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Apple Inc. owes billions in back taxes to Ireland

| Sep 1, 2016 | back taxes or tax debt

Technology giant Apple, Inc. is in some tax trouble with the European Union (EU), which will end up costing the company billions. On Tuesday, August 30, Apple was ordered to pay up to $13 billion Euros ($14 billion) to Ireland in back taxes.

The ruling is due to an illegal tax agreement between Apple and Ireland from 2003 to 2014. According to the European Commission, this arrangement violated the EU’s tax-aid rules. Both Apple and the Irish government believe this ruling to be unfair and plan to appeal the decision. The U.S. Treasury also called these actions unfair, saying they undermine the tax laws of individual nations.

 

According to a U.S. treasury spokesperson, “The commission’s actions could threaten to undermine foreign investment, the business climate in Europe, and the important spirit of economic partnership between the U.S. and the EU.”

The European Commission, however, believes that the tax deal between Apple and the Irish government is a “sweetheart fiscal deal.” Like many deals of this type, it allows corporations to sidestep taxes and exploit loopholes in the laws of a friendly nation.

Although this is by far the heftiest back tax penalty so far from the commission, it isn’t the first case against a corporation. Last year, for example, Starbucks Corp. was ordered to pay 30 million Euros ($33.3 million) to the Dutch government. Additionally, investigations are currently underway regarding Amazon Inc. and McDonald’s Corp and their tax deals with Luxembourg as well as Google’s parent company Alphabet Inc’s deal with the U.K.