Europe to Slap Apple with a Billion+ Euro Fine for Back Taxes

A two-year European Commission investigation into Apple’s tax practices in Ireland may result in a fine for well over one billion euros in back taxes, Reuters reports. If the fine is handed down, it would be Europe’s largest tax penalty ever. The Commission, which issues its ruling on Tuesday, is expected to order Dublin to recoup the recommended billion euro sum, though it will task Irish authorities with calculating the exact amounts owed based on Apple’s profits.

The European Commission recently concluded that Apple, the world’s most valuable public company, had received “illegal state aid” from Ireland in the form of a tax shelter that allowed the tech company to safeguard billions of dollars in profit by paying an ultra-low 2% tax rate. The 130-page judgment on Apple’s Ireland holdings argued that Apple’s taxes had been contrived and “reverse engineered” to minimize its bills, according to the Reuters report.

In 2014, Ireland was accused of maintaining tax havens in order to attract tech investment and jobs. Apple currently has thousands of workers in the Irish city of Cork, where it is the largest private employer. Facebook is also currently being sued by the IRS under suspicion of having underreported the value of assets transferred to Ireland by billions of dollars, which may very well be taxable.

This has resulted in a peculiar situation in which Ireland is expected to appeal the ruling and argue that Apple does not owe it billions of dollars in back taxes.

Earlier this week, the U.S. Treasury issued a warning that clawing back taxes from Apple could result in an “undesirable precedent” and that the European Commission was in danger of becoming a “supranational tax authority” operating beyond accepted international tax norms, according to The Financial Times.

CEO Tim Cook maintains that the company fully complies with international tax regulations and has criticized the European tax system in the past. In his recent interview with The Washington Post, Cook commented that the profits Apple had sheltered in Ireland are likely subject to U.S. taxes and that Apple would keep the money overseas until a fairer federal tax rate is established: “[We’re] not going to bring it back until there’s a fair rate. There’s no debate about it… It’s not a matter of being patriotic or not patriotic. It doesn’t go that the more you pay, the more patriotic you are.”

“We are the largest taxpayer payer in the United States. And so we’re not a tax dodger,” Cook later stated in the interview. Apple is expected to appeal the decision.