EU Demands Apple Repays $14.5 Billion in Irish Tax Breaks--2nd Update
August 30 2016 - 7:52AM
Dow Jones News
By Natalia Drozdiak in Brussels and Sam Schechner in Paris
The European Union's antitrust regulator demanded that Ireland
recoup roughly EUR13 billion ($14.5 billion) in taxes from Apple
Inc., after ruling that a deal with Dublin allowed the company to
avoid almost all corporate tax across the entire bloc for more than
a decade--a move that could intensify a feud between the EU and the
U.S. over the bloc's tax probes into American companies.
The tax payment is the highest ever demanded under the EU's
longstanding state-aid rules that forbid companies from gaining
advantages over its competitors because of government help.
In a statement, Apple said it would appeal the decision adding
that it "follows the law and pays all of the taxes we owe wherever
we operate."
Irish Finance Minister Michael Noonan said "I disagree
profoundly with the Commission's decision," adding that the country
would appeal the decision in order "to defend the integrity of our
tax system."
The European Commission on Tuesday said the tax arrangements
Ireland offered Apple in 1991 and 2007 allowed the company to pay
around 1% to almost zero tax on its European profits for more than
10 years, between 2003 and 2014.
"The commission's investigation concluded that Ireland granted
illegal tax benefits to Apple, which enabled it to pay
substantially less tax than other businesses over many years," said
European antitrust commissioner Margrethe Vestager.
Shares in Apple fell more than 2% in premarket trading in Europe
shortly after the decision was announced.
The U.S. Treasury Department has sharply criticized the EU's tax
investigations, arguing that the bloc unfairly targets American
companies and is inconsistent with international tax norms.
On Tuesday, a spokesperson said the Treasury Department was
disappointed with the commission's decision and reiterated that
"retroactive tax assessments by the commission are unfair, contrary
to well-established legal principles, and call into question the
tax rules of individual Member States."
The White House has previously accused the EU of angling to tax
income the bloc doesn't have a right to tax. Ireland needs to
ensure Apple returns the money, regardless of which entity it comes
from--including its offshore holding company that is used as a
mechanism for deferring U.S. taxes.
Ms. Vestager said the amount Ireland needs to recover could be
reduced if U.S. authorities required Apple to pay larger amounts on
its profits.
European companies, including Fiat Chrysler Automobiles NV, have
also entered the commission's firing line over their tax deals with
EU governments. But the Apple case dwarfs the Fiat case, where the
company was only required to pay back as much as EUR30 million in
taxes.
The commission also continues to investigate Amazon.com Inc. and
McDonald's Corp. over their tax arrangements in Luxembourg.
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com and Sam
Schechner at sam.schechner@wsj.com
(END) Dow Jones Newswires
August 30, 2016 07:37 ET (11:37 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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