The European commission’s recent ruling against tax breaks for multinational corporations in Belgium strongly suggests that the tech behemoth could be subject to a hefty bill when the open investigation against its activities in Ireland concludes.
The commission has been cracking down on US companies trying to negotiate sweetheart deals with individual EU member nations for the last several years. Starbucks’s operations in the Netherlands and Amazon and McDonald’s in Luxembourg have all been subject to similar investigations.
The commission found that Starbucks owed Dutch authorities upwards of $22m, and a ruling from Belgium this week determined that 35 companies across the EU owe the equivalent of $760m in back taxes.
Apple has already said it would appeal against a ruling against the company; CEO Tim Cook called the investigation “political crap” in a recent 60 Minutes interview. “There is no truth behind it,” he said. “Apple pays every tax dollar we owe.”
Apple probably wouldn’t be the direct recipient of a fine in any case, some have argued, since the subject of the investigation is the government of Ireland. But given the state of the Irish economy, especially its national debt, the government would presumably try to recover money from Apple.
This is not the first time Apple has been investigated for its accounting practices in Ireland. Executives including Cook appeared before the US Senate in 2013 to testify about whether it had renegotiated Ireland’s 12.5% corporate tax rate down to 2%. The company denied any wrongdoing. Matt Larson, litigation analyst for Bloomberg Intelligence, calculates that the company would owe $8.02bn at that rate.
The European commission extended the Apple investigation in December, making it less likely that a judgment from the regulator could come in time to affect the Irish election.
“The Belgian ‘excess profit’ tax scheme, applicable since 2005, allowed certain multinational group companies to pay substantially less tax in Belgium on the basis of tax rulings,” said the regulator in an unbylined press release about the similar Belgian plan it ruled on this week. “The scheme reduced the corporate tax base of the companies by between 50% and 90% to discount for so-called ‘excess profits’ that allegedly result from being part of a multinational group. The commission’s in-depth investigation opened in February 2015 showed that the scheme derogated from normal practice under Belgian company tax rules and the so-called ‘arm’s length principle’. This is illegal under EU state aid rules.”
This article was written by Sam Thielman in New York, for theguardian.com on Friday 15th January 2016 18.12 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010