By Joe Brennan
The European Commission’s full decision on Apple’s tax affairs in Ireland came to 130 pages but doesn’t explain how it arrived at the €13 billion bill it ordered the iPhone and iPad maker to pay in back-taxes – not to mention interest.
Still, it does provide the kind of details that can’t help but liven up Christmas cocktail parties for accountants and lawyers all over Dublin this week. For everyone else, here’s our bluffer’s guide.
Firstly, how did the whole investigation get started?
Just over three weeks after Apple chief executive Tim Cook was grilled by a US Senate subcommittee over Apple’s tax affairs – in which he admitted the group had paid an effective tax rate of less than 2 per cent in Ireland over the previous decade – the European Commission was stirred into action.
The commission asked Ireland to provide information on the tax rulings given to large companies, in particular three Apple subsidiaries: Apple Operations International (AOI), Apple Sales International (ASI) and Apple Operations Europe (AOE).
The investigation turned formal in June 2014, when the commission made an initial ruling that Apple’s Irish tax arrangements were improperly designed to give the world’s biggest publicly listed company by value a financial boost in exchange for Irish jobs.
Brussels made its final ruling in August, when it outlined the massive amount of tax it says Apple owes Ireland – €13 billion. It formally published the decision in detail on Monday.
What does the case boil down to?
The entire case centres around two “tax rulings” the Revenue Commissioners gave Apple and its tax advisers in 1991 and 2007 over how ASI and AOE calculated the amount of profit subject to tax in Ireland.
These “rulings” (to use the commission’s language, as the Government says Revenue doesn’t have the authority to issue binding decisions) gave Apple a “selective” advantage, the commission said.