Apple Inc. (IW 500/2) is facing a potential tax bill running into billions of euros, with the European Union poised to release a finding into its dealings in Ireland as soon as August 30, according to people familiar with the situation.
The European Commission decision is expected to say Ireland provided the iPhone maker with illegal aid through a sweetheart deal in return for creating jobs in the nation, the people said on condition of anonymity because the details are confidential. Ireland has vowed to fight any adverse finding.
In preliminary findings in 2014, European competition authorities said Apple’s tax arrangements were improperly designed to give the company a financial boost. There’s a range of estimates on the scale of arrears which may face Apple. In a worst-case scenario, Apple may face a $19 billion bill if the government ultimately loses and is forced to recoup tax from the company, according to JPMorgan Chase & Co. analyst Rod Hall. The Irish Times reported on August 29 that the figure might be not much more than 100 million euros (US$112 million).
The European Commission declined to comment on a decision that’s still pending or on the timing of its announcement.
Apple said it had nothing to add to previous statements rejecting suggestions it received selective treatment from Irish officials. The ministry declined to comment.
“A state aid ruling against Ireland is likely to bring the country’s corporation tax regime back into focus,” said Dermot O’Leary, an economist at Goodbody Stockbrokers in Dublin. “However, the commission investigation relates to two rulings given to Apple in 1991 and 2007. So a critical issue will be how the final decision relates to the current Irish tax code or to previously amended policy.”
The commission in January ordered Belgium to recover about 700 million euros in illegal tax breaks to at least 35 companies, including Anheuser-Busch InBev NV and BP Plc. And last year, for example, Starbucks Corp. was ordered to pay 30 million euros in back taxes to the Dutch government.
By Dara Doyle
