Apple to receive multi-billion dollar Irish tax bill from EU

Apple is to receive a multi-billion dollar tax bill from the European Commission, which has ruled against Ireland's tax dealings with the US company.

The California-based iPhone maker has been routing its significant profits through Ireland in a tax-saving scheme that has now been ruled as a breach of EU rules.

The decision follows a three-year investigation into Apple’s tax dealings in Europe, with the Brussels watchdog concluding that the Irish arrangements - which date back to the early 1990s - were illegal under state aid rules and gave Apple favourable treatment over other businesses.

The ruling is likely to anger Washington, which has accused Brussels of campaigning against US corporate successes and of distorting global efforts to curb corporate tax avoidance.

Amazon and McDonald's also face similar probes over taxes in Luxembourg, while Starbucks has been ordered to pay up to €30m (£26m) to the Dutch state.

For Apple, whose earnings of $18bn (£14bn) last year were the biggest ever reported by a corporation, finding several billion dollars should not be an insurmountable problem, even if the bill ranks as the largest-ever such order. Both the company and Irish government say they will appeal such a ruling.

In a hard-hitting defence of its tax planning and corporate structure, Apple warned of the ramifications for future investment in Europe, where it employs 22,000 people.

"The European Commission has launched an effort to rewrite Apple's history in Europe, ignore Ireland's tax laws and up-end the international tax system in the process," Apple said.

"The Commission's case is not about how much Apple pays in taxes, it's about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe.

"Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned."

As of June, Apple reported it had cash, cash equivalents and marketable securities of $231.5bn, of which 92.8 per cent ($214.9bn) were held in foreign subsidiaries.

It paid $2.67bn in taxes during its latest quarter, leaving it with net income of $7.8bn, an effective tax rate of 25.5 percent, according to company filings.

The European Commission in 2014 accused Ireland of dodging international tax rules by letting Apple shelter profits worth tens of billions of dollars from tax collectors in return for maintaining jobs. Apple and Ireland have rejected the accusation.

The source said the Commission will recommend a figure in back taxes that it expects to be collected, but it will be up to Irish authorities to calculate exactly what is owed.

Any bill in excess of €1bn would be far more than the €30m the Commission ordered Dutch authorities to recover from Starbucks and Luxembourg from Fiat Chrysler for tax deals. Both companies and countries have appealed those decisions.

A bill of €300m this year for Swedish engineering firm Atlas Copco AB to pay Belgian tax is the current record.

Last month, Apple’s CEO Tim Cook said that his company was working on artificial intelligence and augmented reality technology, technologies that will become the cornerstone of its business in the future. 

Apple's massive Irish tax bill infographic

Apple's Ireland tax haven  

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