ROME: Apple has agreed to pay Italy 318 million euros (US$348 million) to settle a tax dispute after the US tech giant was investigated for suspected fraud, the country’s tax agency said yesterday.
Apple’s Italian subsidiary and several of its senior executives had been under investigation for fraud over its alleged failure to comply with obligations to declare its earnings in Italy between 2008 and 2013.
According to Italian daily La Repubblica, Apple Italia should have paid corporate tax of 880 million euros for the period.
After months of negotiations, the tax authorities agreed to close the case in return for a check for 318 million euros.
A spokesman for the tax agency confirmed the newspaper’s report was accurate but would not divulge further details.
Apple Italia did not respond to a request for comment on a case which could set a precedent for other European countries’ dealings with the company.
The settlement comes against a backdrop of mounting controversy over the tax arrangements of multinational groups which use cross-border corporate structures to reduce their tax bills, sometimes with the help of secret and potentially illegal “sweetheart” deals.
Apple Italia is part of the company’s European operation which is headquartered in Ireland, a country with one of the lowest levels of corporate tax in the European Union.
Ireland taxes corporate earnings from normal business activities at 12.5 percent, which compares with a standard 27.5 percent rate in Italy.
Earlier this month, Apple CEO Tim Cook described accusations that the world’s richest company was sidestepping US taxes by stashing cash overseas as “political crap” and insisted: “We pay every tax dollar we owe.”
The settlement of the tax dispute will not halt the criminal investigation into the conduct of three Apple Italia executives but will likely reduce the severity of any sanctions they may face, La Repubblica said.
Apple’s activities in Ireland are currently under investigation by the European Commission, which is due to announce soon whether tax breaks designed to secure the company’s extensive investment in Ireland amounted to illegal state aid.
Apple’s European operations have been headquartered in Cork since 1980.
