After a big ole investigation, in which the European Union threatened to claim back from Apple their ‘owed’ taxes to the tune of billions, they went ahead and did it. Well, technically Ireland has been charged with recovering the bill as they allowed Apple the illegal benefits.
The US Treasury went to the extraordinary length of demanding that the EU not go down this path earlier in the week, due to the pretty big implications for corporations to spread their wings and make lots of money. The ruling now has impact on other major tech companies (and other corporates of course) with offices in the lovely haven of Ireland, including Adobe and Microsoft. I’m not saying that they are also benefiting from a similar deal with the Irish government, and certainly the EU Commission had nominated and focussed heavily on Apple, however this success, and the similar €30 million ruling against Starbucks in Holland last year would embolden the Commission in targeting corporate tax.
What’s the impact, apart from corporate tax lawyers rubbing their hands with glee? Is it legal? Uh…probably not, but the benefits could be said to outweigh the losses. Would Apple have opened such large offices in Ireland if they didn’t have a sweetheart deal? I don’t know, but likely not – the bright lights, big city atmosphere nearer London may have beckoned more. The fine print of arguing the discussion will take an army of well suited legal eagles.
Apple can afford it, but it will dent them, and force them into a much more conservative strategy for the next while. One could easily argue that turning a blind eye to this kind of tax evasion allows companies like Apple to drive innovation by maximising profits and their margin. The higher the margin, the more risks they are willing to take, which in the end benefits the industry and market through innovation.
Would Apple quit the country to avoid this – basically do a runner? That is a radical option, but €13B is more than chump change. Even Dr Evil wouldn’t sniff at it. Certainly Apple having to pull its headquarters back to the US would make Trump happy – he’s often claimed that companies like Apple need to pay more US tax.
The reality is a long and drawn out legal process of course. Slightly boring – the excitement of the news really had me reeling for a moment.