Apple CEO Tim Cook: The EU is putting jobs and investment at risk over Irish tax ruling

Apple responds to EU ruling over Irish taxes

Apple CEO Tim Cook has responded to the demand from the European Commission that it should pay back some €13bn in unpaid tax to the Irish government by accusing the European Union of targeting Apple, and warned that it is putting jobs and investment at risk as a result of its ruling.

"We have become the largest taxpayer in Ireland, the largest taxpayer in the United States, and the largest taxpayer in the world. In Ireland and in every country where we operate, Apple follows the law and we pay all the taxes we owe," claimed Cook.

He added that the judgment could have the "most profound and harmful effect" on jobs and investment in Europe.

In an open letter, the company added that the European Commission was trying to "rewrite Apple's history in Europe, ignore Ireland's tax laws and upend the international tax system in the process".

It also rejected claims that it cut a special tax deal with the Irish government. "The opinion... alleges that Ireland gave Apple a special deal on our taxes. This claim has no basis in fact or in law. We never asked for, nor did we receive, any special deals. We now find ourselves in the unusual position of being ordered to retroactively pay additional taxes to a government that says we don't owe them any more than we've already paid."

It went on to claim that as nearly all of its research and development is done out of California, that is where it should pay the bulk of its taxes. "European companies doing business in the US are taxed according to the same principle. But the Commission is now calling to retroactively change those rules," the company claimed.

The Irish government also opposes the European Commission's judgment, believing that it would affect the country's ability to attract technology companies and the high-value, well-paid jobs that they bring.

Cook was speaking after the judgment caused an outcry among politicians in the US. US House of Representatives Speaker Paul Ryan described the decision as "awful". He claimed that it was "in direct violation of many European countries' treaty obligations".

He added, for good measure, "this is precisely the kind of unpredictable and heavy-handed taxation that kills jobs and opportunity".

The investigation into Apple's tax affairs in Ireland was launched in June 2014 following claims that Apple funnelled all its sales and profits in the European Union via Ireland, taking advantage of a special deal it struck with the Irish government back in 1991.

That deal provided tax incentives for the company to locate there, so that it paid a radically lower rate of tax on profits than Ireland's already low 12.5 per cent corporate tax rate. Other companies, including storage vendor EMC and PC maker Dell, also took advantage of similar deals to locate their regional operations in Ireland.

According to Competition Commissioner Margrethe Vestager, Apple paid just one per cent tax on its European profits in 2003 and 0.005 per cent in 2014. The European Union claims that the tax incentives amount to unapproved state aid and were therefore illegal. It has therefore told the Irish government to reclaim back-taxes estimated at around €13bn.

It is unclear whether the European Commission will extend its investigation - and demands for back payments - to other companies that have located in Ireland or, indeed, whether it will look elsewhere in Europe.

Many companies, such as Amazon, were also enticed to set up head offices in Luxembourg with similar kinds of deals and incentives - at the same time as the current president of the European Union, Jean-Claude Juncker, was Luxembourg's prime minister.