Apple’s main Irish arm appears close to exhausting so-called deferred tax assets that helped substantially keep a cap on its overall tax bills in recent years, accounts just filed indicate.
Apple’s main Irish-registered entity reported pre-tax profits of $69.3bn (€63.5bn) for 2022 in financial accounts filed with the Companies Registration Office here this week.
The accounts are for the California-headquartered technology giant’s Irish-registered Apple Operations International Limited which acts as a parent company for dozens of subsidiaries outside the US.
The Irish arm’s turnover last year was $222.8bn, well over half the global tech giant’s total sales, including the US.
The accounts show the Irish entity paid dividends of $20.7bn to Apple Inc, which is liable to taxation in the US.
The Irish entity also paid taxes itself totalling $7.69bn, way up on the $4.44bn the same business paid the year before, the accounts show. This tax paid includes, but is not limited to, corporation tax paid in Ireland where Apple is understood to be among the biggest if not the biggest single payer of corporation tax.
Although the company’s filings do not break down where tax has been paid.
Irish entity paid taxes totalling $7.69bn
The rise in the amount of tax paid by Apple Operations International Limited is in line with the Irish Government’s surging corporation tax receipts since 2015 in particular, when adjustments to global tax rules kicked off massive changes in many multinationals’ corporate structures and intra-company management of profits and tax.
The Apple Operations International Limited accounts show its intra group deferred tax assets decreased to $812m by September 2022, the end of its tax year, from $4bn a year earlier and $7bn a year before that.
It is understood these intra group deferred tax assets include Irish capital allowances, which provide businesses with tax breaks based on investments including their purchase of intellectual property from elsewhere in a corporate group – such as an Irish unit buying intellectual property from a sister company in another tax jurisdiction.
Apple CEO Tim Cook. Photo: Justin Sullivan/Getty Images
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Apple CEO Tim Cook. Photo: Justin Sullivan/Getty Images
As recently as 2016 the Apple unit's intra group deferred tax assets were as large as $22.5bn according to previous analysis by UCC economist Seamus Coffey, an expert in Ireland’s corporate tax regime.
Apple is thought to be among a number of large multinationals that “on-shored” intellectual property to Ireland following the global tax reforms in 2015 which limited the benefits of holding assets elsewhere and so ended schemes like the so-called ‘Double Irish’ that had helped businesses radically limit tax bills.
While Ireland was seen by many as a target of the tax reforms, the process has dramatically boosted the level of taxable profits being booked here.
That is in part because the availability of deferred tax assets helped offset the effect of the reforms on corporations. However, as those tax-cutting assets are exhausted the implications for Ireland’s corporate tax regime are unclear, but it may make it less attractive to retain tax-generating intellectual property here.
The availability of deferred tax assets helped offset the effect of the reforms on corporations
Meanwhile, a separate filing to the CRO shows Apple Operations International merged earlier this month with another entity, Apple Operations Europe Limited, one of the companies at the centre of the original EU Apple Tax case.
It is understood the change is administrative and will have no bearing on the case, which originally saw the European Commission order Apple to pay over €13bn in what Brussels said were unpaid historic taxes back in 2016. The case was appealed by Apple and Ireland to the the European General Court, which in 2020 rejected the Commission’s ruling.
Brussels has appealed and the case is due at the European Court of Justice on May 23.