EU to investigate Apple's Irish tax arrangements

EU to investigate Apple's Irish tax arrangements

Summary: The European Union will examine whether or not Apple's tax arrangements with the EU member state breach the law on the continent.

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Tim Cook testifies to the U.S. Senate (Image: via C-SPAN live stream)

The European Commission is launching an investigation into Apple's tax arrangements in Ireland, one of the continent's 28 member states.

The news, which first broke on Irish state broadcaster RTE, without naming its source, and was subsequently filed by the Reuters news agency, follows up from allegations that the iPhone and iPad maker used loopholes in international tax laws to reduce its overall payments to governments.

Apple previously said it complies with the law.

The EU's Competition Commission said in 2013 that it was looking into corporate tax arrangements in a number of member states, and had formally asked the Irish government for information.

According to Reuters, EU spokesperson Antoine Colombani declined to comment.

While this reportedly came as news to Ireland's finance ministry, which told the wire service it had not been informed of any such probe, it's not a surprise to U.S. senators, who stated last year that Apple had slashed billions of its U.S. tax bill by declaring its Ireland-based entities as not tax residents.

Sen. Carl Levin (D-MI), the chair of the U.S. Senate Permanent Subcommittee on Investigations chair, said Apple was "exploiting" a tax loophole in U.S. tax code, claiming that the company had "sought the holy grail of tax avoidance."

Apple chief executive Tim Cook was forced to defend himself and the company at the committee in May 2013.

Cook also said that 61 percent of all Apple's revenue was earned outside the U.S., and that Apple paid around $6 billion paid in taxes to the U.S. Treasury in the 2012 fiscal year — or about $16 million per day. The company claimed this accounts for $1 in every $40 in corporate tax the U.S. collected in 2012. 

However, despite the back-and-forth in the committee, the U.S. Securities and Exchange Commission later cleared Apple's tax strategy, and that it would not be taking action at the time.

The company has also been accused of hiding more than $1.3 billion from the European taxman in Italy.

Topics: Apple, Government US, iPhone, iPad, EU

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16 comments
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  • Outdated Laws

    Seems to be the biggest problem.

    "IF" Apple (or any firm) has actually acted illegally, they deserve to be investigated and punished.

    However, most of the time it's out of date laws that allow companies to move money around perfectly legally.

    The Governments then try to argue that the should "morally" pay more, but no governments seem to want to work (together) to tighten the global tax laws.
    Boothy_p
    • You get it on the first post.

      You are 100% right on this.
      Bruizer
      • Big brother goverments must enforse 'moral obligations' too.

        Technically they may not be 'breaking' the law...but big firms which earns tens of billions in profit a year must no use those shitty tax loop holes. Small firms operating locally are pushed against the wall by tax authorities.... For example Amazon pays virtually zero tax in the UK ( they operate as a EU entity ) even though they do many billions in sales...small firms which play by local rules are really struggling...

        Its time to establish a code of conduct for big firms which operates internationally and prohibit them from using tax havens.
        Owl:Net
        • Wash your beak out with soap

          NT
          John L. Ries
        • Your favorite company might go broke...

          If it were forced to that standard...

          After all it avoids paying taxes in Oregon by declaring them in a different state... And does the same as Apple for out of the country business.

          Not any different than any other international company though.
          jessepollard
    • There are no global tax laws and there never will be...

      The solution is simple.. you pay incremental taxes in the countries you earn the revenue(s). If you manufacture in one country and sell in another then there's a sell/buy in the middle an you pay the taxes. If there's lots of hops, there's lots of smaller taxes. I don't care whether that figure is real or arbitrary BUT it has to be better than having nought but a PO box address in the middle of nowhere and saying ALL your revenues were created there, and costs you nought in tax. Pay your dues OR let the rest of us have the same tax loopholes. That's simple enough to set up in your own country EXCEPT when the industries have their pied pipers making the laws. And you are all the little rats happily dancing along.
      johnmckay
      • Never say never...

        ...but under the current scheme of nation states, the prospect is unlikely. And in any case, I'd much rather have tax laws passed by representative assemblies than by conferences of ambassadors.
        John L. Ries
  • EU must investigate Google and Amazon too...

    .
    Owl:Net
    • For what?

      NT
      John L. Ries
    • And Microsoft and...

      They are doing similar things including using the Grand Cayman Islands.
      Bruizer
    • Agreed...

      I'm sure we all want a level playing field and we all want taxes paid in the countries that financed them... not some pimps getting money for nothing.
      johnmckay
    • ..and Microsoft

      They owe the UK exchequer a few £billion in back taxes over many years.
      dcarmi
  • No Corporation actually pays taxes

    No corporation actually pays taxes anyway. In reality only individuals actually PAY the taxes. Corporations work off of after tax income so any taxes they pay are actually reflected in higher prices to customers. This is just how governments and the left tax the very poorest people and convince them they are paying no taxes, and that the evil corporations are avoiding their "fair share".

    Apple and all other companies have a moral obligation to their customers and their shareholders to minimize the taxes they pay. Also there is a very insidious multiplier effect in raising tax rates on companies. A 25% tax rate increase requires a 33 1/3% price increase to maintain the status quo therefor a 25% cop orate tax increase is actually a 33 1/3% tax increase to the individuals who actually pay the taxes through higher prices.

    Corporate Taxes are a Leftist Government Myth.
    granvillea
    • Sure they do

      They pay them out of revenues, so customers are providing the money (same way landlords get the money to pay their property tax bills), but they're still responsible for paying them. And folks on the right should remember that corporations are creatures of the state and that their stockholders and managers get the benefit of limited liability (ie. they're not legally responsible for the corporation's actions, or its debts). And if the cost is too high, then a corporation always has the option of reorganizing as a partnership or sole proprietorship. There don't seem to be many takers for the last option, so it appears that even with the extra tax liability, investors still think that it's worthwhile to incorporate.
      John L. Ries
      • That said...

        ...corporate taxes may in some cases, indeed be so high as to encourage evasion (thus reducing revenue) and therefore need lowering, or at least simplifying, but that would be an economic issue, not a moral one.

        Again, corporate stockholders are receiving a government-conferred benefit. Governments therefore owe it to their citizens to charge for that benefit whatever the market will bear.
        John L. Ries