The European Commission has ordered Tuesday, August 30, 2016 Apple to pay a record sum of at least € 13 billion to Ireland . (Illustration) (AFP / DANIEL OLIVAS-LEAL)
The sentence fell Tuesday, August 30. After three years of investigation, the European Commission estimated that the tax advantages granted by the Irish Government constituted “unlawful aid”, which allowed Apple “to avoid tax on virtually all the profits generated “by its sales in the EU. Brussels has ordered the group to pay Apple the record sum of at least € 13 billion to Ireland.
How Apple has benefited for years from a tax rate effective corporation between 0.005 and 1% on its European profits? The executive has detailed its approach to aggressive tax planning, with, apparently, the Irish complicity.
EUROPEAN RECORD EARNINGS IN IRELAND
Two entities Apple based in Ireland are concerned: “Apple Sales International,” in charge of selling the group’s products in Europe, Africa, the Middle East and India, generating profit of billion euros, and “Apple Operations Europe”, which manufactures certain ranges of computers, with much less activity. Both have the right to distribute Apple products in Europe as part of an agreement with the American parent, they finance up to € 2 billion per year (deductible) to support a portion of research . and development of the group
Next, the technique is simple: Register in Ireland all the profits generated by sales in Europe. An iPhone purchased by a French in an Apple Store in Paris? Profits go to Dublin.
DES “SEATS” GHOSTS
It is then directed between the Irish State. Whether an “Apple Sales International” or “Apple Operations Europe”, the method is the same: since 1991, it endorses a totally ARTIFICIAL internal distribution of profits. A tiny part of sales, yet from all over Europe, is well recognized in the Irish part of each body and subject to a tax of 12.5% companies. The rest, if not the vast majority of profits, share in a hypothetical “siege” outside the country, on which the Irish State refuses to have a say.
What ‘ regained the European Commission on these two “seats” ghosts? Nothing, or almost: no specific employees, no offices and no operational capacity enabling it to exercise any concrete activity. Only sign of existence, occasional meetings of the two administrations Councils, made up of Apple executives full-time employees in Ireland. It causes dividends, administrative arrangements and cash management.
These hypothetical seats therefore exist only on paper, but they allow Apple to avoid tax. The group paid only 0.05% tax on its total annual profits in 2011. The percentage, already staggering, even down to 0.005% in 2014. The curve does not go down: the agreement with Dublin no longer applicable since 2015, when Apple changed its structure in Ireland
one last note highlighted by the Commission. Ireland is not the only country concerned by this refund. If a country is deemed injured seeing for years the sales of products made from its territory to Ireland to escape the tax, it could also claim his slice of cake, mechanically reducing the amount due in Dublin.
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