EU says Apple’s Irish tax deals breach rules

0

The European Union said Tuesday that Apple’s sweetheart tax deals with Ireland breached rules on receiving state aid, in a case which could cost the US tech giant billions if it is found at fault.

Brussels released a letter that the EU competition commissioner sent to the Irish government in June formally setting out the reasons for opening an investigation into Dublin’s arrangements with Apple.

It is the latest in a series of cases pitting the EU, whose 28 nations together make the world’s biggest economy, against largely US-based multinationals on issues ranging from tax avoidance to anti-competitive practices.

The letter from Competition Commissioner Joaquin Almunia said Ireland’s treatment of Apple “appears to constitute state aid” and therefore breaches EU rules on a free internal market.

“The Commission is of the opinion that through those (tax) rulings the Irish authorities confer an advantage on Apple,” the letter said, adding that the advantage was “obtained every year and on-going”.

It asked Ireland to provide further information about the deals, focusing on two in particular in 1991 and 2007.

Ireland said on Monday that it was confident there was no breach of state aid rules.

Apple gave no official comment, but the Financial Times quoted its chief financial officer Luca Maestri as saying that there had “never been any special deal”.

If found at fault, however, Apple would be required to repay potentially billions in restitution.

– Fiat-Luxembourg deal probed –

A separate letter published by the EU on Tuesday said that a tax deal between a subsidiary of Italian car giant Fiat and the tiny nation of Luxembourg may also constitute state aid.

The EU opened the investigation into the Fiat-Luxembourg deal on June 11 at the same time as the Apple case and another probe into arrangements between coffee giant Starbucks and the Netherlands.

The Commission sent a letter to Luxembourg saying that the deal with Fiat Finance and Trade, which lends cash to other Fiat companies, did not appear to comply with the EU’s internal market rules.

It said Luxembourg had also failed to provide sufficient information during the EU’s earlier enquiries, and urged the government and Fiat to provide further details.

Brussels has not yet said when it will publish its reasons behind the Starbucks case.

Apple and other giants including Amazon have come under intense pressure from politicians and campaigners over their tax dealings, with critics saying the arrangements allow companies to move billions in earnings from higher taxed countries to lower taxed ones.

Apple’s European headquarters is in the southwest Irish city of Cork, where it employs 4,000 people.

The country has a competitive corporate tax rate of 12.5 percent, which has been criticised by some other member states of the EU as unfair, but which Dublin has repeatedly defended.

Apple was reportedly paying an effective rate of as little as 2.0 percent.

A 2013 investigation by the US Senate found the maker of iPhones and iPads paid a lower rate by channelling overseas sales through subsidiaries in a deal negotiated with the Irish government. -AFP