EU competition officials could force tech giant Apple (NASDAQ:AAPL) to pay billions in back taxes to the Republic of Ireland, making it Europe’s biggest tax penalty to date.
The final ruling is expected Tuesday and follows a three-year probe into Apple’s Irish tax affairs.
EU competition commissioner Margrethe Vestager estimated Apple will have to pay back tax benefits worth around €13bn.
"The Commission has concluded that Ireland granted undue tax benefits of up to €13 billion to Apple.This is illegal under EU state aid rules, because it allowed Apple to pay substantially less tax than other businesses. Ireland must now recover the illegal aid," read a statement following the ruling.
However it will be down to Irish authorities to calculate the exact amount.
Apple's response
Responding to the ruling, Apple said it was confident of a successful appeal:
"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."
"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."
"I disagree profoundly with the Commission," responded Ireland Finance Minister Michael Noonan.
"The decision leaves me with no choice but to seek cabinet approval to appeal. This is necessary to defend the integrity of our tax system," he said.
Not a fine
Margrethe Vestager affirmed that the decision was not a fine or a penalty, but "unpaid taxes".
In September 2014, the European Commission ruled that Ireland had given illegal state aid to the iPhone maker.
EU law dictates that national tax authorities are not allowed to give tax benefits to selected companies, which would count as illegal state aid.
Rulings made by the Irish government in 1991 and 2007 allowed Apple to minimise its tax bill, claims the regulator.
Its company structure enabled it to channel international sales through Ireland in order to take advantage of the arrangement.
Last year, the commission ruled that Starbucks would have to pay back €30mln (£25.6mln) to the Netherlands.
--UPDATED RULING--