Apple to Pay 318 Million Euros in Italy to Settle Corporate Tax Probe

This sounds like Italy's case was weak and Apple settled to make it go away. It's 1/3 of what Italy was seeking. Remember Italy is in a weak budgetary position (not much better than Greece) and is in shakedown mode. It happens here at the state level. Suddenly what had been accepted practices for years become "abusive." Usually the two sides reach a settlement and practices change prospectively. I've seen this happen with much smaller companies. I wouldn't be surprised if the larger EU probe ends the same way.

If that was that weak, Apple wouldn't have paid anything.

This sounds like Italy's case was weak and Apple settled to make it go away. It's 1/3 of what Italy was seeking.

It is called a plea bargain where when guilty you take the best you can get so you do not take the chance of getting the worst possible result. If it was that weak they would have fought it for the win.

Apple paid what it was owed. However, the Italian government decided to move the goal posts to get more money from Apple, the same way that other companies try their best to swindle money from Apple.

Can you imagine how many people they have working to do Apple's taxes. Big companies will always use the unfixed loop holes. If they are there, use them.

Don't be such a fanboy. "Swindle" money from Apple? Pay your damn taxes and stop using loopholes. Apple doesn't know you, doesn't care about you, you're a number to them, a stat.

Defending them means nothing to them. People need to quit defending tech companies like they're a family member. What's even more hilarious is that you pay them for a device for the "privilege" to do so.

Yeah Tim. You really pay "every dollar" you owe.

This is the scourge of the tech industry.

How many iPhones does Apple sell in Luxembourg, Ireland or the Cayman Islands ?

This sounds like Italy's case was weak and Apple settled to make it go away. It's 1/3 of what Italy was seeking. Remember Italy is in a weak budgetary position (not much better than Greece) and is in shakedown mode. It happens here at the state level. Suddenly what had been accepted practices for years become "abusive." Usually the two sides reach a settlement and practices change prospectively. I've seen this happen with much smaller companies. I wouldn't be surprised if the larger EU probe ends the same way.

I would imagine having multiple jurisdictions crawling through your accounts, asking searching questions of your finance people which involve them doing things to find documents etc etc is a huge distraction from day to day operations - in some shape or form it is going to cost you somewhere in time, reduced efficiencies etc. So coming to some settlement makes sense.

Apple is in the spotlight for this because it is so well known, but an awful lot of relatively small companies, as well as the big ones, are taking advantage of these tax structures. They are totally legal. But as others have commented, when governments are scrambling for revenue, and big business is accused daily, rightly or wrongly, of screwing the tax payer, of contributing to wealth and income inequality, then these legal challenges should come as no surprise.

And if a CEO were to unilaterally decide to pay taxes at higher rates, to not use these tax structures, it would only be a matter of hours before a shareholder sued the company and its officers for failing in their fudiciary duty to maximise gains for shareholders, and I can't think of a CEO or other senior company officer that wants to get embroiled in that hassle. Every time a publicly listed company says it is acquiring another publicly listed company, you see these law suits being filed, usually he first filing is less than an hour after the acquisition is announced...

So this may sound like Apple is admitting it did wrong, otherwise why pay anything at all. But my take on this, is that it is paying money to make a distraction go away. This is a company that does hundreds of billions of dollars of business around the world each year. Paying way less than 1% of revenue to make a major problem go away would be seen by many as simple the pragmatic thug to do, with no admission of guilt...

If that was that weak, Apple wouldn't have paid anything.

Not necessarily. I've seen this played out at the state level here with community banks. Most states have some vague "anti-abuse"' language in their statutes. When there is a budget crunch suddenly something that was acceptable for decades gets declared "abusive" and they go after some high profile companies. The first few settle for a fraction of the claim, and then everyone else gets the message that the rules have changed prospectively.

That sounds like the case here. Italy didn't start investigating until their budget crunch.

Buuuuut .... good guy Tim Cook said all of this was 'political crap' ?

The situation in Europe is very different to the one in the US.

Apple pays its tax on its US profits and doesn't repatriate overseas profits to avoid paying even more tax - fair enough. It would be foolish to do otherwise.

What's happening here in Europe is the aggressive use of transfer pricing to send profits to other countries within the EU with low corporate tax levels. So you have a company that makes huge revenues in Italy but declares its profit in Ireland. Up until January 2015 iTunes customers didn't even pay sales tax in their own country.

I have SME clients that pay more corporate taxes than Apple in France.