European commission says Apple got illegal help with tax breaks but CEO Tim Cook says ruling threatens investment in Europe 
 
 Apple has warned that future investment by multinationals in Europe could be hit after it was ordered to pay a record-breaking €13bn (£11bn) in back taxes to Ireland. 
 
 The world’s largest company was presented with the huge bill after the European commission ruled that a sweetheart tax deal between Apple and the Irish tax authorities amounted to illegal state aid. 
 
 The commission said the deal allowed Apple to pay a maximum tax rate of just 1%. In 2014, the tech firm paid tax at just 0.005%. The usual rate of corporation tax in Ireland is 12.5%. 
 
 “Member states cannot give tax benefits to selected companies – this is illegal under EU state aid rules,” said the European competition commissioner, Margrethe Vestager, whose investigation of Apple’s complex tax dealings has taken three years. 
 
 Vestager’s ruling prompted an angry response from Apple and from Ireland and is likely to spark a political row between the US and the EU. The US Treasury said the ruling threatened to damage “the important spirit of economic partnership between the US and the EU”. 
 
 In a letter to customers, Apple’s chief executive, Tim Cook, claimed the ruling could deal a blow to big companies investing in Europe: “Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe. Using the commission’s theory, every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed.” 
 
 The commission said Ireland’s tax arrangements with Apple between 1991 and 2015 had allowed the US company to attribute sales to a “head office” that only existed on paper and could not have generated such profits. 
 
 The result was that Apple avoided tax on almost all the profit generated from its multi-billion euro sales of iPhones and other products across the EU’s single market. It booked the profits in Ireland rather than the country in which the product was sold. 
 
 Corporation tax rates in Europe Corporation tax rates in Europe. 
 
 Apple and Ireland said they intend to appeal against the ruling. 
 
 The figure of €13bn plus interest is 40 times the previous record for such a case and the equivalent of the annual budget for Ireland’s health service. Irish campaigners called for the windfall to be invested in public housing. 
 
 The taxable profits of Apple Sales International and Apple Operations Europe did not correspond to economic reality, the commission said. 
 
 Vestager said: “The commission’s investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years.” 
 
 
 
 Vestager suggested other countries, including the US, might now examine how Apple did business within their borders. These other jurisdictions might then claim a share of the unpaid tax from Apple for the same period. This would reduce the bill owed to Ireland. 
 
 Facebook Twitter Pinterest Tim Cook, Apple CEO. Photograph: Justin Sullivan/Getty Images 
 
 Tim Cook, Apple’s chief executive, said the commission was rewriting Apple’s record in Ireland, overriding Irish law and disrupting the international tax system. He said Apple chose the Irish city of Cork as its European base 30 years ago and had expanded from 60 workers to almost 6,000 in Ireland. 
 
 He said Apple would appeal and that he was confident of winning. 
 
 Cook said: “We never asked for, nor did we receive, any special deals. We now find ourselves in the unusual position of being ordered to retroactively pay additional taxes to a government that says we don’t owe them any more than we’ve already paid.” 
 
 The commission’s decision is a rebuff to US efforts to persuade it to drop the case after warnings of retaliation from Washington. 
 
 Apple, which changed its tax arrangements with Ireland in 2015, should easily be able to pay the huge tax bill because it has a cash mountain of more than $230bn (£176bn) of cash and securities, mostly held outside the US. The tech group keeps the money outside the US because it would be forced to pay US tax charges if it repatriated the money. 
 
 The €13bn figure covers only the 10 years before the commission first requested information in 2013. The commission, which does not have the authority to go back any further, said it was up to Ireland to collect the tax from Apple. 
 
 The Irish government, however, wants the ruling reversed because it wants to preserve its status as a low-tax base for overseas companies. 
 
 Ireland’s finance minister, Michael Noonan, said Dublin would appeal against the ruling. He said: “The decision leaves me with no choice but to seek cabinet approval to appeal. This is necessary to defend the integrity of our tax system, to provide tax certainty to business and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation.” 
 
 A cabinet meeting will be held in Dublin on Wednesday to discuss the fallout from the ruling. At the heart of the Fine Gael-led administration’s objections is that it would cause Ireland reputational damage in the eyes of other mainly US multinationals thinking of establishing their European base in the Republic. 
 
