EC launches formal tax inquiry into Apple’s Irish operation

11 Jun 2014

After a year of investigation, the European Commission (EC) responsible for competition has formally requested inquiries into the Irish Government’s relationship with Apple and its tax rate.

Led under the EC’s vice-president Joaquín Almunia, the investigation is trying to determine whether there was any special agreement made between the American multinational and the State that would allow the company to forgo paying the standard corporation tax rate of 12.5pc, with Almunia calling on Apple, as well as other multinationals included in the investigation, to “pay their fair share”.

Last year, some of the US’ biggest politicians were outraged after a senate report alleged Apple only paid 2pc corporate tax with respect to its operations in Ireland, home of its international headquarters, and yet was registered to pay tax in another country where the higher tax rate doesn’t apply.

However, the EC has said the Irish Government has been entirely co-operative with the investigation but is worried the Government has shown worrying levels of ‘discretion’ within its tax administration.

“The Commission has concerns that such discretion has been used in the case of Apple to grant a selective advantage to that company, reducing its tax burden below the level it should pay based on a correct application of the tax rules,” the EC said.

Response from parties

Speaking at the announcement to pursue further investigations, Almunia said, “In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes. Under the EU’s state aid rules, national authorities cannot take measures allowing certain companies to pay less tax than they should if the tax rules of the Member State were applied in a fair and non-discriminatory way.”

Apple has since issued its own response to the investigation, declaring it has not broken any laws since it established its first office in Ireland in 1980. “Apple is subject to the same tax laws as scores of other international companies doing business in Ireland.

“Apple pays every euro of every tax that we owe. Since the iPhone launched in 2007, our taxes in Ireland have increased 10-fold.”

The Department of Finance is backing up Apple’s claims, and its own, saying it will “vigorously” defend any allegations. “Ireland is confident that there is no State aid rule breach in this case and we will defend all aspects vigorously.

“However, we understand that the European Commission has a responsibility to investigate potential breaches of State aid rules, so we will continue to do everything we can to ensure that they have the full information they require.”

Colm Gorey was a senior journalist with Silicon Republic