A United States tipoff led to Apple’s European Union tax bill

“Ireland gave Apple two tax rulings to allow them to book the huge majority of their profits in a head office that only exists on paper”.

“Ireland has a very attractive corporate tax rate, and it’s not up to me or anyone in the Commission to question that”, Ms Vestager told France 24.

Heavily-indebted Spain, which is under threat of an European Union fine for breaking spending rules, said it was urgent to know how much Apple may have denied Spanish taxpayers. With regulators focused on the two American technology giants, the battle is being closely watched by other firms like China’s Internet giant Baidu, that hope to challenge the dominance of USA firms in Europe’s Internet market. “The law was applied fully and appropriately, and Apple paid its taxes due in Ireland”. The Revenue Commissioners didn’t express a view on where those other profits were to be taxed, that wasn’t within its remit, only that they were not subject to tax in Ireland. Ireland has about 4.6 million people (by comparison, Sydney has roughly 5 million, and Apple has eight stores in Sydney alone).

On the House side of the US Congress, House Ways and Means Committee Chairman Kevin Brady (R-TX) called the EC’s decision a “predatory and naked tax grab”, and used the ruling as another opportunity to call for reforms to the US tax Code, which he said is driving businesses to keep profits offshore.

Online retailer Amazon.com Inc (AMZN.O) and hamburger group McDonald’s Corp (MCD.N) face European Commission’s probes over taxes in Luxembourg, while coffee chain StarbucksCorp (SBUX.O) has been ordered to pay up to 30 million euros ($33 million) in back-taxes to the Dutch state.

Apple’s bill could reach 19 billion euros ($21 billion) with interest, and both the company and Ireland, Apple’s European headquarters, are appealing the European Commission ruling.

Apple pays its taxes in Ireland, which has been accused of setting a rate of just 1 percent of the company’s profits from sales in all of Europe, instead of the applicable 12.5 percent.

Austria’s finance minister Joerg Schelling has said European Union countries are examining their right to Apple tax revenue. “[Companies] will look for more predictable tax regimes”.

To be sure, the EC’s decision in the Apple case will serve as yet another reminder to United States policymakers that tax reform is needed.

Ireland’s two main parties, Kenny’s Fine Gael and the opposition Fianna Fáil, which supports the minority government, backed the appeal. During the appeal, any amounts recovered would be held in escrow pending the outcome of the appeal process.