Apple's Tax Deals with Ireland Deemed Illegal
Apple's tax breaks agreed with the Irish government have been deemed illegal state aid according to the European Commission (Reuters)

A European Commission report into Apple's financial dealings in Ireland claims that tax breaks given to the company over 20 years allegedly constitute illegal state aid.

The investigation claims deals struck in 1991 and 2007 with the Irish government are not compatible with the internal market of the European Union.

Apple has responded to the publication of the report and its allegations, saying it "has received no selective treatment from Irish officials over the years".

The report states:

"The Commission is of the opinion that through those rulings the Irish authorities confer an advantage on Apple. That advantage is obtained every year and ongoing. At this stage, the commission has no indication that the contested measure can be considered compatible with the internal market."

The report continues:

"At this stage, the Commission considers that the measure at issue appears to constitute a reduction of charges that should normally be borne by the entities concerned in the course of their business, and should therefore be considered as operating aid."

It is unclear from the report whether the Commission is going to seek redress from the Irish government, Apple, or both.

The Commission has the power to fine Apple up to 10% of its annual turnover, which in 2013 was a huge $171bn (£105bn). The Commission has the power to fine Ireland up to €1bn (£780m).

Apple has continually denied any wrong-doing in its tax dealings, with its chief financial officer, Luca Maestri, telling the Financial Times:

"It's very important that people understand that there was no special deal that we cut with Ireland. We simply followed the laws in the country over the 35 years that we have been in Ireland."