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Apple CFO says tax investigation is between EU & Ireland, ‘fair’ outcome would mean zero back taxes

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A report earlier this month from Bloomberg claimed that Apple could owe more than $8 billion in back taxes if the European Commission rules that its Ireland setup is illegal. Speaking to the Financial Times today, Apple CFO Luca Maestri commented on the ongoing European investigation and said that he estimates Apple will have to pay $0 in back taxes, assuming the investigation outcome is “fair.”

Maestri had the following to say regarding the European Commission’s investigation into Apple’s tax practices:

“This is a case between the European Commission and Ireland and frankly there is no way to estimate the impact right now, we need to see what the final decision is going to be. My estimate is zero. I mean, if there is a fair outcome of the investigation, it should be zero.”

For those unfamiliar with Apple’s practice, it funnels all European revenue through Ireland. In Ireland, it has a special agreement with the Irish government that means it pays just a 2.5 percent tax rate instead of the normal 12.5 percent. This practice has been the subject of a European Commission investigation for a while now, but the investigation was recently extended and expanded.

Last month, CEO Tim Cook labeled claims that Apple doesn’t pay its fair share in taxes as “political crap.” Cook said that Apple pays more taxes than anyone and while it would love to bring overseas revenue back to America, it would cost 40 percent for the company to do so. This comment, however, seem to focus primarily on the claims that Apple avoids U.S. taxes, with Cook avoiding the topic of the Irish tax investigation and its agreement with the Irish government.

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Comments

  1. chrisl84 - 8 years ago

    And in related news, every prison inmate claims they are innocent. I guess this is why the world doesn’t get to police themselves.

  2. iSRS - 8 years ago

    To be honest, he is right. Business decisions were made, and taxes were paid, at the amount at the time, that were what was agreed to. The EU should not have the ability to invalidate something back to whenever it feels like it.

    I can see them saying for income effective 1 Jan 2016, something reasonable, and all future, sure. But to go back 8 years because of an inability to control spending to what you are earning, and seeing a successful company with a large bank account that you can, in essence, rob, is outrageous. If that is the case, then you better hope this satisfies the EU. Because what is to stop them from saying that things the average citizen is doing is now illegal, so pay up?

  3. Wes - 8 years ago

    The “legal” result would be zero. They broke no laws. Just the same as I try to get as many deductions as possible when I do my taxes. Just because I pay as little as is legally possible doesn’t mean I’m being immoral. How can we expect anything else from these companies? If they retroactively change the laws, and ask for billions, That is immoral.
    It would be the same as a cop pulling someone over for speeding, and changing the speed limit as they’re writing the ticket. And even though all these companies have been observing the posted speed limits, (as nonsensical as they were), the governments are going to retroactively change the speed limits that they now regret posting.

  4. Doug Aalseth - 8 years ago

    I agree totally with Maestri. Let the EU change the rules if they want. But retroactive enforcement is unethical. Apple played by the rules as they were at the time. they shouldn’t be punished for doing so. Not that that has stopped governments in the past. The IRS and other groups do it regularly.

  5. chopingman - 8 years ago

    Sadly Apple is now finding out that the are exactly where Microsoft was several years ago where the EU is concerned. The EU now just views Apple as a giant cash cow the feel they can repeatedly milk any time they want for billions. Just how do you think they prop up that level of Socialism? Now with this muslim invasion, the EU is finding itself in even greater need of mountains of cash and they are going to be looking to any foreign corp that is cash rich to rob. A Socialist never saw a mountain of cash that they didn’t think was rightfully theirs.

  6. Michael Maguire - 8 years ago

    Unfortunately this kind of political bullying in regard to our corporate tax is nothing new here in Ireland with regard to the EU. We have had a low corporate tax for decades due to having very little industry in a tiny (island) country with a population at it’s highest in centuries but still only around 5million people in the entire country. We needed to do SOMETHING to attract large corporations here when this country was on its arse and this was our opportunity.

    I can tell you that anti-EU sentiment here is at an all time high and this is something which doesn’t help their cause. It just smacks of jealousy and bullying (if we can’t attract these companies here, we’ll make it unattractive for them to go to yours) from countries who have massive industrial capabilities but want everything for themselves, i.e., being world leaders in Auto supply is not enough. They have been trying for as long as I can remember to get us to give up this tax incentive but we have resisted (it’s the only good thing I think ANY government has ever done here). Personally I would like to tell them to shove their so called “Economic Union”. It’s a joke (and a bad one at that).

  7. Apaches911 - 8 years ago

    The above comments do smack of a little isheepism. If the arrangement between Apple and Ireland broke the standing law in the EU then there is no revision of the rules. Of course big companies want to pay less tax, but assuming that they are always acting within the law to do so is little naive. Google just paid $140million in back taxes in the UK due to its shady operation. Facebook makes billions in the UK, and pays virtually no tax. There is a deeper picture here that big companies have been using their power to get away with murder for years, and the balance is being redressed. Just playing devils advocate!

  8. Grayson Mixon - 8 years ago

    It’s interesting to me that the money would be paid by Apple to Ireland. Apple doesn’t want to pay it. Ireland doesn’t want to receive it. A third party is forcing the transaction.

    Grexit, Brexit…… Irexit?

Author

Avatar for Chance Miller Chance Miller

Chance is an editor for the entire 9to5 network and covers the latest Apple news for 9to5Mac.

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