American tech giant Apple has settled to pay France tax authorities close to 500 million Euros in back taxes owed for a ten-year period.
As reported by the UK’s The Register, this payment is “a result of a tax loophole that has been exploited by American tech giants, including Apple, Google, and Facebook, where all the profits banked from customers in countries across Europe are funneled through their European headquarters in Ireland, where the Irish government has struck controversial low-tax deals.”
Earlier this year, following a failed effort to implement a EU-wide digital tax, France set forth its own levy on tech companies, specifically aimed at advertising revenues, platforms and the resale of personal data.
France’s new GAFA tax, named after Google, Apple, Facebook and Amazon and which is expected to accrue 500 millions Euros in its first year, targets tech companies that have global sales worth more than 750 million Euros and 25 million Euros solely in France.
This tax is expected to be approved by French Parliament by the end of February and should collect no more than 5 per cent of the tech companies’ revenues in France.
Apple was quick to react to this new levy and reached a settlement with France’s tax authorities, negotiating a tax payment much lower than what would have been determined retroactively via the country’s new digital sales tax.
As reported by L’Express, this final agreement “followed several months of talks between Apple and French tax authorities and concerned the small amount of revenue the firm booked in France while the sales it reported in Europe ballooned, thanks in particular to iPhone sales.”
A spokesperson for Apple France said, “As a multinational company, Apple is regularly audited by fiscal authorities around the world. The French tax administration recently concluded a multi-year audit on the company’s French accounts, and those details will be published in our public accounts.”
“We know the important role tax payments play in society and we pay all that we owe according to tax laws and local customs wherever we operate,” Apple France added.
According to L’Express, Apple’s revenues in Europe rose from 6.6 billion Euros in 2008 to 47.7 billion Euros nine years later.
Concerns Over France’s New Digital Tax?
Several analysts have raised their own concerns over the impact France’s new digital tax on revenues will have on the local economy.
In an article in Wired, Rémi Bourgeot, a fellow at the French Institute for International and Strategic Affairs, implies that this tax might have adverse effects on the creation of new tech businesses in the region.
Bourgeot said, “We need to closely study the impact on European companies. Are we not going to prevent the emergence of big European and French technology companies with this type of tax?”
Additionally, Delphine Siquier-Delot, a senior fiscal analyst at the Friendland Institute, believes companies may ultimately move out of France as a result of this tax.
In the aforementioned Wired piece, Siquier-Delot criticized the tax, labeling it “more of a political symbol than a real technical fiscal measure which will solve economic problems.”
Furthermore, in an interview with France 24, Antoine Colonna d’Istria, a tax lawyer with Norton Rose Fulbright in Paris, said, “The main risk comes from the US, which could decide on retaliatory measures against a country like France that acts on its own.”
D’Istria also mentioned that the windfall from this digital tax on revenues might be lower than what the government expects.
“Taxing turnover is not the same as going for the profits,” d’Istria said.
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