Apple holds Europe to ransom: Tech giant threatens to cut jobs in EU after Brussels orders it to pay back US$14.5bn in tax over ‘illegal’ sweetheart deal with Irish government

Apple holds Europe to ransom: Tech giant threatens to cut jobs in EU after Brussels orders it to pay back US$14.5bn in tax over ‘illegal’ sweetheart deal with Irish government, by Martin Robinson.

The European Commission’s three-year investigation into Apple’s sweetheart deal with Ireland has found it amounted to illegal state aid.

Its damning report published today says the tech giant paid as little as 0.005 per cent tax by funnelling its non-US profits through its Irish headquarters with no staff or premises then on to its US$178 billion offshore fund.

The giant tax bill, which could reach US$21 billion because of interest, will not be difficult for the company to pay because it made US$53.4 billion last year – the biggest profit in corporate history.

Apple Inc. headquarters sign
Apple’s real HQ is in Silicon Valley, California.

Apple ploughs all its non-US sales through Ireland, where the EU says it has been paying hyper-low tax rates. The majority of profits are then sent offshore where no tax is paid, with some going to America for research and development.

The Commission’s landmark report says that between 2003 and 2014 Apple paid a rock bottom Irish tax rate on most of its profits outside the US before sending it to a tax haven where it paid no tax at all. It has more than US$178 billion stashed in offshore accounts.

In 2011 Apple’s profits outside America were $22 billion but Ireland agreed that only $55 million was considered taxable.

Apple threatens the EU:

But Apple will appeal saying the Commission’s figures are ‘completely made-up’ and its CEO Tim Cook, who previously called the probe ‘political c**p’, is threatening EU job losses if they don’t back down. …

CEO Tim Cook posted a lengthy message on, warning about devastating ramifications for the sovereignty of European countries in light of the competition chief’s hard line. “In Ireland and in every country where we operate, Apple follows the law and we pay all the taxes we owe.”

Ireland doesn’t want the money:

Ireland has said it doesn’t want Apple’s money even though it is equivalent to £2,400 for each of its 4.5million residents and would cover the costs of its national health service for a year. …

Ireland will today be ordered to claw back billions in backdated tax – but extraordinarily the government will appeal the decision and reject the money.

The US Government warns the EU not to go after American companies over tax avoidance:

The tax affairs of a string of other firms, including Amazon, Google and McDonald’s, are also set to come under the EU microscope in the coming months.

Big multinational companies have been avoiding paying significant tax anywhere for years by moving profit around, so it is good to see this scheme finally come under real pressure.

Ultimately this is about an interpretation of tax rules, huge and complicated though they may be. The amount of money at stake is huge. Shame the  tax rules aren’t simple and unambiguous, but here are so many loopholes and complications precisely because big companies and wealthy people lobbied to have them in there. No doubt the various tax codes are individually and jointly quite contradictory, so in the end there will have to be some politically driven compromise.

Finally, it comes down to political muscle, with the US government warning the EU off taxing its companies. Delightful.