Apple will have to pay up to 13 billion euros ($14.5 billion) plus interest in back taxes to Ireland after the European Union found Tuesday that the USA technology giant had paid next to no tax across the bloc’s 28 countries for over 11 years.
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That’s essentially what the European Commission is saying in its ruling that the tax arrangements for Apple amounted to illegal state aid according to one view in the Finance Department.
Currently, the setup allows Apple to record all its sales across the EU’s 28 nations and 500 million consumers in Ireland.
The tech giant’s shares fell 0.8 per cent on the Nasdaq, putting the company down 3.2 per cent over the last two weeks.
Wall Street closed lower Tuesday as investors continued to think about interest rates and processed news of Apple owing back taxes to Ireland.
The EU says the illegal tax breaks began in 1991. The company has “never asked for, nor did we receive, any special deals”, it said, adding the ruling places all companies now operating throughout the euro zone “at risk of being subjected to taxes under laws that never existed”.
In a statement, Apple chief executive Tim Cook said there was no basis to the European Commission’s ruling, and the company would appeal. U.S law allows the President to double taxes on citizens and companies from countries which apply “discriminatory or extraterritorial taxes” on USA firms.
Noonan said Tuesday in a statement issued minutes after the judgment: “I disagree profoundly with the commission’s decision”. Apple’s scheme of sending profits to the island was ruled illegal by the Irish government.
He called the judgment an effort to “rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the global tax system in the process”.
Apple is not the only business facing a hefty tax bill after European Union regulators scrutinized member country policies.
Starbucks Corp (SBUX.O) has been ordered to pay up to 30 million euros ($33 million) to the Dutch state, while Amazon.com Inc (AMZN.O) and McDonald’s Corp (MCD.N) are also under investigation by the Commission, the EU’s executive arm.
In addition, Apple paid $400 million of current United States taxes on those profits, bringing total current taxes paid to $800 million, it said.
The ruling also puts the Obama administration in a tight spot.
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Badertscher agreed the ruling could discourage US companies from investing in Europe. Shame on Apple for dodging USA taxes. Apple has the largest stash of foreign profits – more than $200 billion – of any USA multinational company. “Apple has been in Ireland since the 1980s and employs thousands of people in Cork”. Any money will be placed in a hands-off escrow account pending what could be years of litigation before the European Court of Justice in Luxembourg, he said.
