Ireland taken to court over Apple tax bill

  • 05/10/2017
Tim Cook, head of Apple.
Tim Cook, head of Apple. Photo credit: Getty

The European Commission is taking Ireland to the European Court of Justice for its failure to recover up to €13 billion ($21 billion) of tax due from Apple.

The Commission on Wednesday ordered the US tech giant in August 2016 to pay the unpaid taxes as it ruled the firm had received illegal state aid, one of a number of deals the EU has targeted between multinationals and usually smaller EU states.

"More than one year after the commission adopted this decision, Ireland has still not recovered the money, also not in part," EU Competition Commissioner Margrethe Vestager said in a statement.

"We of course understand that recovery in certain cases may be more complex than in others, and we are always ready to assist. But member states need to make sufficient progress to restore competition," she added.

The commission said the deadline for Ireland to implement its decision had been January 3 this year and that, until the aid was recovered, the company continued to benefit from an illegal advantage.

Ireland's finance ministry said it had never accepted the commission's analysis in the Apple state aid decision, but was committed to collecting the money due pending Dublin's own appeal of the ruling.

"It is extremely regrettable that the commission has taken this action, especially in relation to a case with such a large scale recovery amount," the ministry said in a statement.

Meanwhile, Amazon has been told to pay about €250 million ($410 million) in back taxes to Luxembourg. The fine was much lower than some sources close to the case had expected and is only a fraction of the €13 billion that Apple was ordered to pay to Ireland.

EU Competition Commissioner Margrethe Vestager, who has other big US tech companies in her sights, has taken a tough line on multinational companies' approach to tax.

Amazon said it was considering an appeal.

Amazon shares were little changed in early Wednesday trading.

While the exact amount Amazon needs to repay is yet to be calculated, the €250 million euros is significantly less than the €400 million which sources close to the matter told Reuters a year ago was under consideration by Vestager.

The bill suggests the Commission believes Amazon shielded around €900 million in EU profits from tax, calculations by Reuters show.

For most of its existence, Amazon has worked on razor-thin profit margins to fuel its global expansion, making only US$2.4 billion ($3.35 billion) profit on global revenues of US$136 billion in 2016.

The Commission said Luxembourg allowed Amazon to channel a significant portion of its profits to a holding company without paying tax.

Amazon's corporate set up with subsidies in Luxembourg was also subject of a US$1.5 billion court case with US tax authorities, which Amazon won in March.

Amazon, which employs 1500 in the grand duchy, is one of the biggest employers in the country of half a million people. It has a Europe-wide staff of some 50,000.

Luxembourg, whose tiny economy has benefited from providing a European base for multinational companies, rejected the finding and said it was looking at its legal options.