 Fine Gael, the main opposition party Fianna Fáil, and a host of independent deputies serving as ministers in the coalition government support the low-tax regime for multinationals because it has created hundreds of thousands of jobs. 
 
 A tunnel to Wales or a gallery full of Gauguins: how Ireland could spend Apple’s money Read more 
 
 Richard Murphy, a tax campaigner and a professor in international political economy at City University in London, said: “This is a great day for the sovereignty of the EU’s nations when it comes to tax. They will now be able to choose their own tax policies knowing another state should not be consciously undermining them when doing so. The Irish state has for too long been committed to tax abuse, unfair competition and secrecy, all of which are designed to undermine fair competition and increase inequality.” 
 
 
 
 Prof Louise Gracia of Warwick University business school said: “This ruling is a serious attempt at curtailing the power large multinationals have in avoiding their tax liabilities, and sends a warning to countries that facilitate hard-edged corporate tax minimisation strategies.” 
 
 She added: “It also shines a spotlight on the paltry levels of corporate tax that large multinationals are actually paying. Even if we accept the job and wealth creation arguments put forward by multinationals as mitigation against tax liability, this has to be within reason.” 
 
 Toby Quantrill, Christian Aid’s principal adviser on economic justice, said: “The staggering amount of money at stake here suggests that millions of citizens are paying a painfully high price for multinationals’ cosy tax deals with certain governments. 
 
 “This is not a one-off situation – it is part of a damaging race to the bottom in which governments are competing on who can offer multinationals the lowest tax bill. It’s time to get multinationals’ tax affairs out in the open, so we can all see how much they are actually contributing to the rest of society.” 
 
 In the US Peter Kenny, senior market strategist at Global Markets Advisory Group, said it was not yet clear which side would ultimately prevail, but that the ruling was a watershed moment. “There’s no telling whether the verdict will stand on appeal, but we know that the landscape is changing for US corporations in the EU.” 
 
 He described Vestager’s ruling as “just the tip of the spear – an enormously important ruling” because US-based companies “have traditionally used the EU as a way of circumventing a higher US corporate tax code.” 
 
 Apple’s share price, however, was largely unmoved. In a note to investors, Gene Munster, analyst at Piper Jaffray, said the €13bn potential bill was not a big deal for the huge company. “While the penalty is large in absolute terms, it represents a small portion of AAPL’s [Apple’s] overall valuation.” 
 
 It is not yet clear which side will be backed by either of the 2016 presidential candidates. Republican Donald Trump has said he would force US companies, Apple in particular, to move manufacturing jobs within the nation’s own borders, rather than allowing them to seek cheaper labour overseas. He has also said he would lower the US corporate tax rate. 
 
 His Democratic rival, Hillary Clinton, has also hinted that she might lower the corporate tax rate. She has closer ties to Apple than Trump. Cook held a fundraiser for Clinton on 24 August. ||||| DUBLIN/BRUSSELS (Reuters) - Apple’s Chief Executive Tim Cook described an EU ruling that it must pay a huge tax bill to Ireland as “total political crap”, but France joined Germany on Thursday in backing Brussels as transatlantic tensions grow. 
 
 European Competition Commissioner Margrethe Vestager dismissed Cook’s broadside, saying the demand for a 13 billion euro ($14.5 billion) back tax payment was based on the facts. 
 
 Washington has lined up with the tech giant, accusing the European Union of trying to grab tax revenue that should go to the U.S. government. 
 
 But in Ireland itself, the government and public opinion are divided over whether to take the windfall - which would fund the country’s health system for a year - or reject it in the hope of maintaining a low tax regime that has attracted many multinationals, creating jobs. 
 
 A group of independent lawmakers, whose support is crucial to the minority coalition’s survival, called for a review of how tax is collected from multinationals. Their reluctance to back a call for an appeal by the country’s finance minister has cast doubt on whether Ireland will challenge Vestager’s decision. 
 
 Apple has said it will appeal the ruling which Cook attacked in an interview with the Irish Independent. “No one did anything wrong here and we need to stand together. Ireland is being picked on and this is unacceptable,” the newspaper quoted him saying. “It’s total political crap.” 
 
 Vestager has questioned how anyone might think an arrangement that allowed the iPhone maker to pay a tax rate of 0.005 percent, as Apple’s main Irish unit did in 2014, was fair. 
 
