World Economy

Apple Says Will Appeal $14.5b EU Tax Decision

The world’s richest company benefited from a “selective tax treatment” in Ireland.The world’s richest company benefited from a “selective tax treatment” in Ireland.

Apple said it would appeal against an EU ruling ordering it to pay up to €13 billion ($14.5 billion) in taxes plus interest to the Irish government which the EU considers to have been illegal state aid.

“Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned,” the company said in a statement on Tuesday after the European Commission’s decision, Reuters reported.

“The commission’s case is not about how much Apple pays in taxes, it’s about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe,” Apple said.

The world’s richest company benefited from a “selective tax treatment” in Ireland that gave it a “significant advantage over other businesses,” the European Union regulator said Tuesday in its largest tax penalty in a three-year crackdown on sweetheart fiscal deals granted by EU nations.

Apple and the Irish government have both vowed to fight the decision, which also risks stoking a fight with the US.

“Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years,” EU Competition Commissioner Margrethe Vestager said in an e-mailed statement. “This selective treatment allowed Apple to pay an effective corporate tax rate of 1% on its European profits in 2003 down to 0.005% in 2014.”

Apple was one of the first companies caught up in the EU’s backlash against corporate tax-avoidance. The EU, like other global regulators, has targeted firms that sidestep taxes by moving around profits and costs to wherever they are taxed most advantageously—exploiting loopholes or special deals granted by friendly governments.

“I disagree profoundly with the commission’s decision,” said Irish Finance Minister Michael Noonan. Ireland’s tax system is founded on the strict application of the law “without exception”, he said.

The commission left him with “no choice” but to move toward an appeal before the EU courts. “This is necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state-aid rules into the sovereign member state competence of taxation,” he said.

Appeals at EU courts can take years to finalize, meaning that the final amount Apple may have to pay won’t be known until then. The money can be held in escrow pending a ruling.

Apple depositary receipts in Germany fell €1.40, or 1.5%, to €93.99 ($105.01) in Frankfurt after closing at $106.82 Monday in Nasdaq trading.

As of last month, Apple had $232 billion in cash, with about $214 billion of that being held overseas.