Canadian Manufacturing

Apple agrees to pay Italy US$350M in back taxes

The move is part of an EU initaitive to tackle a corporate tax avoidance practice known as profit-shifting



ROME—Apple has agreed to pay Italy 318 million euros (about $350 million) in taxes for several past years, prosecutors said, part of a broader European effort to make multinationals pay what they owe in each country where they do business.

Italy has already brought several cases against global technology companies that have headquarters in low-tax nations like Ireland to avoid paying higher taxes in other countries, like Italy. The practice, called profit-shifting, has come under attack from the European Union, which wants multinationals to pay tax where they earn their revenue, and not where they have their regional base.

The EU’s 28 states agreed in October to share details of tax deals they reach with big companies to make sure they are fair to other countries. The EU has already ordered Starbucks and Fiat to pay millions in back taxes to Luxembourg and the Netherlands, respectively.

Milan prosecutors on Wednesday confirmed a report in daily La Repubblica that Apple agreed to pay the sum for the years spanning 2008-2013. The prosecutors said Apple’s tax liabilities for the five successive years will hinge on an international ruling on such cases. They declined to give details.

They also declined to discuss how payment of back taxes might affect a criminal probe, conducted by the prosecutors, into suspected tax evasion by three Apple employees. La Repubblica said two of the employees are executives based in Italy while the third is based in Ireland.

Apple offices in Milan, London and Ireland were closed on Wednesday. Messages seeking comment weren’t immediately answered.

Apple CEO Tim Cook has repeatedly rejected the notion that his company is trying to dodge taxes. In an interview with CBS TV program 60 Minutes aired Dec. 20, he said: “Apple pays every tax dollar we owe.”

Independent tax expert Bob Willens said the fact that Apple settled with Italian tax authorities means they’re conceding there was something a bit off in the company’s European tax arrangements.

“I don’t think Apple would have agreed to this sanction if they didn’t feel there was something at least questionable in what they were doing,” Willens said.

He said that while the sum was just a “nuisance” for Apple, the case did create a reputational problem: “It’s not a very positive public relations thing to be branded a serial tax avoider.”

Italian state television said the 318 million euros worked out in the agreement is far less than what Italian tax authorities contend should have been paid over those years.

Italian tax authorities have also examined Facebook’s Milan offices’ books. In yet another investigation, Google has said it has been working with Italian tax authorities to determine what it might owe.

Tali Arbel and Anick Jesdanun in New York contributed to this report.

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