Brussels discloses full decision on Apple’s tax schemes

Tax-saving schemes used by Apple, Amazon, Google, Starbucks and other companies have raised public pressure for EU-wide rules to close loopholes. [Shutterstock]

The European Commission released yesterday (19 December) its full decision on Apple’s tax arrangements in Ireland. The document reveals the details of the tech giant’s tax scheme for the first time in Europe.

The tax arrangements between US tech company Apple and Ireland were disclosed yesterday by the Commission, four months after the investigation was announced by Competition Commissioner Margrethe Vestager.

The 130-page-long decision shows how Apple has declared its profits, so as to reduce its tax bill in Ireland.

The company benefited from two tax rulings granted in 1991 and 2007 by the Irish fiscal authorities, allowing two of Apple’s units to pay almost no tax in Ireland while receiving a billion euros of benefits over the past 11 years.

 

Irish parliament backs Apple tax appeal after angry debate

Ireland’s parliament battled through an ill-tempered debate on Wednesday to vote in favour of appealing a European Commission ruling ordering the country to collect billions of euros in unpaid taxes from tech giant Apple.

State aid case

The tax rulings gave Apple an advantage compared to other companies subject to the same Irish tax rules. The full decision also reveals that the two Apple units (Apple Sales International and Apple Operations Europe) shift most of their sales profits to a “head office” that has no real economic activity.

“This is the first time ever that the financial structure of this company is public in Europe,” said an EU official. “Now that this information is public, this is up to the national tax authorities to draw conclusions, not the Commission.”

In Europe, Apple declares all its profit in Ireland, depriving other European countries of their share of tax incomes.  Some of them could be tempted to look into the nitty-gritty of the investigation and conclude that Apple should have declared part of its profits in other European countries, instead of just the emerald isle.

Apple, US and Ireland protest

“There is a very strong reaction from Apple and Ireland against the decision,” acknowledged an EU official.

Apple said yesterday that it had decided to join Ireland in appealing the decision. Both Apple and the Irish government protest against the €13 billion underpayment of tax profits that the EU executive is urging the tech giant to pay back to Ireland.

Ireland, which has one of the lowest tax-rates for companies in Europe, claims that Brussels overstepped its field of competences.

“The Commission attempts to re-write the Irish corporation tax rules […] and the Commission’s claim is inconsistent with member state sovereignty in the area of direct taxation,” Ireland argues in its official position, also released yesterday.

The US Treasury Department also rejected the Commission’s reasoning, supporting the iPhone maker’s position.

According to the Commission, “this decision is not about tax policy but about the enforcement of the state aid rules. […] Public authorities can’t give unfair advantages to companies”.

Vestager: ‘We have Amazon and McDonald’s in the pipeline’

EXCLUSIVE / Margrethe Vestager, the EU’s competition Commissioner, has drawn praise and criticism regarding the Ireland-Apple case. In an interview with EURACTIV.fr, she says Ireland’s appeal will actually strengthen the Commission’s case and says more tax rulings are in the pipeline, with Amazon and McDonald’s coming next.

“The Irish government’s arguments don’t stand up to scrutiny. The Department of Finance chooses to ignore the economic reality that the structures put in place by Apple and sanctioned by Revenue [the government agency responsible for customs and tax] facilitated industrial-scale tax avoidance,” said Irish MEP Matt Carthy (GUE/NGL).

Further Reading

European Commission

 

Irish Finance Department