Apple hit with £11billion tax bill in landmark ruling by EU competition watchdog

Ireland has been ordered to recoup 13 billion euros in back taxes after it was found to have given the tech giant an "illegal" deal

EU chiefs are set to hit Apple, whose headquarters are pictured, with a huge tax bill

Apple has been hit with an £11billion tax bill in a landmark ruling by an EU watchdog.
Ireland has been ordered to recoup 13 billion euros in back taxes from the tech giant after it was found to have given the firm an "illegal" deal.
A judgement was revealed today after a three-year probe by the EU Competition Commissioner into Apple's set-up in Ireland, where it channelled earnings from throughout Europe.
The arrangement allowed the company to pay just 1% tax on its profits.
The massive sum is said to be 40 times the size of any previous known demand by the watchdog.
"Member states cannot give tax benefits to selected companies - this is illegal under EU state aid rules," the commissioner 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."
"In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of just 1% on its European profits in 2003 down to 0.005% in 2014."
It is believed Apple and Ireland will appeal the ruling.

Apple CEO Tim Cook said his firm would appeal any process that was unfair

Lib Dem economic spokesman Susan Kramer claimed the ruling showed the vital importance of the EU.
She said: "This is another example of how the EU helps to stand up to massive international corporations.
"It's perfectly possible for a company like Apple to bully Ireland, or even the UK, into sweetheart deals - but the EU acts as a referee.
"It shows just how important it is that we fight to stay in the EU, and in particular the single market. If we don't we risk turning the UK into the Liam Fox fantasy of a multinational tax haven cut adrift in the mid Atlantic."

Map of Apple's tangled Tax Web — Map of Apple's tangled tax web

Ireland is renowned for its low corporation tax - set at just 12.5% - and global firms have chosen the nation for their headquarters.

But in 2014 the European Commission warned the Irish Government it had doubts over whether its treatment of Apple followed EU market rules.

George Osborne kisses Danish Economy Minister Margrethe Vestager — EU competition commissioner Margrethe Vestager pictured meeting George Osborne

Brussels voiced fears Ireland gave Apple an unfair advantage by under-estimating taxable profit on Apple products like iPhones and iPads.
This amounted to restricted 'state aid' to a private firm, it is claimed.
Both Apple and the Irish Government have repeatedly denied breaching state aid rules and are likely to challenge today's ruling in the European courts.
The case is one of the most high-profile in the fight to redraw boundaries on aggressive tax avoidance, a fight which has put the EU at odds with the US government.

Apple has had a base in Ireland since 1980 and employs around 5,500 people in the country, with its biggest operations in Cork.
Commissioner Margrethe Vestager's ruling comes a week before Apple's biggest product launch of the year, with the iPhone 7 and a new version of the Apple Watch to be unveiled in San Francisco.

A new version of the Apple Watch is about to be unveiled in San Francisco

Her office's investigations have also targeted tax planning by Starbucks and Fiat, both of which are appealing against rulings ordering them to pay back taxes to the Netherlands and Luxembourg.
Ireland's Department of Finance declined to comment in advance of the Commissioner's announcements.
But government sources in Dublin warned they were steeling themselves for an "adverse finding" and one added: "We could be talking about figures in the billions."
Ahead of the Commissioner's announcement, Apple outlined the scale of its operations across Europe, where it has 22,000 employees.

It also claimed to have helped create more than 1.4 million jobs since its App Store launched eight years ago, and said it spent 11 billion euro (£9.4 billion) with more than 4,500 European suppliers in 2013.
Chief executive Tim Cook told the Washington Post earlier this month: "I hope that we get a fair hearing. If we don't, then we would obviously appeal it."