Cash-strapped EU countries line up for slice of $19.8 billion Apple tax pie

Spain and Austria are among countries who want to take a bite out of the $19.8 billion in tax Apple has been ordered to pay.
Spain and Austria are among countries who want to take a bite out of the $19.8 billion in tax Apple has been ordered to pay.PHOTO: AFP

BRATISLAVA (AFP) - Budget-squeezed EU countries will ask Brussels for a share of the billions in Irish back taxes ordered from Apple, officials said on Saturday (Sept 10), bringing further problems to the tech giant after the lacklustre launch of the iPhone 7.

The European Commission, the EU's powerful competition regulator, last month ordered Apple to reimburse a record €13 billion (S$19.8 billion) in unpaid taxes in Ireland.

As part of its historic decision, which angered Washington, the Commission said other EU countries could also claim a slice of the money pot, though doubts on the legality of the claims remain.

Heavily-indebted Spain, which is under threat of an EU fine for breaking spending rules, said it was urgent to know how much Apple may have denied Spanish taxpayers.

"We are making a huge effort to reduce our public deficit, it is essential that this revenue not get lost," Spanish Economy Minister Luis de Guindos said on the sidelines of two days of talks with his EU counterparts.

"If it's legally accurate, you can be sure that as minister of finance I will take it," Austria's Hans Joerg Schelling said at the meeting in Bratislava, Slovakia.

"We Austrians are looking at it intensively," Schelling said, adding that other member states - including Italy - were also considering a payout demand.

In its landmark decision on Aug 31, the Commission argued that Dublin handed Apple favourable tax terms that amounted to state aid - illegal under its rules.

EU Competition Commissioner Margrethe Vestager called Apple's operations in Ireland a "sham", designed to funnel revenue from across the globe to avoid paying tax.

"Of course we are examining it," said Germany's Wolfgang Schaeuble, the EU's most powerful finance minister after two days of talks with his bloc counterparts.

But Schaeuble, like many ministers, said much would depend on what the EU's still-sealed decision actually contained, adding that he would ask the Commission to clarify the issue at talks next month.

The European Commission said a tax deal with Ireland allowed Apple paid an effective corporate tax rate of just 0.005 per cent on its European profits in 2014 - equivalent to just €50 for every million.

That low rate "brought home the enormity of the problem and the enormity of the challenge that it doesn't happen again," said OECD secretary-general Angel Gurria, who has led a global campaign to reform tax laws.

But Gurria, who attended the talks, said "you could not replicate this in Ireland or anywhere else because these types of constructions are no longer" after a wave of reforms championed by the Paris-based Organisation for Economic Cooperation and Development.

Gurria said that the Commission had clearly opened the door to sharing the tax pot to all countries, including the United States.

But any big pay day is still a long way off, with both Apple and Ireland committed to appealing the decision which launches an EU court battle that could take years.

The brewing court battle comes just days after Apple's unveiling of a new iPhone failed to ignite the usual investor enthusiasm.

The iPhone7, which comes without a headphone jack, sent the company's shares falling late in the week to a still market-topping value of US$572 billion.