Italian government levels tax fraud accusation at Apple, raids local HQ

Posted:
in General Discussion edited January 2014
Authorities have seized equipment from Apple's Italian headquarters in the course of an investigation into accusations that the company shielded more than ?1 billion in profits from Italy's tax authorities, according to a new report out of Milan.

Apple Via Roma store
Apple's Via Roma store in Torino, Italy


Apple's Italian operation is said to have underreported taxable income of ?206 million in 2010 and ?853 million in 2011. The accusations were first reported by Italian publication l'Espresso and later confirmed by Reuters, citing sources in the Italian judiciary system.

The complaint alleges that the income was booked to Apple's Irish holding company, but should have been reported to Italian tax authorities as income derived from activities in Italy. The investigation includes two unnamed middle managers from the Cupertino, Calif.-based company.

Apple has reportedly challenged the seizure order that followed a search of the company's headquarters in Milan, and Italian appeals courts will take up the question of its validity. A timeline for that action was not specified.

l'Espresso notes that this would mark the second Italian inquest into Apple's tax strategy in the country. The first is said to have been closed for lack of evidence.
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Comments

  • Reply 1 of 86
    Case "closed for lack of evidence" is a prosecutor's weaseling way of saying we accused an innocent party. Hopefully, that is the case again.

    My impression of Italian prosecutors, based on a couple of recent cases receiving international attention is that they don't like tobloseconce they have decided some one is guilty. And, they will keep charging their target with crimes until the court's see it that way.
  • Reply 2 of 86
    Well of course it's [I]underreported[/I]; Apple always exceed their own guidance for the quarters ¡
  • Reply 3 of 86
    Italian Gov't has been crooked for years.. They've gotten a ton of flack from locals and focusing on high profile companies that are not local is much less of a political suicide.

    "The investigation includes two unnamed middle managers from the Cupertino, Calif.-based company. " Convenient, we'll see how this plays out.. If we see names, or not..
  • Reply 4 of 86
    asdasdasdasd Posts: 5,202member
    Yes it's rubbish. Apple is headquartered in Ireland so it owes it's corporate taxes on wholesale profits there. It owes merely retail profits in Italy. And there is no way that retail profits would have been that much.

    Italy's justice system is a joke.
  • Reply 5 of 86

    $1B is probably less than the entire inventory Apple sold in Italy which is a country known to be not very iOS friendly.

  • Reply 6 of 86
    cnocbuicnocbui Posts: 3,613member

    A storm in a cappuccino.

  • Reply 7 of 86
    lkrupplkrupp Posts: 6,609member

    Just wait till you see how this story is plastered all over the tech blogosphere as undisputed fact. The shrieks  of joy from the usual suspects will be loud and long. 

  • Reply 8 of 86
    mstonemstone Posts: 11,510member

    Italy is probably owed some taxes. Since Apple is a US company and has a headquarters in Italy, what does Ireland have to do with any of this? Sounds fishy to me.

  • Reply 9 of 86
    asdasdasdasd Posts: 5,202member
    mstone wrote: »
    Italy is probably owed some taxes. Since Apple is a US company and has a headquarters in Italy, what does Ireland have to do with any of this? Sounds fishy to me.

    It's European headquarters are in Ireland.
  • Reply 10 of 86
    Quote:

    Originally Posted by mstone View Post

     

    Italy is probably owed some taxes. Since Apple is a US company and has a headquarters in Italy, what does Ireland have to do with any of this? Sounds fishy to me.


     

    A little thing called the EU.

  • Reply 11 of 86
    gatorguygatorguy Posts: 19,805member
    Note that Apple isn't being singled out. Google, who uses the same types of tax avoidance strategies, is also targeted by the Italian authorities. If one is found to be doing so improperly I'd imagine the other will too.
  • Reply 12 of 86
    gtrgtr Posts: 3,231member
    cnocbui wrote: »
    A storm in a cappuccino.

    A Cupertino cappuccino storm?
  • Reply 13 of 86
    asdasdasdasd Posts: 5,202member
    The US should respond by taxing farrarri not the profits it makes in the US but the total price of sales in its shops.
  • Reply 14 of 86
    ronboronbo Posts: 669member

    Morning breaks. Join us, dear viewer, as we position our cameras near a large money pile. We won't have long to wait. Hark! Here's one now! Listen to the mating call of the red-throated politician bird...

     

    "Gimme!! Gimme!! Gimme!!"

     

    So lovely. Soooo lovely.

  • Reply 15 of 86

    First it is Italy folks, it is not the cradle of business ethics that is for sure.

     

    They went after apple about the warranty issue and now they are claim tax fraud, next it will be murder.....

  • Reply 15 of 86
    This is a good ol' fashioned shakedown. Who said the Italian Mafia is dead. What do we know about the Italian Gov't? They elect corrupt, pedophiles into the office of Prime Minister. They mismanage their finances so badly that they bankrupt the entire country. Why wouldn't they focus on the outsider. It takes far more integrity to point the guilty finger at oneself than an outsider. Especially, an outsider rich beyond their wildest dreams. It must go back to some sort of Roman entitlement that they're the true rulers of the planet because they once had an empire. Nothing there but a bunch of old crabby grandpas with a penchant for the younger life. They do make nice suits, though.
  • Reply 17 of 86
    @adsdad: actually, the way companies can avoid paying taxes by hiding in tax havens, such as Ireland, is the real joke.
    While I sadly agree with you Italy is probably doing this in a... let's say not-so-clearly-honest way, the fact three european countries now question the system's failures, not only for US-based Apple but also European oil companies and Telcos surely is a sign that it's not exclusively Apple-hate.

    I also understand that stockholders have a vested interest in not "understanding" that taxes are important to the country profits are made in, but quite obviously, there is a reason why some companies, based in some countries, are so much richer than others. And no, it's not "think different" for oil and banks. It's not magical technological advantages. It might, however, be savvy tax avoidance, and even if that's legal (which is the matter here), the question of the validity of that legality is a very good one.

    So, I guess, we'll see if Italy's complaint is valid, we'll see if the UE sets better rules (because Italy or France or the UK alone can hardly do anything, but the UE can discuss rules with the USA on more... equal footing), and we'll see what happens next.

    I also notice that when the same countries and courts rule against Samsung, their rulings aren't as badly received here.
  • Reply 18 of 86
    What is up with Italy and France busting Apple's ass over nothing? :no:
  • Reply 19 of 86
    gqbgqb Posts: 1,934member

    Hopefully international corporations will learn that the benefits of hiding their income from the country that made it possible in the first place (i.e. U.S.) are outweighed by the truth of the old bromide "You lie down with dogs, you get fleas."

     

    (And yes, I own AAPL.)

  • Reply 20 of 86

    Well, it doesn't make sense. Someone just needs money and/or attention, it seems. However, I still can't understand how Apple gets away with 1 year guaranty when they are forced by law to give at least 2.

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