Apple has warned in a regulatory filing that it may be forced to pay up to 10 years’ worth of back taxes in Ireland if a European Commission investigation finds against it.
Apple, which has a market value of more than US$750bn and which in the past week reported bumper Q2 revenues of US$58bn, led by insatiable global demand for the iPhone, has had operations in Ireland since the early 1980s and employs more than 2,000 people in Cork.
In June 2014 the European Commission issued an opening decision initiating a formal investigation against Ireland for alleged state aid to Apple.
The opening decision concerned the allocation of profits for tax purposes of the Irish branches of two subsidiaries of the company.
A ‘material’ tax bill looms over Apple
Apple said that if the investigation finds against the company it could be forced to pay “material” amounts of back taxes and currently cannot estimate the level.
“The company believes the European Commission’s assertions are without merit,” Apple said in the regulatory filing to the SEC.
“If the European Commission were to conclude against Ireland, the European Commission could require Ireland to recover from the company past taxes covering a period of up to 10 years reflective of the disallowed state aid. While such amount could be material, as of March 28, 2015 the company is unable to estimate the impact.”
A “material” event in US business parlance is 5pc of a company’s pre-tax profits over the last three years. In this case the tax bill could run to US$2.5bn.
Both the Irish Government and Apple have strenuously denied any wrongdoing. The decision from Brussels is expected before the end of June.
Apple Store in Europe image via Shutterstock