EU’s Apple Tax Case Prompted by Senate Tip Off, Vestager Says

(Bloomberg) -- The European Union’s Apple Inc. tax probe came after the U.S. Senate “tipped us off” about the iPhone maker’s practices, according to EU Competition Commissioner Margrethe Vestager.

Vestager, who has faced criticism from across the Atlantic for ordering the U.S. company to pay Ireland 13 billion euros ($14.7 billion) in back taxes plus interest, said on Friday that the “story of the Apple investigation began in the United States” not in Europe.

“Because the U.S. Senate cares as much as we do about making sure companies pay their fair share of tax,” she said in prepared remarks for a speech in Copenhagen. “And it was their investigation into Apple -- and U.S. transparency rules -- that tipped us off that the company might have received state aid.”

The European Commission ruled last month that Apple must pay up after Ireland illegally slashed the company’s tax bill, in a record crackdown on fiscal loopholes exploited by multinationals. The final amount payable could be as much as $19 billion, Irish officials said.

U.S. Senate

But it was a hearing by the U.S. Senate Permanent Subcommittee on Investigations in 2013 where it was first disclosed that Apple cut its global tax bill by tens of billions of dollars using a series of Irish subsidiaries. The EU opened a formal probe into Apple’s tax affairs the following year, under Vestager’s predecessor.

Responding to the EU tax-repayment order, U.S. Treasury Secretary Jacob J. Lew said it was “not appropriate” for the EU “in the name of state aid” to “be rewriting tax law retroactively, reaching into a tax base that properly should be a U.S. tax base, because it’s U.S. income.”

While Lew didn’t single out the EU-Apple case, President Barack Obama said this week that international tax policies should be better coordinated among countries to avoid problems.

“There’s always a danger that if one of us acts internationally” it may impact our ability to collect taxes from the same company, Obama said at the close of the Group of 20 summit in Hangzhou, China. If a company pays into Europe, the U.S. Treasury “is shortchanged.”

To contact the reporter on this story: Peter Chapman in Brussels at pchapman10@bloomberg.net. To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Jones Hayden, Dara Doyle