APPLE’S IRISH DEAL FACES BILLION-DOLLAR TAX BITE
EU contends accords with multinational companies are illegal
Apple could face a billion-dollar tax bill in Ireland if the European Union rules its tax deal there is illegal.
The European Union, which is expected to release a decision as early as Tuesday, long has contended deals made by EU-member Ireland with multinational companies such as Apple constitute illegal state aid. The European Commission is expected to argue the country, which has become a tech hub, provided Apple a sweetheart deal in exchange for creating jobs there, according to a Bloomberg report, citing people familiar with the decision.
Irish authorities have vowed to fight the finding, and the U.S. government has disputed the EU’s position. Apple shares closed down 0.1% Monday at $106.82.
Apple and other major U.S. firms hold stockpiles of what’s known as indefinitely reinvested foreign earnings — or revenue not subject to U.S. corporate income tax — outside the U.S. The 10 firms with the largest holdings collectively have $724 billion in this revenue outside the U.S., a USA TODAY report found.
The EU has been investigating possible tax avoidance by multinational firms since June 2014.
A ruling by the European Commission in October that a tax arrangement between Starbucks and the Netherlands was illegal is on appeal to the EU General Court, as is a similar ruling against Fiat in Luxembourg. An EU probe into tax agreements between Amazon and Luxembourg is awaiting a final decision.
Under a “worst-case scenario,” Apple could owe $19 billion in taxes if a full Irish tax rate of 12.5% is levied against some $153 billion in profits over 10 years, J.P. Morgan analyst Rod Hall said in a May 2015 research note.
Apple did not respond to email messages seeking comment.
The European island offers the lure of minimal regulation and significantly lower corporate tax rates (12.5% vs. 35% in the U.S.), a major reason why top U.S. tech companies — including Apple, Google, Amazon, Facebook, Yahoo, Microsoft, Twitter and eBay — have corporate facilities in Ireland, where they employ thousands.