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Apple's Irish tax deal questioned by European Commission Apple's Irish tax deal may be state aid, says Europe
(about 1 hour later)
The European Commission (EC) has set out its case against Apple's tax arrangements in Ireland. The European Commission (EC) has told Ireland it believes it gave illegal state aid to Apple.
It has published a letter, sent to the company in June, that accuses it of benefiting from illegal state aid through tax arrangements in Ireland. It has published a letter, originally sent to the country in June, accusing it of helping the computer giant through special tax arrangements.
It has asked Ireland to provide information about the deal. The EC is looking at whether some countries, including Luxembourg and the Netherlands, unfairly favour multinationals.
The move is part of a probe into whether certain countries, including Luxembourg and the Netherlands, unfairly favour multinationals. Apple says it has received 'no selective treatment'.
In a statement, the company said: "Our success in Europe and around the world is the result of hard work and innovation by our employees, not any special arrangements with the government.
"Apple has received no selective treatment from Irish officials over the years. We're subject to the same tax laws as the countless other companies who do business in Ireland."
It goes on to say, though, that it believes "comprehensive corporate tax reform is badly needed".
As well as Apple, Fiat and Starbucks are also in the EC's sights.As well as Apple, Fiat and Starbucks are also in the EC's sights.
The Commission is also set to outline its reasons for launching an investigation into Fiat Finance and Trade, which is resident for tax purposes in Luxembourg. The Commission told Fiat on Tuesday its preliminary view was that its tax arrangement with a subsidiary of Fiat also constituted state aid. Fiat has not yet commented.
It argues that backroom tax deals it believes were struck between Apple and the Irish government and Fiat and the Luxembourg government could constitute a breach of EU regulations on state aid. If Apple is found to have benefitted from illegal state aid, it will have to repay any tax benefit it received, which could run into billions of euros.
'Not state aid''Not state aid'
"Ireland is confident that there is no breach of state aid rules in this case and has already issued a formal response to the Commission earlier this month, addressing in detail the concerns and some misunderstandings contained in the opening decision," Ireland's Department of Finance said in a statement earlier this week. In the letter, the European Commissioner Joaquin Almunia told Ireland: "The Commission's preliminary view is that the tax ruling of 1990 (effectively agreed in 1991) and of 2007 in favour of the Apple group constitute state aid."
Ireland's Department of Finance said in a statement earlier this week: "Ireland is confident that there is no breach of state aid rules in this case and has already issued a formal response to the Commission earlier this month, addressing in detail the concerns and some misunderstandings contained in the opening decision,"
Ireland's corporate tax rate is set at 12.5%, but Apple enjoys an effective rate of tax of 2%, due to the way it channels overseas sales through its subsidiaries.Ireland's corporate tax rate is set at 12.5%, but Apple enjoys an effective rate of tax of 2%, due to the way it channels overseas sales through its subsidiaries.
Ireland's flexible approach to tax is designed to attract investment and jobs to the country. But other European countries say their treasuries lose out, as corporations funnel profits through Irish registered companies that are not resident for tax anywhere.Ireland's flexible approach to tax is designed to attract investment and jobs to the country. But other European countries say their treasuries lose out, as corporations funnel profits through Irish registered companies that are not resident for tax anywhere.
Apple has denied that the company agreed any special tax arrangements with Dublin.
"There's never been anything that would be construed as state aid," Apple's chief financial officer, Luca Maestri, told the Financial Times newspaper on Monday.
Apple says it pays all the tax it owes.
Once the Commission has reached a judgement the EU has the right to recover illegally granted state aid from the company in question. This could amount to billions of euros if Apple is found to have received benefits it was not entitled to.
The EU's move comes as the Organisation for Economic Co-operation and Development begins a broader crackdown on aggressive tax avoidance by multinational companies.The EU's move comes as the Organisation for Economic Co-operation and Development begins a broader crackdown on aggressive tax avoidance by multinational companies.