pay any taxes on $74 billion in revenue. Far more powerful than a subcommittee, a fine from the European Commission can reach into the billions. The Irish government has 30 days to respond to the allegations made by the European Commission, after which a ruling will be made.

Photo by blakespot/Flickr (CC BY 2.0)

Micah Singleton

Micah Singleton

Micah Singleton is a former technology and culture reporter of the Daily Dot and a former staff writer at Gizmodo. His work has also appeared in Time, Yahoo, the Verge, Mashable, ReadWrite, and NBC. Singleton was named a "rising star" by the Huffington Post in 2013.