TECH

Apple's Irish Tax Deal Might Be 'State Aid' Says EU

30/09/2014 09:16 BST | Updated 30/09/2014 19:59 BST

A European investigation has said it believes Apple took illegal tax aid from the Irish government over 20 years.

The European Commission published a letter originally sent to Ireland this summer, stating the preliminary findings of a probe into Apple's tax affair in the country. In the letter it said it suspected there may have been a 'sweetheart deal' designed to keep the company's European operation based in Ireland and that it might be illegal.

The letter can be read in full here.

Apple's tax rate in Ireland was reported to be less than 2% according to the Financial Times, despite the firm employing more than 4,000 people at its Cork HQ.

Many tech companies base European operations in Ireland, including Amazon, PayPal, Twitter and Facebook.

The statement by the EU follows a 2013 US senate investigation, which claimed Apple paid far less than the usual 12.5% corporate tax rate in Ireland by chaneling sales through subsidiaries.

The European commission is also investigating the tax affairs of international companies based in Netherlands (specifically relating to Starbucks) and Luxembourg (Fiat).

In response to similar claims, the Organisation for Economic Cooperation and Development (OECD) said earlier in September it would launch a new effort to close tax loopholes exploited by corporations seeking to avoid tax.

Ireland has denied offering illegal tax breaks to Apple or any tech company.

"This is simply the next normal procedural step in the State aid investigation process," said the Irish department of finance. "At this stage, the Commission has not formally decided that there is State aid, only that it is formally examining this case."

Apple said in a statement:

"Apple is proud of its long history in Ireland and the 4,000 people we employ in Cork. They serve our customers through manufacturing, tech support and other important functions. Our success in Europe and around the world is the result of hard work and innovation by our employees, not any special arrangements with the government. Apple has received no selective treatment from Irish officials over the years. We're subject to the same tax laws as the countless other companies who do business in Ireland.

Since the iPhone launched in 2007, our tax payments in Ireland and around the world have increased tenfold. To continue that growth and the benefits it brings to the communities where we work and live, we believe comprehensive corporate tax reform is badly needed.”