Italian prosecutors complete probe into Apple over $964M in unpaid taxes, could pave way for trial
Apple could potentially face trial in Italy after prosecutors there recently finished a probe into claims that the company's crafty accounting led to more than 879 million euros ($964 million) in unpaid corporate taxes.
Apple Store Via Roma in Torino, Italy.
Citing a pair of sources with knowledge of the inquiry, Reuters on Monday reported prosecutors completed their probe into Apple's tax practices and, under Italian law, may soon seek a trial over the matter.
At the investigation's heart are Apple accounting techniques that from 2008 to 2013 booked income to a subsidiary in Ireland rather than Italy. Specifically, two managers from Apple's Italian operations and one employee from Apple's Irish subsidiary Apple Sales International were under scrutiny.
If Apple had booked income with Italian tax authorities, its taxes would have been much higher. Overall, the company allegedly saved some $964 million using its Irish holding company.
For its part, Apple told the publication it is one of the largest tax payers in the world and has paid all required dues in full. The statement is seemingly taken verbatim from responses to media regarding other tax-related allegations, including an investigation from the European Union's antitrust commission.
"These new allegations against our employees are completely without merit and we're confident this process will reach the same conclusion," Apple said of the Italian probe's claims.
In 2013, government authorities seized equipment from Apple's regional headquarters in Milan as part of the investigation.
Back home, CEO Tim Cook in 2013 testified in front of a U.S. Senate subcommittee, saying "[Apple pays] of the taxes we owe -- every single dollar. We not only comply with the laws, but we comply with the spirit of the laws."
Since the success of iPhone, Apple has faced increasingly rigorous standards from Italy's governing bodies, especially the Antitrust and Competition Authority. In 2011, Italy's antitrust authority fined the company $1.2 million for unfair commercial practices relating to AppleCare warranties. Following a relabeling of product packaging to fit Italy's laws, the body fined Apple another $264,000 in 2012 over similar transgressions. In addition, the Antitrust and Competition Authority conducted an investigation into "freemium" app sales last year.
Apple Store Via Roma in Torino, Italy.
Citing a pair of sources with knowledge of the inquiry, Reuters on Monday reported prosecutors completed their probe into Apple's tax practices and, under Italian law, may soon seek a trial over the matter.
At the investigation's heart are Apple accounting techniques that from 2008 to 2013 booked income to a subsidiary in Ireland rather than Italy. Specifically, two managers from Apple's Italian operations and one employee from Apple's Irish subsidiary Apple Sales International were under scrutiny.
If Apple had booked income with Italian tax authorities, its taxes would have been much higher. Overall, the company allegedly saved some $964 million using its Irish holding company.
For its part, Apple told the publication it is one of the largest tax payers in the world and has paid all required dues in full. The statement is seemingly taken verbatim from responses to media regarding other tax-related allegations, including an investigation from the European Union's antitrust commission.
"These new allegations against our employees are completely without merit and we're confident this process will reach the same conclusion," Apple said of the Italian probe's claims.
In 2013, government authorities seized equipment from Apple's regional headquarters in Milan as part of the investigation.
Back home, CEO Tim Cook in 2013 testified in front of a U.S. Senate subcommittee, saying "[Apple pays] of the taxes we owe -- every single dollar. We not only comply with the laws, but we comply with the spirit of the laws."
Since the success of iPhone, Apple has faced increasingly rigorous standards from Italy's governing bodies, especially the Antitrust and Competition Authority. In 2011, Italy's antitrust authority fined the company $1.2 million for unfair commercial practices relating to AppleCare warranties. Following a relabeling of product packaging to fit Italy's laws, the body fined Apple another $264,000 in 2012 over similar transgressions. In addition, the Antitrust and Competition Authority conducted an investigation into "freemium" app sales last year.
Comments
That's the same fracking italian justice system that
- Tried Knox 3 times for the same thing, taking the name of an avowed murderer with prints all over the room, as their "star" witness. In the third trial, they reused "evidence" from the first trial that had been thrown out as pure invention in the appeal!! The prosecutor in the first trial was basically fabricating evidence, yet still roams free!
- Had a judgement against geologists because they couldn't predict earthquakes
- Didn't prosecute Burloscony for decades because of influence peddling.
Italian justice is the pits, so I expect a conviction. They're very good at being a laughing stock of European law, and they will be up to that "challenge".
