Sen. Carl Levin is taking vindication in a preliminary finding from the European Commission that Ireland cut an illicit tax deal with Apple.
“The facts are abundantly clear: Apple developed its crown jewels — lucrative intellectual property — in the United States, used a tax loophole to shift the profits generated by that valuable property offshore to avoid paying U.S. taxes, then boosted its profits through a sweetheart deal with the Irish government,” Levin said in reaction to the European Commission’s report released Tuesday.
As head of the Senate Permanent Subcommittee on Investigations, the Michigan senator has led inquiries into the possibility that multinational corporations have located divisions of their business in low-tax jurisdictions like Ireland to reduce their global and U.S. tax bills.
The Brussels-based European Commission cited a 2013 report by Levin’s committee on Apple in making the initial determination that Ireland gave the Cupertino, Calif., tech giant a favorable deal to locate part of its business in Ireland.
After reviewing tax rulings by Irish authorities relating to Apple, “the commission’s preliminary view is that the tax ruling of 1990 (effectively agreed in 1991) and of 2007 in favor of the Apple group constitute state aid,” which is not allowed under European Union agreements.
The report also found that “through those rulings the Irish authorities confer an advantage on Apple…. That advantage is also granted in a selective manner.” The report includes a decision to investigate more deeply for possible action, which could include penalties against Apple.
“Hopefully this finding will help persuade Congress that we should close the loopholes in our tax code that allow Apple-type gimmicks whose sole purpose is to avoid paying U.S. taxes,” Levin said.
The question of multinationals lowering their payments to the U.S. Treasury has gained attention in Washington in recent weeks, as inversions — in which U.S. companies buy businesses in low-tax countries and then place their headquarters there — have increased in number.
The Treasury announced measures last week intended to undercut the tax benefits of inversions and reduce companies’ ability to decrease their U.S. taxes using foreign subsidiaries.
