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Apple's tax settlement could set precedent for other tech companies

Staff writer ▼ | January 4, 2016
Apple has agreed to pay Italy 318 million euros ($347 million) in back taxes, in a case that Italian tax officials are hailing as a victory.
Apple Italy
Italy   Accounting for revenue could be the biggest challenge
Tax experts said it was not immediately clear how strong of a precedent the case would set, but it is still a significant settlement because it is the first time a major multinational technology company agreed to pay a major tax bill in one European country that had been declared in another European country.

"Accounting for revenue for big multinationals could be the biggest challenge for European tax officials. It's unclear whether the Apple settlement is a one-off deal or whether it will have an impact on the way these cases are resolved in the future," Bruno Romano, a tax law professor at the University of Modena, said in an interview.

Calculating the national income of a multinational company, particularly an online company, because services performed in one country can generate income in another country. It can also be hard to calculate the value of brands, marketing, intellectual property, and other intangible assets.

Italian officials have said they were looking into the activities of online retail giant next, and in other countries the dominant search engine Google, social media powerhouse Facebook, software icon Microsoft, and online auction leader EBay are among the companies garnering unwanted attention from tax authorities. If the Apple deal sets a precedent, it could trigger a flood of similar deals.