DUBLIN — The European Commission yesterday ordered U.S. tech giant Apple to pay Ireland the equivalent of $14.5 billion in unpaid taxes on its foreign profits.
Up until 2014, Apple had a sweet tax deal with Ireland, where its subsidiaries registered in the country hold IP rights to the company’s products outside of North and South America.
Apple subsidiaries Apple Sales International and Apple Operations Europe are both registered in Ireland.
Around 90 per cent of Apple’s foreign profits are earned by these two companies, the Financial Times reported. And there’s nothing illegal about that.
The EU’s beef is that only a tiny bite of the profits were taxed in Ireland before the bulk of the cash was sent to another Apple subsidiary that isn’t tax-registered anywhere.
Even though $14.5 billion would put Ireland back in the black, the Irish government doesn’t want the money, according to the Wall Street Journal.
It fears jeopardising Ireland’s long-term relationship with Apple, which employs 5,500 people in the country.
The U.S. is also not happy with the EU, because Uncle Sam has his eye on taking a slice of Apple’s profits for the U.S. Treasury. Apple has around $215 billion sitting in its foreign subsidiaries, which has never been taxed in the U.S., according to the Wall Street Journal.
Apple said it will hold the $14.5 billion in escrow while it appeals the EU’s decision.
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