The EU announced on Monday that Ireland gave Apple an illegal sweetheart deal on its taxes.
This means that Ireland will be forced to claw back 13 billion euros in unpaid tax — or about $19 billion. Apple plans to appeal the ruling.
Apple is the world’s most valuable company, with over $230 billion in cash and marketable securities.
This is wrong. $19 billion is a colossal amount of money, one that is certainly material to Apple, and a higher international tax rate going forward will clearly eat into Apple’s international net profit.
In fact, $19 billion dollars is equivalent to:
- Just under twice Apple’s net income from the last quarter ($10.4 billion)
- 27% of Apple’s total, world-record breaking profit from fiscal year 2015
- Equivalent to 24.3 million iPhones according to Apple’s most recent average sales price
- That’s enough to give every man, woman, and child in Ireland over 5 iPhones
- Over four times Facebook’s total profit for 2015, and comparable to Facebook’s $23.9 billion in revenue last year
- It would eat up 88% of Alphabet’s total profit for 2015, and would eclipse Google’s total profit in 2014
Apple is clearly sweating the decision. It took the unusual step of posting a letter from Apple CEO Tim Cook explaining its tax structure, and claiming the European Union simply made up new tax laws.
It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been. This would strike a devastating blow to the sovereignty of EU member states over their own tax matters, and to the principle of certainty of law in Europe. Ireland has said they plan to appeal the Commission’s ruling and Apple will do the same. We are confident that the Commission’s order will be reversed.
One change that may happen because of this decision is that Apple will decide to repatriate more of its money to the U.S., depending on if the U.S. Government gives it a tax break.
NOW WATCH: The best way to use incense in ‘Pokémon GO’
Business Insider Emails & Alerts
Site highlights each day to your inbox.