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E.U. to Launch Formal Investigation Into Apple's Irish Tax Deal

Apple trimmed billions from its tax bill by declaring companies registered in Cork as not tax resident in any country.

Composite image by Re/code

The European Commission will launch a formal investigation on Wednesday into Apple Inc’s tax arrangements in Ireland, Irish state broadcaster RTE reported, without naming its source.

The EU’s competition authority said last year that it was looking into corporate tax arrangements in several member states and had requested information from Ireland.

Antoine Colombani, a spokesman for competition issues at the Commission, declined to comment on the RTE report. Ireland’s finance ministry said it had not been informed of any investigation.

A U.S. Senate committee investigation revealed last year that Apple had cut billions from its tax bill by declaring companies registered in the Irish city of Cork as not tax resident in any country. But Senator Carl Levin, chairman of the subcommittee and a veteran tax sleuth, said the Apple structure represented “the Holy Grail of tax avoidance”.

Apple in the U.S. entered into deals with the Irish subsidiaries whereby the Irish units received the rights to certain intellectual property which were subsequently licensed to other group companies, helping ensure almost no tax was reported in countries like Britain or France. Apple’s Irish arrangement helped it achieve an effective tax rate of just 3.7 percent on its non-U.S. income last year, its annual report shows — a fraction of the prevailing rates in its main overseas markets.

Apple said it complied with the law.

(Reporting by Conor Humphries; Additional reporting by Barbara Lewis in Brussels; Editing by Robin Pomeroy and Louise Heavens)

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