Row.co.uk Blog

In late August 2016, Ireland was ordered by the European Commission to reclaim €13 billion in back taxes from Apple.

It is claimed that Ireland illegally gave significant tax breaks to Apple, allowing the gadget mega-corporation to pay just 2% on profits compared to the country’s rate of 12.5%.

Although both Apple and the Irish government are appealing the ruling, it is unclear whether they will be successful.

However, with such a large cash pile, could there be another way for Apple to avoid paying the tax?

In 2014, the GDP figure for Ireland was $205 billion, just a few billion more than the cash hoard Apple reported to hold in 2015.

Ireland may not be for sale, but their debt potentially is. With a reported $226.6 billion in the red, Apple could pay off the entire amount in just a few instalments.

What would Apple get in return? Perhaps an even better tax deal or even the offer of paying no tax at all. That may not currently be legal under EU rules, but with neighbouring Britain having recently decided to leave the union, Ireland may not be far off joining.

Ireland may be seen as a tax haven and therefore attractive to Apple to place its European headquarters, but what’s stopping Apple from just creating its own country and making its own taxation laws?

In theory, Apple could buy its own country and build a bank for under $150 million, avoiding hefty penalties like the one it currency faces.

The idea may initially sound absurd, but in 2007 ‘Sealand’ was put on the open market. An ugly second World War II gun platform, just outside Britain’s three-mile territorial waters, claims to be the world’s smallest state. Remarkably, the UK government agrees.

For offers in the region of $100 million, this platform comes with the right to print its own postage stamps and even put a team into the qualifying stages of the World Cup.

According to OffshoreCompany.com, the costs of starting a new bank is roughly between $10 - $20 million; pocket change in comparison with Apple’s net worth.

Whether Apple considers one of these possibilities to avoid large future tax bills or not, it’s going to interesting watching what Apple does with its eye-watering cash stockpile and how it operates in an international economy with politicians increasingly clamping down on tax avoidance.

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