Apple moves international iTunes biz to Ireland

Apple will move its entire international non-US iTunes operations to Cork, Ireland on February 5. It had been managed from low-taxing Luxembourg since 2004, and is set to close all operations in that location on February 4.

The assets involved are iTunes Store, Apple Music, the App Store and iBooks Store. The catalogue includes more than 43 million songs, 700,000 apps, more than a million podcasts and over 40,000 music videos.

They cover 140 countries, including Australia and New Zealand, with Apple Music streaming in 115 territories.

Apple first announced the move last September. At the time, the US company shifted an estimated US$9 billion worth of iTunes assets to Hollyhill in Cork, as well as all developer contracts to Apple Distribution International, one of its Irish entities.

Cork is the second largest city in Ireland, with Apple having operations in the city since 1980. It is the biggest private employer in that city with 5000 staff, and injects $24 billion into the Irish economy annually from salaries, taxes and investment. It plans to hire another 1000 in the next 18 months.

Ireland offers a generous 12% tax structure for international businesses operating within its borders, compared to America’s 35% corporate tax rate. Additionally Apple gets a further redution in tax rates because it based its European operations in Ireland. In 2014, it paid just 0.005% on its European profits.

Additionally, Ireland’s Double Irish provisions allow multinational corporations with Irish operations to legally move billions of dollars in profit to an Irish subsidiary which claims tax residency in a tax-free nation. The profits can then move to tax havens such as Bermuda and Cayman Islands. The scheme, which is supposed to be closed in 2020, does not charge transfer fees.

Last August, the European Union hit Apple with underpaid taxes worth $14.5 billion from across the European bloc from 2003 to 2014. This came after a year-long investigation by the EU into its Irish business. It contends tax deals it gets from Ireland are a breach of regional regulations, and amount to “illegal state aid.” It ordered Ireland to collect this money.

Both Apple and Ireland contend their actions as completely above board, and have appealed the EU decision. Apple says it has paid all the taxes required of it. Ireland says the EU is violating the nation’s sovereignty.