Apple has agreed to pay 318 million euros in Italy to settle an investigation that determined the iPhone and iPad maker failed to pay nearly triple that amount in corporate taxes in the country over a five year period, according to Italian newspaper La Repubblica.
Italian regulators in Milan concluded a tax probe of Apple in March, accusing the company of booking profits generated in Italy through an Irish subsidiary in an effort to lower its taxable income base and save 879 million euros between 2008 and 2013.
Apple has yet to comment on the deal, but previously said it has paid all necessary taxes in countries that it operates. "These new allegations against our employees are completely without merit and we’re confident this process will reach the same conclusion," the company said in March.
Apple Italia is part of the company's European operation headquartered in Ireland, where Apple pays a significantly lower corporate tax rate compared to other EU countries. Ireland has a corporate tax rate of 12.5% for normal business activities, compared to a standard rate of 27.5% in Italy, per The Guardian.
Apple faces a similar Irish tax probe by the European Commission, which formally accused the company of receiving illegal state aid from Ireland in September 2014. A decision in the lengthy investigation has likely been delayed until early 2016, as the Brussels-based executive cabinet has requested supplementary questionnaires.
Apple's tax policies in Europe have come under intense scrutiny over the past three years, as the company is said to utilize multiple subsidiary companies located in the Irish city of Cork to move money around without significant tax penalties. Apple continues to deny any wrongdoing, and CEO Tim Cook recently described the accusations as "total political crap" on 60 Minutes.
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Top Rated Comments
Defending them means nothing to them. People need to quit defending tech companies like they're a family member. What's even more hilarious is that you pay them for a device for the "privilege" to do so.
How many iPhones does Apple sell in Luxembourg, Ireland or the Cayman Islands ?
Apple is in the spotlight for this because it is so well known, but an awful lot of relatively small companies, as well as the big ones, are taking advantage of these tax structures. They are totally legal. But as others have commented, when governments are scrambling for revenue, and big business is accused daily, rightly or wrongly, of screwing the tax payer, of contributing to wealth and income inequality, then these legal challenges should come as no surprise.
And if a CEO were to unilaterally decide to pay taxes at higher rates, to not use these tax structures, it would only be a matter of hours before a shareholder sued the company and its officers for failing in their fudiciary duty to maximise gains for shareholders, and I can't think of a CEO or other senior company officer that wants to get embroiled in that hassle. Every time a publicly listed company says it is acquiring another publicly listed company, you see these law suits being filed, usually he first filing is less than an hour after the acquisition is announced...
So this may sound like Apple is admitting it did wrong, otherwise why pay anything at all. But my take on this, is that it is paying money to make a distraction go away. This is a company that does hundreds of billions of dollars of business around the world each year. Paying way less than 1% of revenue to make a major problem go away would be seen by many as simple the pragmatic thug to do, with no admission of guilt...