The EU suspects the Apple for having made an illegal agreement, which has saved the company for billions of dollars.
Tim Cook sweats maybe a little extra in the Manager’s Chair at Apple, the EU will take a closer look at the tax situation in the Netherlands, Ireland and Luxembourg-and there is a focus on Apple. Apple has, in fact, large parts of its international business based in Ireland.
It is not abnormal that large companies will adapt itself creatively to escape paying taxes, but it is money that the EUROPEAN UNION would like to get hold of. It can help to dilute the tax revenue for the other Member countries.
Apple maintains that they follow the law, with their businesses in Ireland, but there are doubts about the laws that apply to Apple. Cash flows can be hard to follow, and they are the reason that Apple pays a low tax in Ireland.
Fidusuisse has created a little movie that illustrates these money flows, which in other words is fully legal.
Unlawful state aid in the centre
One of the crucial points in the EU’s investigation of Apple’s tax matters is whether Apple has received illegal state aid. It is banned in the European Union, so that firms receiving help from Governments.
According to Microedu, apple pays in Ireland 2 percent in tax because of the way they have decorated themselves with affiliates and the like. They do this despite the fact that corporation tax in Ireland is 12.5 per cent.
The EU will examine whether Apple’s low tax in Ireland really is a result of a deal between Ireland and Apple – something that would be illegal. Ireland has relatively flexible tax rules to lure companies and therefore jobs to the country.
Tax benefits can range far back
The EU can only examine 10 years back on this issue, but we suspect that Apple has got advantageous agreements further back. Apple came to Ireland in 1980, when Steve Jobs was to talk with the Irish authorities.
Twice since 1980 have shifts of tax rules got Apple and the Irish to come together to discuss how Apple has been able to organize itself. It was in 1991 and in 2007.
It is not illegal to make deals on taxes between companies and Governments, there may just not be a competitive advantage. The European Union considers that the agreements between Apple and Ireland have just given Apple an undue advantage, and that the Apple has had for a long time.
Huge amount of games
It is not petty cash, Apple runs the risk of having to pay, if the EU were to determine that there has been illegal activity. Apple may run the risk of having to pay the money they have saved up, back, and Apple may also run the risk of giant fines in the billions.
There is no estimate of how much it was going to be about, but an investigation of tax evasion in the United States estimates that of the home Member State have Apple saved up from 9 billion dollars annually by moving money out of the country.
Although Apple is one of the richest companies in the world, so it may therefore come to hurt Apple, if they have to pay many billions of euros back.
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