European Union regulators announced today that following a two-year investigation into Ireland's treatment of two corporate entities operated by Apple in Cork, they've concluded that Ireland illegally offered tax breaks to Apple dating back to 1991 that by 2014 amounted to them paying an effective corporate tax rate of 0.005 percent. In a just-released statement, European competition commissioner Margrethe Vestager said, "Member States cannot give tax benefits to selected companies — this is illegal under EU state aid rules... [and it's clear] Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years."

Vestager says the European Commission concluded that Apple owes 13 billion euros, or $14.5 billion in back taxes, plus interest, after "two tax rulings issued by Ireland to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991."

Apple CEO Tim Cook immediately issued an open letter "to the Apple community in Europe" saying that Apple's first operations in Cork date back 36 years, "long before introducing iPhone, iPod or even the Mac," and "As our business has grown over the years, we have become the largest taxpayer in Ireland, the largest taxpayer in the United States, and the largest taxpayer in the world."

Cook says further, "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." And he says that the claim that Apple gave special tax breaks to the company "has no basis in fact or in law."

As the SF Chronicle reports, Vestager went further in a news conference to illustrate her point about how easily Apple has been getting off, tax-wise, saying that for every million euros earned, Apple had only been paying 50 euros in tax.

If Apple were to comply with the ruling, it would be a major windfall for Ireland, a country of just 4.6 million people, the equivalent of over $3,000 for every person there.

This could get interesting given that claims about Apple dodging paying their fair share in taxes go back a while now, and Ireland has long been known as a low-tax shelter by many American companies. Back in 2012, the New York Times reported how Apple paid only $3 billion in worldwide taxes the previous year, an effective tax rate of 10 percent, which was about 14 percent less than one would expect from non-tech companies like Wal-Mart. They did this, reportedly, by allocating about 70 percent of its profits to overseas entities, including the two they own in Ireland.

Earlier this year, the mayor of Cupertino, home to Apple HQ which is soon to look like a giant spaceship, was waging a campaign to shine light on how little Apple is paying in local and US taxes. Ron Eckstein of the advocacy group Americans for Tax Fairness put it this way: "They’re all just as good at engineering their own tax rates as they are at engineering new technology."

As Bloomberg reports, Irish Finance Minister Michael Noonan said, "I disagree profoundly with the commission’s decision," and he claims that there had been no exceptions made in how Apple was taxed.

Specifically, regulators object to the practice of routing all the company's European profits through the "head offices" in Ireland, and thereby justifying only paying taxes in that one low-tax country.

From the statement:

In fact, the tax treatment in Ireland enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire EU Single Market. This is due to Apple's decision to record all sales in Ireland rather than in the countries where the products were sold. This structure is however outside the remit of EU state aid control. If other countries were to require Apple to pay more tax on profits of the two companies over the same period under their national taxation rules, this would reduce the amount to be recovered by Ireland.

Cook says that this ruling could "strike a devastating blow to the sovereignty of EU member states over their own tax matters," adding, "Ireland has said they plan to appeal the Commission’s ruling and Apple will do the same."

Previously: Apple Barely Pays Any Taxes