Regulators are set to break down the reason tax deals given to Apple in Ireland violate EU laws, according to people familiar with the matter.
The European Commission began formal investigations into the tax avoidance issue back in June, and plans to publish its findings as early as today — with the claim that tax deals between Apple and the Irish government could fall under the heading of illegal state aid.
While Apple has yet to make a comment on the matter, the Irish government has spoken up; describing its position as “confident” that the Apple deal represents “no breach of state-aid rules.” It claims that it has already submitted a formal response to the European Commission, in which it addresses in detail “the concerns and some misunderstandings.”
In January this year, Tim Cook travelled to County Cork, Ireland, to meet with the Irish prime minister to discuss Apple’s presence in the country, along with the Irish tax laws that help it avoid paying billions extra.
Apple previously came under fire for tax practices involving the channeling of 64% of earnings into Irish subsidiaries with zero employees in order to minimize tax burdens. Irish officials have shied away from accepting blame for the company’s low tax bill, while Tim Cook and then-CFO Peter Oppenheimer appeared before a Senate sub-committee to discuss the subject of tax avoidance.
Apple itself is not under investigation in this present matter, but if it is concluded that the current arrangement falls under the bracket of state aid, it could be made to pay any unpaid taxes. It’s not known how big these sums might be.
Whatever the EU’s decision, Apple gets 30 days to respond. Automaker Fiat is also a company named as part of the investigation, based on a similar tax deal in Luxembourg.
Source: Wall Street Journal