Apple and the European Union (EU) have recently ended up at the losing end of a court case. This defeat has left a huge hole in the pocket (now 13 billion euros, ~$14 billion) of Ireland which Apple should have paid as taxes. The ruling is part of Brussels' wider plan to crackdown on "sweetheart deals" the unfair tax agreements that certain countries, like Ireland, make with multinational companies.
EU's Tax Benefits to Apple
- In 2016, The EU's competition chief, Margrethe Vestager said that Ireland gave Apple benefits instead.
- Initial reaction from Apple was to dismiss the allegations, but eventually the EU won out at the European Court of Justice.
- Apple has been guilty of benefiting from Ireland's tax laws, paying less tax than it theoretically should be allowed.
'Double Irish' Scheme
- Specifically, the 'Double Irish' scheme allowed Apple to establish two companies in Ireland that could make profit and not be taxed on it or move the money from there to a location with low taxes and in turn avoid having to pay extra taxes in any other EU country.
- Apple said the European Commission was changing tax rules backwards by pulling up judgments.
Apple's Response
- Apple said it was "disappointed" with the ruling and reaffirmed that it pays "the taxes we owe wherever we do business".
Ireland's Use of Funds
- Ireland has yet to announce what it intends to do with the 13 billion euros it will have to return to Apple.
- The cash will be retained in a special investment portfolio designed to bolster Ireland's economy.
- Taxpayers could end up winners in the deal -- and with some tax cuts before the next election.
Implications for other companies
- The Apple brawl exposes how serious Europe may be in extracting Taxes from Corporates.
Month: Current Affairs - September 15, 2024
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