European Union orders Apple to pay Ireland $14.5 billion in back taxes

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European Commissioner Margrethe Vestager gestures during a news conference on Ireland's tax dealings with Apple Inc at the European Commission in Brussels, Belgium August 30, 2016. REUTERS/Eric Vidal

European Commissioner Margrethe Vestager gestures during a news conference on Ireland’s tax dealings with Apple Inc at the European Commission in Brussels, Belgium August 30, 2016. REUTERS/Eric Vidal

The European Union ordered Apple on Tuesday to pay $14.5 billion to Ireland in back taxes, plus interest, after finding that the Irish government provided the U.S. company with 11 years of illegal tax benefits.

EU Competition Commissioner Margrethe Vestager said an in-depth investigation found that Ireland’s “selective treatment” of the multinational company allowed Apple to pay an effective corporate tax rate of 0.005 percent on its European profits in 2014, down from 1 percent in 2003.

“Member states cannot give tax benefits to selected companies – this is illegal under EU state aid rules,” Vestager said in a statement.

Both Apple and Ireland vehemently oppose the ruling and plan to appeal.

“At its root, the Commission’s case is not about how much Apple pays in taxes,” Apple said in a statement. “It is about which government collects the money.”

The company went on to say that the European Commission is trying to “rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process.”

Ireland also resisted the investigation’s conclusion.

“I disagree profoundly with the Commission’s decision,” Irish Finance Minister Michael Noonan said in a statement. “Our tax system is founded on the strict application of the law.”

Noonan announced he will seek Cabinet approval for an appeal, calling the EU’s decision an encroachment on one of its sovereign member states. He also pointed out that Apple employs thousands of people in the region.

The U.S. Treasury released a white paper last week on EU state aid investigations and accused the Commission of disproportionately targeting American companies and using an approach that is “inconsistent with international norms and undermines the international tax system.”

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