Apple tax investigation: Brussels to unveil details of illicit state aid probe

Technology giant facing fine from Brussels watchdog

(AP)

Technology giant Apple will be told tomorrow why it is being investigated in depth by the European Commission, to see whether it benefited from illicit state aid in Ireland.

The European Commission launched a formal investigation into the tax affairs of Fiat in Luxembourg, Starbucks in the Netherlands and Apple in Ireland in June.

At the time, the European competition watchdog said it was looking at whether the deals approved by all three states may have resulted in an overly favourable treatment for the three multinationals.

It said the Commission has been investigating under EU state aid rules certain tax practices in several member states following media reports alleging that some companies received significant tax reductions by way of “tax rulings” issued by national tax authorities.

In Apple's case, the Commission will focus on allegations that two tax deals agreed between Irish authorities and the Cupertino giant on the grounds that it amounted to illegal state aid, the Financial Times reported.

Under the EU's state aid rules, national authorities cannot take measures allowing certain companies to pay less tax than they should if the tax rules of the member state were applied in a fair and non-discriminatory way. If the investigation results in any findings of unlawful state aid substantiated, Apple could be asked to pay back billions of euros.

The Irish government has repeatedly denied offering Apple special treatment. Apple has always insisted it complies with all relevant rules and has not benefited from sweetheart deals in the country.

Today, Dublin said it “welcomed that opportunity to clarify important issues about the applicable tax law” and insisted that the iPhone maker “did not receive selective treatment and was taxed fully in accordance with the law”.

Apple's decision to set up its international headquarters in Ireland, where it paid less than a 2 per cent rate in 2012, has come under intense scrutiny with some critics arguing that the country effectively serves as a tax haven for the American technology giant.

The Commission will also outline its reasons for launching an investigation into Fiat's tax deals in Luxembourg tomorrow.