Apple loves to tout its technological innovation, but the Italian government wasn’t a fan of the company’s innovative approach to paying taxes, so it’s starting to collect its dues.
The Cupertino company has agreed to pay $348 million to settle an investigation into the tax practices of its Italian subsidiary. The sum falls considerablyshort of the $960 million that Italy has accused Apple of hiding. Apple generates enough revenue to cover the cost of the settlement in just over 10 hours.
The dispute covers a five year period between 2008 and 2013 during which time, according to Italian authorities, Apple was booking sales in Italy through its Irish subsidiary.
Ireland has a considerably lower tax rate than Italy. A 2013 U.S. Senate investigation revealed that Apple’s operations are structured so that it can report much of its international profit through Ireland to take advantage of an odd feature in the country’s tax law.
When that investigation began, Apple defended its actions, saying in a statement,”Apple pays every dollar and euro it owes in taxes and we are continuously audited by governments around the world.” The company claimed to have been in full compliance with Italian law according to audits in 2007, 2008, and 2009.
Apple is the latest tech giant to face considerable Italian regulatory scrutiny due to its tax practices. Italian Prime Minister Matteo Renzi has proposed a tax on multinational Internet companiesdubbed the “Google Tax”that could yield over $3 billion per year. The previous prime minister proposed the idea only to abandon it due to opposition from the European Union. Renzi has revived the proposal as a way of shoring up his country’s strained finances.
Silicon Valley firms’ practices have placed significant pressure on Italy to take action. In 2014, Google reported about $60 million in revenue in the country; Italy’s tax office estimates the search giant’s revenue to be nearly ten times higher. Google opened its European headquarters in Ireland to take advantage of the same generous tax rates that boost Apple’s profits.