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3 More Companies Besides Apple The EU Has In Its Crosshairs

A decision issued by the European Union’s antitrust regulator Tuesday demands that Ireland recover $14.5 billion in unpaid taxes from Apple Inc. (NASDAQ:AAPLC). Apple can afford to make the payment. That’s not the main issue.

The main issue is that the EU may go after other American companies and the net result of multiple judgements could rob the U.S. of tax revenue as companies pay their previously unpaid taxes.

Jobs For Taxes

Everything springs from a deal between Apple and Ireland in 1991. The thrust of the deal was that Ireland agreed that Apple would pay very low taxes in exchange for bringing thousands of jobs to the country. Apple did that. By 2015 the company had 5,000 employees in Ireland.

The EU, while noting the agreement between Ireland and Apple was legal, now says it was – in effect – a scam. Among the charges against Apple are that the company created a “head office” that did not exist and that the agreement deprived other EU countries of taxes Apple should have paid them.

The EU’s Hunt For Unpaid Taxes

So far the European Union has gone after several American multi-national corporations. The status of these cases varies but the EU’s goal in all cases is to collect back taxes and fines.

In each case the EU says certain countries have allowed the companies to gain an unfair advantage by avoiding taxes. The governments involved said they would appeal and companies have all said they complied with law and paid fair taxes.

The EU’s beef with Starbucks has to do with Starbucks Manufacturing EMEA BV, a coffee-roasting house in Amsterdam , Netherlands. The EU disagreed with Starbucks tax classification and maintained that tax-reducing royalties were overestimated.

In its ruling the EU said Starbucks paid unjustified royalties that does not pay taxes. The finding was for €20-30 million in back taxes and fines.

With regard to Amazon EU Sarl, which is Amazon’s European head office, EU regulators also maintained a large royalty fee that was not subject to corporate tax.

In this case both the ruling and potential back taxes due are still pending.

McDonalds Europe Franchising was the subject of this EU investigation. Regulators said advantageous tax treatment may have been granted to McDonalds by Luxembourg.

As with Amazon, there has been no ruling and no determination of back taxes owed to date.