Cross-border tax warning


Businesses with cross-border activities are being urged to take tax advice after a major European ruling which could land computer giant Apple with a £11 billion tax bill.

Stuart Rogers, corporate tax partner at chartered accountant and business adviser, PKF Francis Clark, was speaking after the EU Commission announced the results of a three-year investigation into Apple’s Irish affairs.

The investigation concluded that Ireland’s tax rulings had allowed Apple to pay substantially less tax than other businesses with profits attributed to a head office that, according to Margrethe Vestager, the European Commissioner for Competition, “only existed on paper”.

As a result the EU Commission said the Irish Government had effectively allowed Apple to pay a corporate tax rate of no more than one per cent. It has demanded that up to £13 billion Euros (£11 billion) should be repaid by Apple.

Both Apple and the Irish Government are expected to appeal against the ruling. The conclusion of the EU Commission investigation has also been criticised by the US Treasury.

Rogers said the EU Commission was clearly targeting corporate cross border structures, existing and proposed, which, it believed, had little substance.

He added: “This ruling sends a very clear message that a lack of substance, actual or even perceived, will be attacked by the authorities.

“National tax authorities, including HM Revenue & Customs, will be looking carefully at the EU Commission announcement.

“It will undoubtedly frame and shape their own thinking going forwards when dealing with multinational enterprises and how they approach lower level cases.

“UK businesses with overseas entities therefore need to be aware of this and consider whether the EU Commission announcement impacts them. We would urge them to speak to their adviser at the earliest possible opportunity.”