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EU ministers line up to take bite out of Apple

September 10, 2016

EU finance ministers have discussed ways to ensure international companies such as Apple pay fair taxes. This comes after the European Commission called on the tech giant to pay at least 13 billion euros in back-taxes.

Giant Apple logo on a building, as seen through a car's sideview mirror.
Image: picture-alliance/dpa/G. Mabanglo

European Union finance ministers are lining up to get a slice of Apple's tax revenue following a controversial ruling last month by the European Commission, which found the US technology giant had vastly underpaid its corporate taxes for more than a decade.

Dutch Finance Minister Jeroen Dijsselbloem appeared to be first in line, warning Apple on Saturday to "get ready" to pay up. His comment came after a two-day meeting of his EU counterparts in the Slovak capital, Bratislava.

The ministers were discussing ways to harmonize tax rules for foreign firms. Dijsselbloem said corporations "have an obligation to pay taxes in a fair way."

"International tax loopholes are a thing of the past," he added.

His British counterpart Philip Hammond concurred, saying the EU was keen "to make sure that international corporations pay the right tax at the right place."

"That's the fair way to do it," Hammond said, "and we are going to make sure it happens."

Last month the EC ordered Apple to pay 13 billion euros ($14.6 billion) in back-taxes dating back more than a decade. The Commission concluded that Apple paid an effective corporate tax rate of just 0.005 percent on its European profits in 2014 - equivalent to just 50 euros for every million earned.

Apple could owe Ireland billions in tax

The emerald Apple

Apple's European headquarters is in Ireland, which stands to gain a massive windfall if the ruling is upheld. But Ireland - as well as Apple) - opposes the ruling because the country has benefited from the current agreement, particularly in terms of the 5,000 jobs created.

Small countries can reap huge benefits by taking in large multinational companies that generate huge revenue streams. For starters, such firms hire a lot of locals, which in a small country can have a disproportionately positive impact on a nationwide unemployment rate, as well as the country's economy.

The Commission ruled that Dublin gave Apple favorable tax terms that were tantamount to state aid - illegal under EU rules.

'Sham operations'

EU Competition Commissioner Margrethe Vestager slammed Apple's operations in Ireland, calling them a "sham" designed to funnel revenue from throughout the European Union to avoid paying tax.

Other EU countries, including Austria, Italy and France, are following the case closely, and expressing interest in a possible payout, according to Austria's Finance Minister Hans Joerg Schelling, who spoke on the sidelines of the two-day summit.

"If it's legally accurate, you can be sure that as minister of finance I will take it," Schelling said, adding: "We Austrians are looking at it intensively."

As part of its historic decision, which angered Washington, the Commission said other EU countries could also claim a slice of the 13 billion euros which, with interest, could reach 19 billion euros.

bik/tj (AP, AFP)