Report: Apple to be assessed “billions” in unpaid European back taxes

According to an article in the Financial Times, Apple is about to be hit with a “multi-billion tax bill” by the European Commission. Following a multi-year investigation into Apple’s tax payments, part of a larger effort to collect “back taxes,” the EU is reportedly about to release a report contending that Apple underpaid taxes by billions.

Like Google, Facebook and others, Apple set up European headquarters in Dublin partly because of its language and culture and partly because of its favorable tax structure. Apple has paid most of its European taxes through its Irish subsidiary, where tax rates are 12.5 percent and much lower than in the rest of Europe. Western European countries typically have corporate tax rates above 20 or 25 percent. France’s corporate tax rates exceed 30 percent.

European governments have long accused Google, Apple, Amazon and other US corporations of tax avoidance through arcane legal and accounting practices. The new EU report to be released is equally an indictment of Irish tax authorities.

The European Commission’s decision will reportedly require Ireland to assess new “back taxes” on the company. Apple may have to refile years of corporate returns in Europe.

Google has been assessed tax penalties in several EU member states, with France alone seeking roughly $1.7 billion from the company. In this case, Apple and Ireland will have recourse to European courts if they wish to contest the assessment.

Recent efforts by the EU and individual European countries to collect taxes from US corporations are motivated partly by considerations of tax fairness and a desire to punish “tax avoidance,” but also by the need to find additional revenues in the midst of an uneven economic recovery.