Apple Inc. has been asked by the European Commission to pay tax of €13 billion plus interest to the Irish Government. Such directions have been given by the European Commission after its investigation that Ireland had granted undue tax benefits to Apple Inc. which is illegal under the EU State Aid Rules.
The European Commission in its investigation found that Apple Inc. was carrying on business in Ireland through its two subsidiary companies, namely, Apple Sales International and Apple Operations Europe.
The Irish subsidiaries were internally allocating almost all their profits to their respective head office. These head offices were existed only on papers and not based in any country. Therefore, Irish Subsidiaries were paying tax in Ireland only on profits that were allocated to Irish branch and not on majority of profits that were allocated to the ‘head office’.
The Irish Apple subsidiaries were able to transfer their profits to head office without paying any taxes because of two tax rulings of Ireland whereby they were allowed to allocate most of their profits to the head office and were liable to pay tax only on remaining part.
After assessing the business operations of Apple and tax rulings of Ireland, the European Commission concluded that Ireland had violated the EU State Aid Rules by allowing Apple’s subsidiaries to artificially allocate their profits to non-existent head office.
To read more, click below: