The European Union on Tuesday said US tech giant Apple must repay a record 13 billion Euros (US$14.3 billion) in back taxes after ruling that a series of Irish sweetheart tax deals were illegal.
"The European Commission has concluded that Ireland granted undue tax benefits of up to 13 billion Euros to Apple. This is illegal under EU state aid rules because it allowed Apple to pay substantially less tax than other businesses. Ireland must now recover the illegal aid," a Commission statement said.
EU Competition Commissioner Margrethe Vestager said Apple's "selective treatment" in Ireland meant it paid an effective tax rate of just one percent on its European profits in 2003, which then fell to a bare 0.005 percent by 2014.
"The tax treatment in Ireland enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire EU single market."
Brussels launched an inquiry into Apple's tax arrangements in Ireland in 2014, one of a series of anti-trust cases targeting major US corporations that have angered Washington.
Apple has vowed to appeal the unprecedented ruling, saying the decision would harm jobs and investment in Europe.
"We will appeal and we are confident the decision will be overturned," the US company said in a statement after the European Commission decision that Dublin's tax breaks for Apple were illegal.
"It will have a profound and harmful effect on investment and job creation in Europe."
The Irish government said it would also appeal the ruling.
The announcement came after Apple chief Tim Cook said earlier this month he hoped to "get a fair hearing ... If we don't, then we would obviously appeal it".
Apple accused the European Commission, the executive of the 28-nation European Union, of overthrowing longstanding practices.
"The European Commission has launched an effort to rewrite Apple's history in Europe, ignore Ireland's tax laws and upend the international tax system in the process," Apple said.
"The Commission's case is not about how much Apple pays in taxes, it's about which government collects the money," said the company which insisted it pays its full share of taxes wherever it is in world.
But the Commission said the world's most valuable company avoided tax bills on almost all its profits in the bloc under the arrangements with the Irish government.
Apple has had a base in the southern city of Cork since 1980 and employs 5,000 people in Ireland where it is seen as a prestige high-tech partner and a valued source of jobs.
Ruling could 'undermine' US-EU trading partnership
The US Treasury Department on Tuesday slammed an EU ruling ordering Apple to pay record back taxes, saying the decision threatened the bilateral "spirit of economic partnership".
"The Commission's actions could threaten to undermine foreign investment, the business climate in Europe, and the important spirit of economic partnership between the US and the EU," a Treasury Department spokesperson said in a statement.
"We will continue to monitor these cases as they progress, and we will continue to work with the Commission toward our shared objective of preventing the erosion of our corporate tax bases."