 She said on Thursday that the calculations were based on data provided by Apple itself and evidence presented during hearings on Apple tax issues in the United States. “This is a decision based on the facts of the case,” she told a news conference. 
 
 The battle lines are forming on both sides of the Atlantic. In Paris, French Finance Minister Michel Sapin backed Vestager’s view that Apple’s Irish tax arrangements amounted to abnormal state aid. “The European Commission is doing its job,” he told a news conference. “It’s normal to make Apple pay normal taxes.” 
 
 German Economy Minister Sigmar Gabriel also supported the Commission on Tuesday. Austria also welcomed the ruling but Britain - which voted in June to leave the EU - has stayed out of the row, saying it is an issue for the Irish government, Apple and the Commission. 
 
 “DOING THE WRONG THING” 
 
 Irish Finance Minister Michael Noonan has insisted Dublin would appeal any adverse ruling ever since the EU investigation began in 2014. 
 
 However, the cabinet failed to agree on Wednesday whether to accept his recommendation due to misgivings among the five-strong Independent Alliance group of lawmakers. 
 
 Related Coverage Independent Irish ministers want review of multinationals tax 
 
 “I don’t think Apple have paid sufficient tax. I don’t think they’ve been illegal in what they’ve done, it’s the tax system as it’s set up,” said Alliance member John Halligan, a junior minister who does not sit at cabinet. 
 
 “The Independent Alliance have asked that we review our intake of tax, how we take tax in from multinationals and (assess) are we collecting fair tax,” he told RTE radio. 
 
 After five hours of discussion, the cabinet adjourned discussion of an appeal until Friday when the government said a decision would be made. Any failure of the Alliance to come on board would cast doubt on the government’s survival prospects. 
 
 On the streets of Dublin, some argued Ireland had to keep drawing foreign investors with low tax rates to provide jobs. 
 
 But others said the government should drop the idea of appealing the decision and take the money. 
 
 “They are doing the wrong thing. They don’t care about the normal people,” said Louise O’Reilly, 57, a full-time carer for her diabetic and partially blind mother. “The money should be spent on the old-age pensioners who worked all their lives and are struggling to survive.” 
 
 O’Reilly’s mother pays 10 euros tax on a monthly pension of 1,050 euros ($1,170), a higher rate than the EU said Apple’s main Irish unit paid on its profits in 2014. 
 
 By contrast, Cook estimated Apple’s average annual tax on its global profits at 26 percent. “They just picked a number from I don’t know where,” he said. But in another interview he promised to boost tax payments by repatriating billions of dollars in global profits to the United States next year. 
 
 Apple would fight with Ireland to overturn the ruling - by far the largest anti-competition measure imposed on a company by the EU - which he said had “no basis in law or in fact”. 
 
 “DOING THE RIGHT THING” 
 
 Cook played down the possibility of the government failing to appeal the decision. 
 
 “The future investment for business really depends on a level of certainty,” he told RTE radio. “I’m pretty confident that the government will do the right thing.” 
 
 In Washington, U.S. Treasury Secretary Jack Lew criticized the ruling. “I have been concerned that it reflected an attempt to reach into the U.S. tax base to tax income that ought to be taxed in the United States,” he said on Wednesday. 
 
 Apple Inc. CEO Tim Cook speaks on stage at the company's World Wide Developers Conference in San Francisco, California, U.S., June 13, 2016. REUTERS/Stephen Lam 
 
 Apple was found to be holding over $181 billion in accumulated profits offshore, more than any U.S. company, in a study published last year by two left-leaning nonprofit groups, a policy critics say is designed to avoid paying U.S taxes. 
 
 But Cook said part of the company’s 2014 tax bill would be paid next year when the company repatriates offshore profits to the United States. 
 
 ($1 = 0.8969 euros) ||||| Media playback is unsupported on your device Media caption Ms Vestager said the Irish tax system "allowed profits to be attributed to a head office that only existed on paper." 
 
 Ireland should recover up to €13bn (£11bn) from Apple in back taxes, the European Commission has ruled. 
 
 After a three-year investigation, it has concluded that the US firm's Irish tax benefits are illegal. 
 
 The Commission said Ireland enabled the company to pay substantially less than other businesses, in effect paying a corporate tax rate of no more than 1%. 
 
