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EU Accuses Ireland of Offering State Aid to Apple

Apple image — The Apple Store, Santa Monica, Calif.

The European Union has accused Ireland of being a tax sanctuary for Apple, Reuters is reporting.

European Competition Commissioner Joaquin Almunia, in a letter, told the Irish government that it is offering the U.S. iPhone maker illegal state aid through tax arrangements that have “no scientific basis.” Rather, the provision helps the iPhone maker to avoid paying international tax on tens of billions of dollars in revenue.

Almunia said the tax deals agreed to in 1991 and 2007 are pretty much state aid, which breaks EU laws.

“The Commission is of the opinion that through those rulings the Irish authorities confer an advantage on Apple,” reads the letter from Almunia, who added that the money could yet be demanded from the U.S. company. According to EU competition law, if a government is found to have doled out state aid to a company without justification, it must then recover that money from the company.

Analysts said the deals struck with Ireland have saved Apple billions of dollars in tax.

Neither the Irish government nor Apple would comment on the matter, but have in the past denied any tax sheltering was occurring.

This is not the first time Apple has been accused of such measures.

Apple CEO Tim Cook appeared before a Senate panel in the U.S. last year to defend his company’s tax practices.

Sen. Carl Levin of Michigan accused Apple of using “ghost companies” in other countries to avoid paying more tax in the U.S. He described Ireland as a “tax haven” for Apple.

A Congressional report last year about Apple’s practices indicated that some of Apple’s overseas holdings had no employees and, instead, were run by Apple executives from its headquarters in Cupertino, Calif. By setting up shop in Ireland and other countries, Apple was able to find tax exemptions.

Cook, however, said Apple pays “all the taxes we owe — every single dollar.”

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