The highest punishment in EU history. Apple has to pay 13 billion euros of taxes

Apple did not pay virtually any sales tax on its stores in Europe, the European Commission said, pointing out that the giant would now have to pay 13 billion euros. This is a record sum. The corporation has announced an appeal against the decision.

The investigation into Ireland, where Apple has its European headquarters, tax benefits have been carried out by the Commission since 2014. It focused on two agreements negotiated between Apple and the Irish authorities in 1991 and 2007. Thanks to them the company could have avoided paying billions of dollars in taxes.

The findings of the investigation in Brussels show that Dublin will now have to recover about 13 billion euros of unpaid taxes (plus interest) for the years 2003-2014 from the US producer.

“Member States can not confer benefits on selected companies. This is contrary to EU state aid rules. The Commission’s investigation has shown that Ireland has conceded illegal tax advantages for Apple, which has allowed the company to pay lower taxes for many years than other companies, “said EU Competition Commissioner Margrethe Vestager at a press conference Tuesday.

The Irish authorities responded to the Commission’s decision to declare that they disagreed and, similarly to Apple itself, had announced their appeal to the court. The island is concerned about the loss of investors who may seek other places where the jurisdiction of the European Commission will not reach. As he argued in a statement by Irish finance minister Michael Noonan, Apple paid the entire tax due in his country and did not benefit from state aid.

However, according to the Commission, two individual interpretations of Irish and Canadian tax law in 1991 and 2007 “significantly and artificially” affected the amount of tax paid by corporations in that country.

The effective tax rate that Apple paid for its profits in Europe was 1 percent. In 2003, to fall in 2014 to 0.005%. “To show this in context: from every million euros of profits the company paid 500 euros of taxes,” stressed Vestager.

This has made Irish decisions about how to count your income tax. Thanks to internal transfers, Apple was able to place profits across Europe in companies in Ireland, Apple Sales International and Apple Operations Europe.

The Irish agreed that almost all sales revenue recorded by both companies were internally attributed to “headquarters”. The Commission investigation has shown that these “head offices” existed only on paper and were not able to generate any revenue. Moreover, the Irish regulations allowed “head offices” not to be taxed in any country (these regulations were changed).

The Commissioner for Competition pointed out that the 13 billion euros referred to in this case are not a penalty for Apple to pay, only an outstanding tax that must be recovered.

Vestager also denied accusations of the US Treasury Department, which last week accused the Commission of acting retroactively and creating a transnational tax superorganism. “Retroactivity would suggest that the rules have changed. No, they have not changed. We had to deal with unpaid taxes, “she said.