The European Union announced on Monday that Ireland gave Apple an illegal sweetheart deal on its taxes.
This means that Ireland will be forced to collect 13 billion euros in unpaid tax from Apple — or about $14.5 billion. Apple plans to appeal the ruling.
Apple is the world's most valuable company, with over $23o billion in cash and marketable securities.
This has led some to say that the decision won't hurt Apple, or that it's loose change to the company.
This is wrong — $14.5 billion is a colossal amount of money, one that is certainly material to Apple, and a higher international tax rate going forward would eat into Apple's international net profit.
In fact, $14.5 billion dollars is equivalent to:
- Just under twice as much as Apple's profit from the last quarter ($7.8 billion)
- 27% of Apple's total, world-record-breaking profit from fiscal year 2015
- 24.3 million iPhones, according to Apple's most recent average sales price
- Enough to give every man, woman, and child in Ireland five iPhones
- Over four times Facebook's total profit for 2015, and comparable to Facebook's $17.9 billion in revenue last year
- It would eat up 88% of Alphabet's total profit for 2015, and would eclipse Google's total profit in 2014
Apple is clearly sweating the decision. It took the unusual step of posting a letter from CEO Tim Cook explaining its tax structure and claiming the EU simply made up new tax laws.
Cook wrote:
"It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been. This would strike a devastating blow to the sovereignty of EU member states over their own tax matters, and to the principle of certainty of law in Europe. Ireland has said they plan to appeal the Commission's ruling and Apple will do the same. We are confident that the Commission's order will be reversed."
One possible change Apple might make because of this decision would be to repatriate more of its money to the US, depending on if the US government gives it a tax break.
Cook has predicted American corporate tax reform in 2017, and he recently held fund-raisers for Democratic presidential nominee Hillary Clinton and Republican House Speaker Paul Ryan.
