The European Commission has concluded this morning after a three year investigation that tax benefits received by Apple in Ireland amount to illegal state aid, meaning that according to the ruling Apple must pay 13 billion euros in back taxes for the period between 2003 and 2014. (BBC)
Apples tax arrangements with Apple between 1991 and 2915 allowd the company to attribute sales to a head office that existed purely on paper, which the commission states could not have genrated such profits. THe result of this arrangement was essentially that Apple were able to book all profits in Ireland for sales in the European single Market, rather than the country the product was sold.
Apple has published a new FAQ that addresses any concerns that investors may have about the ruling and its impact on the companies bottom line. According to the document both Apple and the Irish government are planning to appeal the descision and have confidence they will be able to overturn it, however the appeals process is a lengthy one which can run for several years before a final descision is made. In addition to the FAQ, Tim Cook has posted an open letter to the Apple Community in Europe, which outlines the benefits Apple has brought initially to the local community in Cork and later Ireland as a whole since they began operations there.
At the time of writing while the European Commission has ordered the Irish government to order Apple to pay the back taxes, the Irish government has yet to do so, so as yet Apple don’t actually have to pay anything until the Irish government tells them to. Based on the fact that both Apple and the Irish government are looking to appeal, this is unlikely to occur. Similarly Apple has around $200 billion stored outside of the US, which could easily be used to cover the amount and indeed Apple have stated that they will be placing an as yet undisclosed sum into escrow to use towards this, should it be needed .