Apple CEO Fires Back at EU's $14.5 Billion Tax Decision

Tim Cook Says Company Pays the Most Taxes in the World

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Apple CEO Tim Cook.
Apple CEO Tim Cook. Credit: Marlene Awaad/Bloomberg

Apple CEO Tim Cook fired back Tuesday following the European Commission's ruling that Ireland illegally gave the tech titan preferential tax breaks for more than a decade.

The Cupertino, Calif.-based device maker was ordered to repay $14.5 billion, plus interest, as part of the commission's judgement. For a full breakdown on the ruling, see Apple's $14.5 Billion EU Tax Ruling: Here's What You Need to Know.

In "A Message to the Apple Community in Europe" posted on the company's website, Mr. Cook explains that Apple is the largest taxpayer in Ireland, the U.S. and the entire world. He then goes on to explain why the commission's ruling makes no sense to him:

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 opinion issued on August 30th 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.

The issue at hand, Mr. Cook says, is not just about the tax amount, but more about which government gets to collect it, he says.

In Apple's case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States. European companies doing business in the U.S. are taxed according to the same principle. But the Commission is now calling to retroactively change those rules.

This move, the CEO says, is "unprecedented and it has serious, wide-reaching implications."

It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been. This would strike a devastating blow to the sovereignty of EU member states over their own tax matters, and to the principle of certainty of law in Europe.

When Apple first set up shop in Cork back in 1980, it had 60 employees. "Cork was suffering from high unemployment and extremely low economic investment," Mr. Cook says. Today, it employs nearly 6,000 people across Ireland, with the vast majority still in Cork. Mr. Cook says the ruling could affect job creation.

Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe. Using the Commission's theory, every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed.

Apple will appeal the ruling, with Mr. Cook saying, "Ireland has said they plan to appeal the Commission's ruling and Apple will do the same. We are confident that the Commission's order will be reversed." The appeal process may last as long as three or four years.