 Ireland and Apple both said they disagreed with the record penalty and would appeal against it. 
 
 Apple reaction: Live updates 
 
 Apple tax ruling 'a serious blow' 
 
 Rory Cellan-Jones: EU takes on Apple, Ireland and the US 
 
 "Member states cannot give tax benefits to selected companies - this is illegal under EU state aid rules," said Commissioner Margrethe Vestager. 
 
 "The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years," she added. 
 
 The standard rate of Irish corporate tax is 12.5%. The Commissions's investigation concluded that Apple had effectively paid 1% tax on its European profits in 2003 and about 0.005% in 2014. 
 
 Ms Vestager said that the tax agreement reached between Ireland and Apple meant that the company's taxable profits "did not correspond to economic reality". 
 
 'Profound and harmful effect' 
 
 Apple said the decision would be harmful for jobs. 
 
 "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," the company said in a statement. 
 
 "The Commission's case is not about how much Apple pays in taxes, it's about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe. 
 
 "Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned." 
 
 Media playback is unsupported on your device Media caption Nobel Prize winner Joseph Stiglitz says the EU is telling big corporations: "We can get you" 
 
 The Irish government held a similar view. 
 
 "I disagree profoundly with the Commission," said Ireland's finance minister, Michael Noonan, in a statement. 
 
 "The decision leaves me with no choice but to seek cabinet approval to appeal. This is necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation." 
 
 The record tax bill should not be a problem for Apple, which made a net profit of $53bn in the 2015 financial year. 
 
 'Undermine investment' 
 
 "Apple has been enjoying a river of free cash flow and while the ruling may not been too much short-term, investors will have to assess whether a higher tax bill will have any impact on profits after tax," said Neil Wilson, market analyst at ETX Capital. 
 
 The US Treasury, which said last week that the European Commission was in danger of becoming a "supranational tax authority", said the latest ruling could "undermine foreign investment, the business climate in Europe, and the important spirit of economic partnership between the US and the EU". 
 
 "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," a US Treasury spokesman said. 
 
 Apple is not the only company that has been targeted for securing favourable tax deals in the European Union. 
 
 Last year, the commission told the Netherlands to recover as much as €30m (£25.6m) from Starbucks, while Luxembourg was ordered to claw back a similar amount from Fiat. 
 
 Apple and Ireland €13bn demanded in back taxes. Equal to: ALL of Ireland's healthcare budget 
 
 66% of its social welfare bill 
 
 15 million iPhones 
 
 27% of Apple's 2015 profit Getty 
 
 Analysis: Dominic O'Connell, Today business presenter 
 
 The current focus is on the size of the bill, but there are even larger issues at stake, including one fundamental question - who really runs the world, governments or giant corporations? 
 
 At present, it is difficult to tell. Individual governments appear impotent in their attempts to apply their tax laws to multinationals like Apple. They have systems designed to deal with the movement and sale of physical goods, systems that are useless when companies derive their profits from the sale of services and the exploitation of intellectual property. 
 
 In Apple's case, 90% of its foreign profits are legally channelled to Ireland, and then to subsidiaries which have no tax residence. At the same time, countries can scarcely afford not to co-operate when Apple comes calling; it has a stock market value of $600bn, and the attraction of the jobs it can create and the extra inward investment its favours can bring are too much for most politicians to resist. 
 
 There is an echo here of the tycoons of the early 20th Century who bestrode America. Andrew Carnegie, Cornelius Vanderbilt and John Rockefeller were judged so powerful that they were almost above the law, something that successive US administrations sought to curb. 
 
 The European Commission's attempt to bring Apple to heel is on the surface about tax, but in the end about the power of the multinational and the power of the state. There is more to come; Margrethe Vestager, the Danish commissioner who is leading the charge against Apple, is warming up to take on Google. 
 
 Europe versus the giants of corporate America will be a battle royale, and one that will run and run. ||||| Apple's Chief Executive Tim Cook has disputed tax figures presented by the European Competition Commissioner and stated the technology giant pays a global tax rate of 26.1%. 
 
 In his first broadcast interview since the Commission ruled that Ireland granted Apple illegal state aid and must repay €13bn plus interest to the exchequer, he said he was "very confident" the findings will be overturned on appeal. 
 
 Speaking to RTÉ News from California, Mr Cook said the decision was maddening and was not based in law or in fact and the scale of the tax bill to be repaid has shocked the company. 
 
