Apple, EU tax battle far from over
Apple (AAPL) may face a record EU fine over allegedly engaging in illegal deals with the Irish government to reduce its tax bill.
The European Union’s antitrust authority is expected to unveil details Tuesday of an investigation launched in June into why tax deals Apple negotiated with the Irish government are tantamount to illegal state aid.
Apple's chief financial officer, Luca Maestro, told the Financial Times, "We know that we didn't do anything that was against the law and we are very confident that through the investigation it will be shown that there was no selective treatment in our favor at any point in time.”
A Senate investigation found last year that Apple dodged billions in U.S. taxes through a tax loophole known as the “double Irish,” which allows companies to move billions in profits through an Irish subsidiary in deals negotiated with the Irish government.
“I do think it’s going to be an overhang for a little while here…mostly for these global companies that have a ton of discretion for exactly how they route their profits through various jurisdictions overseas,” said Yahoo Finance Senior Columnist Michael Santoli.
Apple CEO Tim Cook has already emphatically defended the company's tax practices, even appearing on Capitol Hill last year and telling U.S. lawmakers the company didn't use "tax gimmicks."
The iPhone maker’s European base is in the Irish City of Cork, where it employs 4,000 people.
Apple is not alone in choosing Ireland for its European headquarters, Amazon (AMZN), Facebook (FB), PayPal and Twitter (TWTR) have also chosen the Emerald Isle.
Ireland’s corporate tax rate of 12.5%, compares to a more than 30% tax rate in the U.S.
European Commission is also looking into similar tax arrangements between Starbucks and the Dutch government, and Fiat’s financial arm with Luxembourg.
“I do think the EU is a massively unwieldy bureaucracy, they’re going to look at things in a very heavy handed way and kind of make things annoying for global companies,” Santoli said.