I am actually surprised (should I be?) that AppleInsider failed to mention this from the Reuters article...
It said the Italian tax authorities had audited Apple's Italian operations in 2007, 2008 and 2009 and confirmed it was in full compliance with the OECD documentation and transparency requirements.
If Apple is being investigated from 2008 to 2013, then why are the 2008 and 2009 practices being investigated again since those years were previously confirmed to be in compliance?
It would be great if Apple could charge the Italian government with antagonistic practices would have the government paying a fine as well as Apple's legal bill. I can dream, eh?
A lot of those euro countries are broke and they're trying to snatch cash from wherever they can, and who better than Apple, that has plenty of cash lying around?
Greece is even trying to godwin Germany, to get out of paying the debts that they owe.
Also, various stats have shown that the poorer the country, the more Android users are likely to be found in that country.
Screw Italy and Greece. Pull the hell out of those countries. Also, US government, please fcking lower foreign corporate tax rate so US companies can bring cash home.
(Essentially) a billion in (unpaid) taxes over 5 years seems like *a lot* in taxes (even for Apple) for a country the size of Italy. [Perhaps I'm out of touch.]
Whatever happened to harmonization of business practices across the whole EU? Screw Italy. Get out of there, Apple.
You're not wrong. It's blackmail.
Have you noticed here that companies often "agree" to pay a fine? What's up with that?! Governments are supposed to fine companies when they are in the wrong whether they like it or not. If a company "agrees" to a fine, it is probably not high enough.
Sorry, rant off.
What the hell?
I wish our regulators had as much guts as the Italians. We are pitiful, the way we let corporations walk all over our laws.
Have you noticed here that companies often "agree" to pay a fine? What's up with that?! Governments are supposed to fine companies when they are in the wrong whether they like it or not. If a company "agrees" to a fine, it is probably not high enough.
Sorry, rant off.
Well, in a way . . .
The Italian regulators seem to have guts in the same way mafia extortionists have brazen guts.
Meanwhile . . .
The US regulators need the guts of Elliot Ness going after criminal behavior rather than their current state sometimes marked by the affability of a co-conspirator.
Pretty unlikely though, with legislators of both parties in the pockets of big business interests. I'm really glad that Apple hasn't chosen to throw their money and weight around in DC, and instead seem mostly to set an example of enterprise in partnership with employees, stock holders, the community, and the government.
When I lived in Germany, I'd travel to Italy often on the weekends. Love the culture, and its people. That being said, that country is one of the most corrupt EU countries, right next to Greece. Just like Greece, they just try to ride on the backs of other countries (like Germany) that actually have a stable economy. The Italians and Greeks would rather just sip coffee all day and let the government take care of them. Not stereotyping... I've seen this first hand all the time there. It's really sad. I'd say 20% of the people actually do work and contribute. The rest... well... enough said.
Just like the Knox trial, the Italians seem to have no shame to continuously retry something until it gets what it wants. I really hope Apple stands its ground.
Italy is part of the EU. Suck it up pizza boys. Can't have one without the other. Apple played by the rules, and you lose.
Screw Italy and Greece. Pull the hell out of those countries. Also, US government, please fcking lower foreign corporate tax rate so US companies can bring cash home.
US corporations "can" bring cash "home" already.
I am italian and I agree with you (actually it is much worse than you think). But I still prefer living here for an awful lot of reasons (foods, arts, history, landscapes, culture, life expectancy, less poverty, less people killed).
You wish it was like that but it isn't. Those countries are not facing problems because of their social measures. In fact the countries which are the most socialist in Europe are the happiest places on Earth and without economical problems, see Scandinavia.
How is Scandinavia more socialist than Greece? You're right that in general the issues aren't related to socialism itself, but rather a totally different mindset/attitude/worldview of the people in northern Europe as opposed to southern/Mediterranean Europe.
Australia is also having a bit of an issue with some large companies and their creative tax practices, which include Apple.
I think countries could look at applying a tax as a percentage of local revenue if the profit they declare locally seems unreasonably low.
US corporations "can" bring cash "home" already.
Oh sure they can. We have one of the HIGHEST Corporate Tax Rates in the world. Something around 35%. What's a real load of crap is the Money was already TAXED in these other country's. so bring it into the U.S. just means another huge Tax on top of it. Ya, real smart thing to do, Lose all your profits in taxes.