Europe has charged tech giant Apple the largest tax penalty to be paid in Europe amounting to €1.1bn (£94m) as Ireland gave it an unfair advantage in its country in exchange for creating millions of jobs.
The European Commission has tasked Apple to repay the same amount in back taxes to Ireland.
Ireland had given Apple an illegal state aid to create more jobs in the country. Ireland often attracts huge multinational companies because of their low taxes. After a three-year probe into Apple’s Ireland operations, investigators found that both sides had broken the EU law.
The law states that national tax authorities are not allowed to give tax vacations as it is considered illegal state aid. Ireland had made the rulings in 1991 and 2007 that allowed Apple to minimise its tax bill in the country.
“A state aid ruling against Ireland is likely to bring the country’s corporation tax regime back into focus,” said Dermot O’Leary, an economist at Goodbody Stockbrokers in Dublin. “However, the commission investigation relates to two rulings given to Apple in 1991 and 2007. So, a critical issue will be how the final decision relates to the current Irish tax code or to previously amended policy.”
The commission in January ordered Belgium to recover about 700 million euros in illegal tax breaks from at least 35 companies, including Anheuser-Busch InBev NV and BP Plc. And last year, for example, Starbucks Corp. was ordered to pay 30 million euros in back taxes to the Dutch government.