Brussels’ ruling on Apple causes outrage in DC

In a milestone decision on August 30, 2016 following an in-depth state aid investigation launched in June 2014, the European Commission (EC) has concluded that Ireland granted undue tax benefits of up to EUR 13 billion to US-based giant technological company Apple, thirteen times what’s been expected by most analysts. “Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules,” said EU Commissioner Margrethe Vestager.

Considering that Apple has benefited from an effective corporate tax rate of 1% from 2003 down to 0,005% in 2014, the EC deemed that Apple must now repay the illegal aid to Ireland. “It’s maddening, it’s disappointing, it’s clear that this comes from a political place, it has no basis in fact or in law,” Apple CEO Tim Cook said about the EC ruling on Irish TV RTE. The White House expressed concern about a “unilateral approach” in state aid negotiations and “unfair” treatment of US companies. “It reflected an attempt to reach into the US tax base to tax income that ought to be taxed in the United States,” Treasury Secretary Jacob Lew added.

The EC ruling apparently came as a huge surprise in Washington DC although European companies have paid around EUR 100 billion in recent years on the basis of controversial rulings by the US government. As both Apple and the Irish government have signaled their intent to appeal, many across Europe welcomed the EC ruling as a necessary step to rebalance trade relations with the United States.