An Apple executive in Ireland recently escaped a jail sentence after a settlement was reached with a court in Milan. The exec was in charge of Apple’s controversial Apple Sales International unit, which has often been in the crosshairs of European Union regulators. In August, for example, the European Commission ordered Apple to pay $14.6 billion in back taxes that largely affected the rest of the European Union.
The latest case involved Apple’s failure to pay taxes to Italy, Reuters explained. As a result of that failure, the Apple executive in charge of Apple Sales International faced up to six months in jail. Instead, the exec will cough up $49,126, or 45,000 euros, thanks to a settlement that was reached with a judge in Milan. It certainly beats hanging out behind bars, and while it might seem like this suggests Apple and the executive in charge were guilty, it actually doesn’t work that way.
Apple exec gets fine instead of jail time
Reuters explained that this doesn’t mean Apple was guilty in the case since it decided to settle. Much of this stems from the European Union’s charges that Ireland is allowing Apple to pay an incredibly low corporate tax rate, to the tune of just 0.005 percent, which means other countries, like Italy, feel like they aren’t getting their fair shake. In fact, the 0.005 percent rate is far below the standard corporate tax in Ireland, 12.5 percent, which is still lower than U.S. corporate taxes.
Italy is no doubt upset because of how Apple decides to do its business in the European Union and where it counts its profits. According to an earlier report from The Guardian, Apple “booked the profits in Ireland rather than the country in which the product was sold.” In other words, Apple allegedly takes the sales from across the European Union and, instead of paying corporate tax rates in each individual country, pays the single, much lower, Irish tax. You can see why Italy might be upset about that.
Apple has fought against these allegations. “The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process,” Apple CEO Tim Cook said in August.
Reuters said that the Milan court is currently investigating two additional Apple managers who work for an Apple subsidiary in Italy, but that prosecutors are now asking for those charges to be dropped.