Financial Times reports the European Commission investigation into Apple’s tax affairs has found evidence of illegality

This article is more than 5 years old

This article is more than 5 years old

The European Union will accuse Apple of taking illegal aid from the Irish state through sweetheart tax deals over two decades, the Financial Times reported on Monday.

A European Commission investigation into Apple’s tax affairs in Ireland, where it has a rate of less than 2%, has found that the company benefited from illegal state aid, the newspaper reported, citing sources close to the matter.

Ireland is favoured as a European base by several major companies including Amazon, Facebook, PayPal and Twitter.

Apple employs 4,000 people at its European headquarters in Cork.

Ireland has a competitive corporate tax rate of 12.5%, which has been criticised by some other member states of the EU as unfair, but which Dublin has repeatedly defended.

But a 2013 investigation by the US Senate found that Apple paid a lower rate by channelling overseas sales through subsidiaries in a deal negotiated with the Irish government.

Apple did not immediately respond to a request for comment, but both the Irish government and Apple have previously denied the company was given a special deal.

The Organisation for Economic Cooperation and Development (OECD) this month began efforts to crack down on “aggressive” tax avoidance by multinational companies, such as the mechanism known as the “Double Irish”.

Under such arrangements, a subsidiary based in a higher-tax country pays another subsidiary based in a tax haven, reducing the amount of tax the corporation pays on overall profits.

Ireland has indicated that such loopholes could be closed amid pressure from the OECD.

The 34 OECD nations have proposed new international measures aimed at forcing companies to report their profits and holdings country-by-country, increasing transparency and stopping common methods of shielding profits from tax.