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Apple tax deal 'illegal state aid' claim EU chiefs

The European Union's competition watchdog says tax rebates that Ireland granted iPhone maker Apple appear to amount to illegal state aid and may have to be recouped.

Apple funnels the bulk of its international sales through subsidiaries in Ireland, where it benefits from low, negotiated tax deals.

In a letter to the Government published today, the 28-nation bloc's executive Commission said the tax treatment granted to Apple raises "doubts about the compatibility" with EU law.

The Commission says tax deals struck with Apple in 1991 and then 2007 show "several inconsistencies" and may not comply with international taxation standards.

The EU first announced the probe in June. It's now requesting further documents from the Revenue Commissioners before making a decision, which is likely to take several months.

The inquiry involving Ireland relates to the Irish branches of two Apple entities - Apple Sales International and Apple Operations Europe.

The inquiry is not focusing on our 12.5pc corporation tax rate, but on the two so-called tax rulings, which involve "comfort letters" being issued by the tax authorities of a country to a specific company clarifying how its corporate tax will be calculated or on the use of specific tax provisions.

"The Commission is of the opinion that through those rulings the Irish authorities confer an advantage on Apple," the letter from European Competition Commissioner Joaquin Almunia said.

"That advantage is obtained every year and on-going, when the annual tax liability is agreed upon by the tax authorities in view of that ruling."

The Government here has said repeatedly that it is confident there was no breach of state aid rules.

Apple has also repeatedly said it has been given no special consideration by Irish authorities.

Under EU competition law, if a government is found to have unfairly helped a company with state aid, it must then recover that money from the company.