Apple will pay a €318M ($347M) tax bill to the Italian government to settle an investigation by the Italian tax office in which Apple was accused of failing to declare more than $1.3 billion of income when paying its corporate tax in the country.
Apple was accused of funneling profits from Italian sales through its Irish subsidiary in order to benefit from the lower tax rate the company had agreed there. (Those tax arrangements are the subject of a separate EU investigation.)
Apple had listed its Apple Italia division as a “consultant” for Apple Ireland, allowing it to book Italian profits through Ireland, thereby allowing it to pay just 2.5% tax under an agreement with the Irish government. The company has 16 retail stores in Italy.
Apple has long funneled most of its European profits through Ireland, allowing it to pay much less than the normal 12.5% paid by most companies. An EU investigation into the arrangement between the Cupertino firm and the Irish government is currently underway, and was recently expanded and extended.
If the investigation should show wrongdoing by Apple, the company would be required to pay the difference for up to ten years. The company warned shareholders of that possibility last year. While Apple hasn’t offered an estimate of what it would be required to pay, The Financial Times has estimated the amount at $2.5 billion. Apple would not be required to pay any fines or penalties, as the law would have been broken by the Irish government, not Apple.