French tax authorities have recently issued Apple a fine in the amount of 400 million euros (about $422 million), according to L’Express. At the core of the adjustment is Apple’s complex and controversial tax optimization scheme that allows the firm to send back the lion share of its profits to tax-friendly countries such as Ireland.
According to French newspaper Le Monde, the tax adjustment specifically targets Apple France, a subsidiary of the American giant which despite selling its products in the Hexagon, reported a total income of only 69 million euros ($73 million) to French tax services, the rest of it being sent to Ireland where it is taxed at a much smaller rate.
Only financial years 2011 to 2013 are being under scrutiny, although a French government official said years 2013 to 2015 are still being audited and that it is expected similar large adjustments will be made.
Interestingly enough, Apple claims to have never been notified about the situation by French tax authorities. Even more bizarre, Apple executives reportedly found out about the fine by reading the press, according to a source.
Apple isn’t the only one being showed a big bill. Other tech giants such as Google, Facebook, and Amazon are enduring the same fate.
This fine issued by the French government is hardly news for those that follow Apple, who’s been at the center of a tax debate in the European Union for several years now. By using legal yet controversial tax schemes, Apple manages to send back the majority of its profits to Ireland where it enjoys, along with many other companies, preferential tax rates.
In August, the European Commission slammed Apple with a $14.5 billion tax bill over that specific arrangement it received from Ireland, which in the Commission’s view constitutes “illegal state aid”. Earlier this month, the Irish Finance Minister said that Dublin challenged the EU judgment by submitting an appeal to the European courts in a bid to block the decision, effectively putting its head on the line on behalf of Apple.
The Cupertino company has been asking the US government for years now to change its tax code to allow the firm to repatriate some of its profits generated overseas and be taxed at a lower rate.
Questioned about Apple’s tax practices during an an interview in December 2015 for 60 Minutes, Tim Cook said:
I’d love to bring it home. But it would cost me 40% to bring it home, and I don’t think that’s a reasonable thing to do. This is a tax code that was made for the industrial age, not the digital age. It’s backwards. It’s awful for America. It should have been fixed many years ago. It’s past time to get it done.
It is expected that Apple will challenge this fine in court.