Apple Served with a $14.6 Billion Tax Bill
Apple was ordered to pay up to 13 billion euros ($14.6 billion) plus interest after Ireland illegally reduced the company’s tax bill according to the European Commission. The ruling is considered to be the biggest tax ruling ever made by the European Union involving a single company. The “special treatment” Apple received with respect to the company’s tax bill allowed them to pay significantly less than other businesses the European Commission reported. The corporate tax rate in the United States is 35% and the rate in Ireland is 12.5%. Apple managed to pay tax of 1% (or less) on profits generated by subsidiaries in Ireland. In other words, the treatment allowed Apple to avoid taxation on nearly all profits generated by Apple product sales in the entire EU Single Market.
The ruling resulted from an in-depth investigation launched in 2014 to examine whether decisions by tax authorities in Ireland, The Netherlands, and Luxembourg complied with EU rules on state aid. Ireland is currently solely responsible for recovering the amount of unpaid tax from Apple. Apple and Ireland each have two months to file an appeal once they receive copies of the European Commission’s decision.