Did you miss a session from GamesBeat Summit Next 2022? All sessions are now available for viewing in our on-demand library. Click here to start watching.
Apple and other large U.S. companies have been parking profits overseas for years as a way of reducing their overall tax bill.
Apple has been especially aggressive lately, more than quadrupling the amount of its offshore holding over the past three years.
Ireland has been a favorite parking spot for Apple. A U.S. Senate committee investigation last year found that Apple had cut billions from its tax bill by booking profits under the names of subsidiary companies in the Irish city of Cork.
The European Commission appears to be ready to take Apple to task on its Irish tax arrangements. The commission is set to launch a formal investigation, according to Irish state broadcaster RTE. RTE did not name its source.
The EU announced last year that it was interested in looking into the foreign tax arrangements of some of its member countries, and one of them was Ireland.
When Apple books profits in Ireland, it pays a tax rate of 12.5 percent. Booked in the United States, Apple would have to pay a 35 percent rate.
An EU study last year found that Apple reported $30 billion in profits in Europe, with “no tax home” for the money.
European countries have been reluctant to act against the practice, because they want to attract U.S. companies to set up operations in there.
U.S. lawmakers have faced limited jurisdiction to act against the offshoring of profits for tax purposes.
A 2013 Congressional Research Service report found that U.S. multinational companies reported earning 43 percent of their 2008 overseas profits in Bermuda, Ireland, Luxembourg, the Netherlands and Switzerland. That’s more than five times the share of workers and investment they have in those jurisdictions, the report said.
And the trend has only accelerated. Over the past three years, Apple has more than quadrupled its offshore profit holdings, Microsoft has doubled its offshore holdings, and Google’s offshore profits have doubled to $38.9 billion from $17.5 billion.
VentureBeat's mission is to be a digital town square for technical decision-makers to gain knowledge about transformative enterprise technology and transact. Discover our Briefings.