Apple hit with £11bn tax bill after EU ruling

Apple was hit with a record-breaking £11 billion back tax bill today after Brussels ruled that the iPhone maker had entered an illegal “sweetheart deal” with the Irish government.

The world’s most valuable company was given “selective” treatment that allowed it to pay “substantially less tax than other businesses over many years”, according to a European Union regulator.

The Irish authorities have now been ordered to recover the tax — plus interest — from the Silicon Valley giant following a three-year investigation.

Apple reacted furiously to the ruling. The tech giant said in a statement that it would have “a profound and harmful effect on investment and job creation in Europe” and the company would launch an appeal.

Competition Commissioner Margrethe Vestager claimed the arrangement with Dublin meant Apple paid an effective corporate tax rate of just one per cent on its European profits in 2003, falling to 0.005 per cent in 2014.

She said: “Member states cannot give tax benefits to selected companies — this is illegal under EU state aid rules.”

The investigation focused on two Dublin tax rulings in 1991 and 2007 that allowed Apple to reduce its tax bill to far below the official Irish corporation tax rate of 12.5 per cent.

It is easily the biggest tax demand in the history of the European Union, dwarfing the previous record penalty of £1.2 billion levied against French energy giant EDF last year.

The vast scale of the bill — equivalent to twice Ireland’s entire annual corporation tax revenue — is enough to pay for the country’s health system for a year. It stunned industry experts who had predicted a smaller penalty running to hundreds of millions of pounds.

Apple shares fell by around three per cent in trading ahead of the official market opening in New York. However, the California-based multinational has more than £170 billion in cash at its disposal and would easily be able to afford the tax demand.

In its statement Apple said: “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.