Tech Industry

Ireland seeks to join Apple's appeal against EU tax demands

The Irish government takes a big first step toward standing with the iPhone maker in its fight against a bill that could reach $14.5 billion.

Apple's campus in Cork, Ireland.

Aidan Crawley/Bloomberg via Getty Images

Apple has an ally in its European tax battle.

In a Friday vote, the Irish cabinet agreed to ask the country's parliament to endorse Apple's legal appeal against a European Union demand for up to $14.5 billion in back taxes, Reuters reported.

The dispute stems from tax benefits that Ireland set up for Apple years ago, which the EU on Tuesday described as "illegal aid" that allowed the iPhone maker to "pay substantially less tax than other businesses."

In 2014, according to the EU, that aid meant Apple's effective corporate tax rate on European profits was just 0.005 percent.

Apple fired back against the ruling, insisting it had done nothing wrong.

"The Commission's move is unprecedented and it has serious, wide-reaching implications," CEO Tim Cook wrote in an open letter. "It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been."

Now, motivated to protect its ability to draw large international companies into its economy, Ireland will put its support behind Apple's legal challenge. A formal endorsement seems likely to come next week in a parliamentary vote, with support from Ireland's coalition and opposition parties.

Its the latest phase of increased scrutiny over Ireland's tax dealings in recent years. The European Commission alleges that Ireland isn't collecting enough taxes and that it cuts deals with large companies that allow them to pay less than the country's low 12.5 percent corporate tax rate.

With over 90 percent of its cash located overseas, Apple is able to minimize its tax impact by avoiding territories with higher rates, including the United States, where it is headquartered.