Apple Settles Italian Tax Probe for $350M

Investigators reportedly found a $961 million gap between Apple's sales in Italy over a five-year period and what it paid in tax.
Katie Kuehner-HebertDecember 30, 2015

Amid increased scrutiny of U.S. companies’ tax arrangements in Europe, Apple has agreed to pay as much as $350 million in a settlement with Italian tax authorities.

According to the BBC, investigators say they found an 880 million euro ($961 million) gap between Apple’s revenues in Italy of over 1 billion euros between 2008 and 2013 and the 30 million euros that it paid in tax in the country.

The penalty could reach as much as $350 million, the New York Times said, citing local news reports. Tax authorities have alleged that Apple moved roughly $1.1 billion in revenue from its Italian operations through an Irish subsidiary to lower the taxes that the company was obliged to pay in Italy.

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“The country’s investigation into Apple’s activities is the first time that an individual European country has focused on the company’s complicated corporate tax structure, though policy makers in countries like France have previously looked at other tech companies’ tax arrangements, including those of Google,” the NYT wrote.

The Cupertino, Calif. company has previously denied attempting to escape paying tax owed on profits made around the world, with CEO Tim Cook calling such allegations “political crap.”

Apple Italia is part of the company’s European operation that is headquartered in Ireland, a country with one of the lowest levels of corporate tax in the European Union  12.5% for normal business activities, compared to 27.5% in Italy.

The European Commission has been investigating the tax arrangements of numerous multinational companies accused of using cross-border structures to reduce their tax bills.

An EU tax ruling on Apple’s dealings with Ireland is expected early next year. The EU has accused Ireland of bending international tax rules by letting Apple shelter profits worth tens of billions of dollars from revenue collectors in return for maintaining jobs.