The European Commission has directed Apple Inc to pay €13 billion (more than 97,000 crore rupees) plus interest after the regulatory body on Tuesday said the company illegally gained from a “selective tax treatment” in Ireland, Bloomberg reported. Ireland and Apple have said they will contest the penalty, which jeopardises the European Commission’s relationship with the United States. The US has claimed it is a victim of unfair targeting.

The European Commission said Ireland’s favourable tax policy gave the world’s richest company a “significant advantage over other businesses.” The penalty is the regulator’s biggest decision in a three-year concentrated campaign against tax favouritism.

In an email, EU Competition Commissioner Margrethe Vestager said, “Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years. This selective treatment allowed Apple to pay an effective corporate tax rate of 1% on its European profits in 2003 down to 0.005% in 2014.” In 2014, Ireland was accused of circumventing international tax laws to offer Apple a sheltered deal, which it denied.

The iPhone maker was one of the first corporations to be caught in the EU campaign against tax-avoidance. According to a Reuters report, the penalty, which is 40 times larger than any European Commission bill issued to a company in such a case, could be decreased if other countries increased the taxes demanded from the company, an EU official said.

The United States tech giant reported a record $18 billion in earnings last year.