Economy

Apple to pay hundreds of millions of euro in French back-taxes

Tech giant handed bill by Paris after audit covering past decade

Activists of the Association for the Taxation of Financial Transactions and for Citizens’ Action demonstrate inside an Apple Store during a protest against tax evasion in Aix-en-Provence, France, last week. Photograph: Boris Horvat/AFP/Getty Images

Tim Bradshaw
Tue Feb 5 2019 - 20:31

French authorities have ordered Apple to pay additional taxes believed to run into hundreds of millions of euro, following an examination of the US tech group's operations in the country over the past decade.

The audit of Apple's business in France, dating back to 2008, comes a year after the iPhone maker was forced to pay an extra £136 million in taxes in the UK, following a similar probe.

European governments have been grappling with how to extract more tax from US tech companies, many of whom choose to base their operations in lower-tax countries such as Ireland.

Two years ago, Google succeeded in overturning a French ruling that it owed an extra €1.12 billion in back taxes. Apple is still contesting a record-breaking €13 billion tax penalty after the European Commission found in 2016 that Ireland provided it with illegal state aid.

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Apple and the French government reached their settlement late last year. While the exact sum that Apple has paid is expected to be disclosed in its next French accounts, typically published in the spring, the magazine L'Express reported that it has agreed to pay about €500 million, covering a 10-year period.

‘Regularly audited’

Apple declined to comment on that figure but confirmed the settlement on Tuesday. A spokesperson for the French government’s public accounts department declined to comment.

“We know the important role tax payments play in society and we pay all that we owe according to tax laws and local customs wherever we operate,” Apple said. “As a multinational business, Apple is regularly audited by tax authorities around the world. The French tax authority recently concluded a multiyear audit of our French accounts and the adjustment will be reflected in our publicly filed accounts.”

Apple’s most recent quarterly filings in the US, released last month, stated that it faced open tax audits in certain US states dating back more than a decade and unspecified “major foreign jurisdictions” for the years following 2010.

Vocal proponent

France has been a vocal proponent of introducing a wide-ranging pan-European digital tax on tech companies. Following disagreements between member states on this issue, the French government is working on a new domestic tax that will be levied on big international tech groups such as Apple, Google and Facebook.

It will apply to all digital service providers with a turnover in this line of business of more than €750 million worldwide and €25 million in France. It will be retroactive to 1 January 2019 and is expected to generate about €500 million in revenue for France. The legislation is expected to be put to a parliamentary vote at the end of this month.

Apple on Tuesday pointed to its “many contributions across France”, including French developers earning €1.3 billion through the App Store and the company spending €800 million with hundreds of French suppliers last year.

– Copyright The Financial Times Limited 2019

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