Apple Hit With Record Penalty For Illegal Irish Tax Arrangement [Updated]

By Aatif Sulleyman on at

The big news today is that a mega-rich company that’s done its utmost to pay as little as possible in taxes will have to pay a perfectly manageable fine if it’s found to have done anything naughty.

The company is widely known to route its international sales through Ireland in order to pay as little in tax as possible, an arrangement that's always appeared questionable to ordinary folk, and one that would be considered illegal if it's found to represent preferential statement.

According to EU authorities, rulings made by the Irish government in 1991 and 2007 enabled Apple to minimise its tax bill. This could be classified as illegal state aid.

Apple reportedly faces a fine amounting to billions of Euros, which would be the biggest tax penalty in European history. An estimate is expected from EU competition commissioner Margrethe Vestager today, but Irish authorities would calculate the exact amount.

Apple and Ireland, however, maintain that the arrangement was above board. The US Treasury has also spoken out against the EU's probe, unhappy because it believes that any penalty should see Apple's money pumped into the US economy, rather than thrown into EU vaults.

I wonder if Tim Cook will address the situation at the iPhone launch next week.

Update: The European Commission has ruled that Apple’s arrangement in Ireland is illegal, which means the company owes up to €13 billion (£11 billion) in back taxes.

"Member states cannot give tax benefits to selected companies - this is illegal under EU state aid rules," said Commissioner Margarethe Vestager. "The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years."

Both Apple and the Irish government will appeal against the decision. [BBC]