Apple must pay $14.5 billion plus interest in back taxes for the illegal tax deal it cut with Ireland, European Union officials said Tuesday.
The sweetheart deal that Ireland gave the U.S. tech company had “no factual or economic justification,” said EU Competition Commissioner Margrethe Vestager, citing the fact that Apple’s head office in Ireland had no employees or activities.
Apple’s tax arrangements in low-tax Ireland, a highly-cited example of complicated tax maneuvering by multinationals, allowed the company to cut its corporate tax rate on profits in Europe to below 1 percent and as low as 0.005 percent from 2003 to 2014, the EU found.
The EU finding is likely to be challenged by the U.S. Treasury, which has advocated in favor of Apple in the long-running dispute.
Tuesday’s finding is potentially a costly one for the Treasury. The U.S. allows companies credits for taxes paid on foreign profits.
Ireland’s corporate tax rate is just 12.5 percent, versus the statutory 35 percent rate in the United States. Ireland’s low-tax environment has enticed U.S. corporations to move their headquarters there, to cut their tax bills on profits earned in Europe and elsewhere.
