Apple’s international headquarters are in Cork, Ireland under the name “Apple Sales International, Ltd.”. The reasons why they’re here is obvious: lots of good, young people willing to work for them with college degree’s, access to Europe and the Eurozone and most importantly the 12.5% corporate tax rate.
I’ve explained this to several people recently but a story popped up on Ifo today highlighting it from the Spanish sales perspective…
Despite a huge increase in sales at Apple’s Spain stores during their first full year of operation, the foreign subsidiary reported just $457,856 in pre-tax revenue because of accounting procedures that take advantage of the company’s subsidiary in Ireland. Apple’s accounting methods—common and legal among international companies—are intended to lower reported revenues, and to take advantage of Ireland’s low 12.5 percent corporate tax rate, compared to Spain’s standard 30 percent tax rate.
The story claims that this is “controversial accounting”. While it’s not the most honest practice, it’s hardly controversial. It’s probably commonplace these days with large international companies. In fact, companies like Google take advantage of the Irish and Dutch “sandwich” to only pay around 2% corporate tax in Europe.