The European Commission has found that Ireland granted undue tax benefits by allowing Apple to pay significantly less taxes than other companies from 1991 to 2014.
In June 2014, the Commission opened an in-depth state aid investigation against the US company. The enquiry led the Commission to uncover that Ireland had issued two tax rulings to Apple that substantially and artificially lowered the taxes paid by Apple in Ireland since 1991. These rulings accepted a specific method to establish the taxable profits for two Irish incorporated companies of the Apple group.
The rulings allowed almost all sales profits recorded by the two companies to be internally attributed to a head office. According to the Irish tax legislation in force at that time, these profits were tax-free in any country. The investigation has now shown that these head offices were an artificial setting that could not have produced such profits.
Given that the Commission is only entitled to order recovery for the 10-year-period preceding the first request of information (in this case, in 2013), Apple must now reimburse the Irish state the unpaid taxes for the period 2003 to 2014. This amount can total up to EUR13 billion, plus interest.
The investigation has also proved that the Irish tax rules enabled Apple to avoid taxation on almost all profits generated by the sales of its products in the entire EU market due to the company´s choice to record all sales in Ireland. This scheme is not under the scope of state aid investigations. However, if other Member States conclude that Apple should have recorded its sales in those countries instead of Ireland on the basis of their national tax laws, Apple could be required to pay more tax locally in those countries. As a consequence, the amount to be recovered by Ireland would be reduced.
