The European Commission has ordered the Irish government to recover up to €13bn - plus interest - from American tech giant Apple.
The Brussels executive said that Ireland had granted undue tax benefits to the company, allowing it to pay a corporate tax rate of one per cent on its European profits in 2003, down to 0.005 per cent in 2014.
Following an in-depth investigation launched in June 2014, the Commission found that two Irish incorporated companies of the Apple group, Apple Sales International and Apple Operations Europe, attributed most of their sales profits internally to a "head office". However, the Commission established that these "head offices" only existed on paper.
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This tax treatment, says the Commission, allowed Apple to avoid taxation for almost all of its sales across the EU single market.
The deal was deemed illegal because it gives the company a clear advantage over other businesses subject to national taxation rules.
European competition Commissioner Margrethe Vestager commented, "Member states cannot give tax benefits to selected companies - this is illegal under EU state aid rules. The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple."
Welcoming the ruling, EPP group MEP Burkhard Balz said, "To protect the internal market and to make sure that nobody plays foul we need consistent, rigorous and bold enforcement of competition rules."
"Anyone doing business in the European Union has to obey European rules."
However, Balz disagreed with Ireland reclaiming Apple's unpaid taxes. "I feel a strong discomfort about that," he said.
"This is a weird way of encouraging countries to infringe competition rules. The money clawed back should flow into the EU budget instead."
Meanwhile, Apple CEO Tim Cook dismissed the ruling as "political crap."
Ireland, which frequently grants preferential tax treatment to multinationals in order attract foreign investment, is expected to appeal the Commission's verdict.