EU Regulators: Apple Owes Ireland $14.5 Billion In Back Taxes

Image courtesy of afagen

That thing where corporations do anything they can to pay as little tax as possible doesn’t just hit inside the U.S. Companies that relocate part of their operations overseas to avoid an American tax bill still have to pay the taxes they owe to the countries they’re in, and that’s what European antitrust regulators say Apple hasn’t properly done.

As the New York Times reports, the European Union antitrust commissioner today announced the result of a two-year investigation into Apple’s tax situation in Ireland. The result? Apple did indeed get preferential treatment it should not have, and owes Ireland about €13 billion for 10 years’ worth of back tax.

While the order to Apple is the largest that the EU has put out recently, it’s far from the only one, the NYT reports. EU regulators have also targeted Starbucks in the Netherlands, Amazon in Luxembourg, and Anheuser-Busch InBev in Belgium.

An expert told the NYT that “U.S. companies are the grandmasters of tax avoidance,” but added, ““Nevertheless, because of the nature of U.S. politics [the Apple order] will be framed by the U.S. as Europe overreaching and discriminating against ‘our team.’”

Apple is, of course, defending its actions and its tax payments. In an open letter to customers, CEO Tim Cook detailed Apple’s history in Ireland, from the time in 1980 when it opened a factory in Cork.

“As responsible corporate citizens, we are also proud of our contributions to local economies across Europe, and to communities everywhere,” Cook writes. “As our business has grown over the years, we have become the largest taxpayer in Ireland, the largest taxpayer in the United States, and the largest taxpayer in the world.”

Cook argues that, “At its root, the Commission’s case is not about how much Apple pays in taxes. It is about which government collects the money,” and argues that the European Commission is retroactively changing rules. And as is usual for business, Apple threatens that any attempt to charge it more money will hurt investment and job creation.

As the NYT points out, though, Ireland has done quite a lot with taxes to attract exactly the kind of deal that Apple (and Facebook, and others) sought. Its corporate tax rate is one of the lowest not just in Europe but in the entire developed world, the NYT says, and it provides numerous incentives and breaks to attract large international conglomerates to open offices there.

Irish officials are also against the ruling, which would of course set a precedent that could hurt all those incentive programs.

The Irish finance minister and Apple both plan to appeal the decision, but that process may take years.

Apple Must Pay Billions for Tax Breaks in Ireland, E.U. Orders [New York Times]