European Union regulators have in the recent past launched investigations on tax deals granted to various multinationals on the pretext that these deals were illegal. The most prominent of these companies included Apple Inc. which was under investigation by the European Anti-Trust regulator in Ireland while car maker Fiat SPA was under investigation in Luxembourg. According to the regulator, the tax breaks offered to these companies constituted illegal state support according to WallStreet Journal.
The investigations into Apple have concluded with the authorities stating that the company should pay $14.5 Billion to Ireland. These amounts represent illegal tax benefits Apple received from the Irish Government and does not include interest on the same amount. Both Apple and the Irish government have said they will appeal the said decision.
The decision by the European Commission states that members states cannot give tax benefits to selected companies. Apple benefited from deals made with the Government of Ireland which lowered the amounts of tax returns payable since 1991. Apple registered two companies in Ireland Apple Sales International and Apple Operations Europe which the Antitrust agency states reported financial returns below economic reality. Apple on its part paid a corporate tax of 1% which was then lowered to 0.005% in 2014 making it lower than what other firms paid.
You can read more about the decision by the Commission Here to understand how Apple masked its profits by accounting for all sales in European nations in Ireland.
