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Ireland plans to appeal this week against the European Commission’s ruling that Apple must pay up to 13 billion euro (£11bn) to the country in back taxes, after the regulators ruled Apple’s controversial tax deal was illegal.
The tech giant says it has been singled out and was “a convenient target” and is also contesting the decision.
Here’s everything you need to know:
The Commission’s investigation that was launched in 2014 found that Apple was paying only 1% tax on its European profits in 2003.
It also found that the country gave the firm a sweetheart deal which ultimately allowed the iPhone maker to pay 0.005% tax in 2014 – 50 euro (£41) for every one million euro (£838,000) of profit.
The inquiry was launched under the suspicion that Irish authorities were purposefully miscalculating and ultimately underestimating Apple’s taxable profit on products like iPhones and iPads.
Both Irish authorities and Apple have repeatedly denied breaching state aid rules.
The Commission’s inquiry found that Ireland’s treatment of Apple allowed the global brand to avoid taxation on almost all profits generated by sales in the entire European single market.
It said this was because Apple recorded all its sales in Ireland rather than in the countries where the products were sold.
Ireland argues the important decisions within the Irish branch offices were made in the US so profits deriving from those decisions could not be attributed to Ireland.
Apple has warned that the European Commission has put jobs and investment at risk.
Chief executive Tim Cook accused competition chiefs in Brussels of targeting his global brand with laws that did not exist and simultaneously putting every business on the continent at risk.
But the company insists it is committed to Ireland, where employee numbers have grown from 60 in October 1980 and through the lean years of the early 1990s to almost 6,000 now.
The Dublin administration said the EU’s competition watchdog had interfered with its sovereignty.
Ireland will argue that the Commission is attempting to rewrite Irish tax laws and that Apple’s Irish subsidiaries paid all tax which was properly due.
The Department of Finance in Dublin published its legal arguments, saying: “The Commission never clearly explained its State aid theory during the investigation, and the decision contains factual findings on which Ireland never had the chance to comment.
“The Commission breached the duty of good administration by failing to act impartially and in accordance with its duty of care.”
The ruling means Ireland stands to gain an additional £11bn from unpaid taxes.
However, the country has structured its economy around attracting multinationals with its low corporate tax rate.
And left-wing critics have argued accepting the windfall could bring dramatic changes to national coffers during recovery from a recession.
If the Commission prevails in court, the decision will reset the balance of power on tax policy in Europe.
In October, the Commission ordered Starbucks and Fiat to pay 20 to 30 million euro (£16-£25m) for benefiting from so-called sweetheart tax deals in the Netherlands and Luxembourg.
And there are other US companies in the firing line.
EU authorities are currently investigating Amazon and McDonald’s for similar tax deals it deems illegal.
