What has the commission ruled?
That Ireland provided Apple illegal aid through a favorable tax arrangement, which violated the European Union's state-aid rules. It's the largest tax penalty in a three-year crackdown on sweetheart fiscal deals granted to multinationals by EU nations. The EU, like other global regulators, has targeted firms that sidestep taxes by moving around profits and costs to wherever they are taxed most advantageously -- exploiting loopholes or special deals granted by friendly governments.
How does such a "sweetheart deal" work?
In a press release the commission published a graphic illustrating how Apple benefitted from Ireland's state aid.
What has the commission said?
EU Competition Commissioner Margrethe Vestager said in an emailed statement that member states of the EU cannot give tax benefits to selected companies. "This is illegal under EU state aid rules," she said. "The commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years."
What period of time does the ruling cover?
The decision covers taxes which would have been due in 2003-2014.
How much tax does the commission say Apple paid?
It says Apple paid an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014.
How have Apple and Ireland reacted?
Apple and the Irish government have both vowed to appeal the decision.
In a statement, Apple said: "The European Commission has launched an effort to rewrite Apple's history in Europe, ignore Ireland's tax laws and upend the international tax system in the process. The commission's case is not about how much Apple pays in taxes, it's about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe. Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned."
Irish Finance Minister Michael Noonan said: "I disagree profoundly with the commission's decision." Ireland's tax system is founded on the strict application of the law "without exception," he said.
What has the U.S Treasury said?
In an emailed statement, a U.S. Treasury spokesperson said: "We believe that retroactive tax assessments by the commission are unfair, contrary to well-established legal principles, and call into question the tax rules of individual Member States. The commission's actions could threaten to undermine foreign investment, the business climate in Europe, and the important spirit of economic partnership between the U.S. and the EU. We will continue to monitor these cases as they progress, and we will continue to work with the commission toward our shared objective of preventing the erosion of our corporate tax bases."
Can Apple afford to pay the bill?
Easily. As of last month, Apple had $232 billion in cash, with about $214 billion of that being held overseas.
Who receives the money if Apple ends up paying?
The money gets paid to Ireland, which puts those funds into an escrow account and leaves it there until any appeal process has fully concluded.
Why might Ireland not want this money?
Because Ireland says it did nothing wrong in the first place. And the risk of damage to Ireland's attractiveness to multinationals may cost it much more in the long term through lost foreign investment than it will gain out of Europe's ruling today.
Does this affect Dublin's post-Brexit attractiveness to companies?
Probably not, as although Tuesday's ruling concerns taxes, it is not related to the 12.5% corporation tax rate companies based in Ireland must pay. The ruling is also unrelated to access to the European single market.
Is the EU singling out Apple or forcing other companies to obey too?
It's not just Apple. The EU authority has already ordered the Netherlands and Luxembourg to recover as much as 30 million euros ($33.3 million) apiece in back taxes from Starbucks Corp. and a Fiat Chrysler Automobiles NV unit. Ms. Vestager is also probing Amazon Inc. and McDonald's Corp.'s affairs in Luxembourg and has signaled she's willing to add Google parent Alphabet Inc.'s 130 million-pound ($184 million) tax deal with the U.K. to her growing list of investigations.
What is the immediate next step?
Appeal. Ireland's Mr. Noonan said the commission left him with "no choice" but to move toward an appeal before the EU courts. "This is necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state-aid rules into the sovereign member state competence of taxation," he said.
Apple has also said it will appeal. The appeal process could take as long as three or four years.
-- Bloomberg News