Apple should pay Ireland up to €13bn in back taxes according to the European Commission. The Commission ended up in the above decision after a three-year investigation which concluded that Apple’s tax benefits in the country are illegal.
Both Apple and Ireland expressed their disagreement with the decision and will appeal against the penalty.
According to the Commission, Ireland allowed Apple to pay significantly less taxes than other businesses, with a corporate tax rate of 1% maximum, when the standard rate of corporate tax is 12.5%. Apple in a statement said that this decision will change the way Apple works in Europe and that it will have a harmful effect on investments and jobs.
Margarethe Vestager, European Commisionner mentioned: “Member states cannot give tax benefits to selected companies – this is illegal under EU state aid rules”.
Apple is not the first and certainly won’t be the last company that has been targeted for enjoying favourable treatment in the European Union. Last year, the Commission ruled Starbucks’s tax treatment in the Netherlands as illegal and ordered them to pay €30m to the country. The Netherlands appealed the decision and Starbucks are about to do the same.