Tech giant Apple could be forced to pay up to $14.5 billion in back taxes to Ireland after European Union regulators ruled today that the company benefited from improper Irish tax breaks and other benefits for more than a decade.
The ruling was immediately slammed by Ireland and Apple – both announcing plans to appeal and taking aim at Brussels for what they described as regulatory overreach that could scare away international companies and stifle economic growth.
Regardless of the outcome, however, the showdown could have a chilling effect on efforts by Ireland and fellow E.U. members such as Luxembourg to lure major tech companies and other multinationals with business-friendly regulations that seek to streamline the bureaucracy and rules in place in many other E.U. partners.
Ireland’s finance minister, Michael Noonan, denied that the country sidestepped E.U. tax rules and vowed to challenge the decision – raising yet another potential flash point between Brussels and member states over the reach of regulations and oversight.
Such questions helped tip the scales in Britain in June’s vote to leave the 28-nation bloc, and have complicated transatlantic trade talks.
“This is necessary to defend the integrity of our tax system, to provide tax certainty to business and to challenge the encroachment of E.U. state aid rules into the sovereign member state competence of taxation,” Noonan said in a statement.
In Brussels, the European Union’s competition commissioner, Margrethe Vestager, said a three-year investigation concluded that Ireland granted generous tax breaks to Apple from 2003 to 2014 that eventually shrunk the tax rate to well below 1 percent.
The decision, she said, demands that Ireland recover up to $14.5 billion plus interest for alleged violations over state aid to private businesses.
A statement from Apple decried the E.U. move as having a “profound and harmful effect on investment and job creation in Europe.”
“The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process,” the Cupertino, Calif.-based company said.
In an interview last week with The Washington Post, Apple’s chief executive Timothy Cook said the company would “obviously appeal” any tax E.U. ruling it considered unfair.
The Obama administration and many U.S. lawmakers have accused the European Union of overstepping its authority and potentially stifling expansion of American companies in Europe.
Trade talks between the United States and the European Union have been stalled, and could spill over to the next White House administration.
On Tuesday, French President Francois Hollande described the negotiations as “bogged down” and unbalanced.”
France’s trade minister, Matthias Fekl, said he would request a halt to the Transatlantic Trade and Investment Partnership negotiations at a meeting of trade ministers in September.
(c) 2016, The Washington Post · Brian Murphy