Apple Has Reportedly Relocated Its International Tax Residency to Jersey
Last year, the European Union ordered Apple to pay up to $14.5 billion for illegal tax benefits in Ireland. The company smelled something fishy when Commissioner Margrethe Vestager started the investigation in 2014, as the International Consortium of Investigative Journalists revealed in the Paradise Papers. Apple relocated its tax residency to the tiny island of Jersey after the beginning of the investigation back in 2014.
Apple’s tax avoidance structure was so popular among tech companies that it had a cute nickname — the Double Irish. And other European governments lobbied to put an end to the Double Irish back in 2014.
The European Union investigation combined with the ending of the Double Irish led Apple to Jersey. Offshore law firm Appleby helped Apple set up its tax home in Jersey. And Appleby’s internal documents were leaked to the German newspaper Süddeutsche Zeitung and the ICIJ.
Both Apple Sales International and Apple Operations International declared tax residency in Jersey back in 2014. While the Double Irish is over, Irish companies that were incorporated before December 31st, 2014 can still declare tax residency in a tax haven until 2020.
Apple is currently using this grace period to hide most of the company’s pile of cash. The company currently holds around $252.8 billion outside of the U.S. as companies need to pay 35 percent in taxes when they bring overseas profit back home. Apple will have to find another trick to avoid taxes after 2020.
While Apple’s tax optimization structure doesn’t look illegal, there’s no reason why Apple should pay less in taxes than a smaller company that doesn’t try to route money through different countries to avoid local taxes. Apple is a good example of the ever-changing tax avoidance strategies, and shows once again that tax havens help the biggest companies in the world, which leads to unfair competition.
Update: Apple addressed the current furor around its taxes in a statement. It says that it pays all the taxes it’s required to, in the countries where it is taxed, and that the reshuffling of its Irish holdings was designed to maintain the status quo, not to further reduce its tax burden, in the U.S. or in Ireland. The veracity of these claims will have to be evaluated by the IRS and other authorities for whom the intricacies of international tax law are navigable.
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