 The Commission's Competitions chief, Margrethe Vestager, told a news conference this morning that the decision was based on fact and was not political. 
 
 The Cabinet met yesterday to discuss an appeal, something Apple has already indicated it would too. 
 
 The Independent Alliance is expected to meet later to discuss supporting an appeal. 
 
 The Cabinet will meet again tomorrow to discuss the matter having failed to agree a position yesterday. 
 
 Mr Cook said the association of Apple with illegality brought outrage to the company. 
 
 He described the investigation's findings as political and lacking any level of fairness and challenged tax figures presented by European Commissioner for Competition Margrethe Vestager at her news conference on Tuesday. 
 
 Ms Vestager said Ireland's selective treatment of Apple allowed the company to pay an effective tax rate of 0.005% on its European profits in 2014. 
 
 Mr Cook described that figure as false and untrue and said the company paid "a worldwide income tax rate" of 26.1% that year. 
 
 He added that $1 out of every $15 paid in corporate tax in Ireland in 2014 was paid by Apple, making it the biggest taxpayer in the country that year. 
 
 Asked if he believed that Apple paid its fair share of taxes, Mr Cook said he looked at the figure of 26.1% and he thought that was "a reasonable level". 
 
 He confirmed that Apple will pay money into an escrow account and that the amount will be calculated using the formula devised by the commission. 
 
 Apple's commitment to Ireland was undiminished and investment in this country will continue "as per plan", he added, and insisted there was no special deal between Ireland and Apple on tax. 
 
 He described his company's relationship with Ireland as a 37-year-old marriage which had gone through "a pothole here and there" but was now thriving. 
 
 He said Apple was being accused of doing something which was so foreign to its values it brought outrage. 
 
 'Nothing to apologise for', Cook insists 
 
 Mr Cook said Apple had nothing to apologise for and Apple and the Irish Government had done nothing wrong. 
 
 Asked directly if Apple was given deals that were not available to any other companies, Mr Cook replied: "No - not a single time." 
 
 And asked if Apple was treated differently to other companies, given special treatment and sweetheart deals, he replied: "No, never." 
 
 Mr Cook said he was confident the Government will appeal the findings of the commission's investigation. 
 
 He denied that Apple's announcement that the company is to lodge its own appeal was an indication of fear that the Government may not follow through on its own appeal. He said he was confident the Government will "do the right thing" and appeal. 
 
 He also said he was satisfied that it would be clear to anybody who examines his company's tax affairs from an unbiased, non-political point of view that not only did Ireland and Apple do what was within the law, they did what was right too. 
 
 Mr Cook said Apple was not going to allow what he described as an "invalid, politically-based ruling" to affect the company's deep commitment to Ireland. 
 
 Apple expects to repatriate billions of dollars of global profits to the United States next year, Mr Cook said, without specifying exactly how much would be returned. 
 
 Asked about the level of tax paid by Apple on profits in 2014, Mr Cook said $800m had been paid and that billions of dollars more had been provisioned and would likely be returned to the United States next year. 
 
 "We paid $400m to Ireland, we paid $400 (million) to the US and we provisioned several billion dollars for the US for payment as soon as we repatriate it and right now I forecast that repatriation to occur next year," he said.
– Apple got some bad news out of Europe on Tuesday in the form of a massive tax bill. The European Union says Ireland has given illegal tax benefits worth up to $14.5 billion to the company and must now recover the money, plus interest. The penalty is unprecedented—Reuters reports that it's 40 times bigger than any other such fine levied by the European Commission. "Member states cannot give tax benefits to selected companies—this is illegal under EU state aid rules," said EU Competition Commissioner Margrethe Vestager, per the AP. She said a three-year investigation found Ireland granted such lavish tax breaks to Apple over many years that the company's effective corporate tax rate on its European profits dropped from 1% in 2003 to practically nothing—a mere 0.0005% in 2014. Both Apple and Ireland say they will appeal. CEO Tim Cook has previously called the tax inquiry "political crap," notes the Guardian, while Ireland says it threatens to torpedo its successful strategy of using low taxes to woo international business. "Apple follows the law and pays all of the taxes we owe wherever we operate," said the company in a statement, per the BBC. "We ... are confident the decision will be overturned."