January 18, 2018 / 3:05 PM / 4 months ago

Apple's U.S. tax payment does not change EU's Irish tax ruling

BRUSSELS (Reuters) - Apple’s (AAPL.O) announcement that it will pay $38 billion in U.S. tax on its overseas cash will not reduce the $16 billion tax bill the company owes Ireland following a European Union ruling, the EU’s executive said on Thursday.

A 3D printed Apple logo is seen in front of a displayed Irish flag in this illustration taken September 2, 2016. REUTERS/Dado Ruvic/Illustration/File Photo

“Nothing has changed,” a spokesman for the European Commission said, with regards to its 2016 ruling that Apple received illegal state aid in Ireland through sweetheart tax deals with the government.

At the time of the ruling, the Commission said the amount Apple would have to pay to Ireland could be reduced if other countries found the company should have recorded its sales there instead of Ireland, or if its European subsidiaries were to pay more tax to the U.S. parent company.

However, Apple’s announcement on Wednesday that it would pay about $38 billion in one-time U.S. tax payments on its overseas cash do not fit either of these criteria.

“The Commission’s 2016 state aid decision found that, over many years, tax rulings issued by Ireland had allowed Apple to pay less tax on profits recorded in Ireland than other companies subject to (the) same national taxation laws. This gave Apple an illegal advantage in breach of EU state aid rules, which must now be recovered by Ireland - nothing has changed in that regard,” said the Commission spokesman.

    The Commission ordered Apple to pay Ireland up to 13 billion euros ($16 billion) in August 2016 and has since taken Dublin to court over its delays in recovering the money.

    A spokesman for the Irish finance ministry also said it had no indication the U.S. tax payment would affect its recovery of the money.

    “Ireland has an obligation to recover (money) that is binding under EU law. Changes to U.S. legislation do not alter such an obligation,” the spokesman said.

    Apple on Wednesday unveiled a $30 billion U.S. investment plan and said it would pay about $38 billion in foreign cash taxes.

    It is unclear whether Apple will be able to offset the Irish tax bill against the 15.5 percent U.S. tax on offshore tax piles.

    Additional reporting by Padraic Halpin in Dublin; Editing by Mark Potter and Elaine Hardcastle

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