Apple faces fine for allegedly favourable tax agreements

Apple faces a fine for allegedly favourable tax agreements with Ireland

The European Commission investigates the tax agreements Apple has with Ireland and could impose an unprecedented sanction on the multinational for performing against the internal market.

The tech multinational Apple could face a penalty for back taxes of up to billions of euros. The decision depends on the European Commission, which concludes a two year investigation on Tuesday regarding allegedly favourable tax agreements with Ireland, signed in the period 1991-2007.

If the Competition Commissioner Marghrete Vestager concludes her inquiries considering Apple responsible for signing these agreements with Ireland, it will suppose a record fine. Ireland is sure that the European Commission will declare the agreements illegal under the Irish state aid laws and EU internal market rules.

In this sense, Apple could face the retroactive payment of Irish corporation tax, which has a rate of 12.5% on profits before taxes.

As a result, according to the financial consulting firm JP Morgan, the fine with which Brussels could penalize Apple could cost the company up to 15,000 million euros, although from Dublin they are hoping that it is finally not so high.

Those responsible for the company and government officials from Dublin have repeatedly denied the accusations made by the European Commission and have announced that they will present allegations.

On the other hand, it is not the first time Apple has been investigated on its obligations regarding payment of taxes over benefits. In 2013, the US Senate closed an investigation against the multinational which showed it had paid very low or non- existent amounts of tax over benefits for four years.

Thus, the American Treasury may have missed up to 74,000 million dollars of income due to the existence of loopholes in Irish and American tax laws. However, it could not prove Apple or the Irish government had incurred in any sort of misconduct.

The investigations of which Apple and other large multinationals are being subject by European authorities are part of the BEPS project to combat international tax evasion, which the OECD is sponsoring since 2013 and the European Union is implementing through the enactment of European regulations such as the Directive 2016/1164.

If you have legal questions about your tax obligations abroad please do not hesitate to contact us and we will advise on

Del Canto Chambers’ Editorial Board

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