TAX RULING

One Bad Apple

FILE - In this Wednesday, Dec. 7, 2011 file photo, a person stands near the Apple logo at the company's store in Grand Central Terminal, in New York. Apple will have to pay up to 13 billion euros ($14.5 billion) plus interest in back taxes to Ireland after the European Union found Tuesday aug. 30, 2016 that the U.S. technology giant had paid next to no tax at all across the bloc's 28 countries for over 11 years. The ruling is a dramatic escalation by the EU executive Commission in its battle to have multinationals pay their fair share in the region. (AP Photo/Mark Lennihan, File)
Will consumers still bite?
  • Why it matters

    Why it matters

    Accusations by the European Commission that Apple received illegal tax benefits are unlikely to undermine the cornerstone of the company’s success – customer loyalty.

  • Facts

    Facts

    • The €14.5-billion tax bill imposed by the European Commission on Apple represents only 6 percent of the company’s cash pile.
    • Both Apple and the Irish government have vowed to appeal the commission’s decision.
    • In the first quarter of 2016, Apple’s 13-year growth streak came to an end when its revenue dropped by 13 percent to $50.6 billion.
  • Audio

    Audio

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Apple faces one of the largest payments for back taxes ever imposed by the European Union’s anti-trust regulators. The $14.5-billion (€13-billion) bill would cripple most companies, but analysts believe Apple has little cause for concern given the zealous loyalty of its customers.

This brand loyalty has made Apple one of the most valuable companies in the world, beating out multinational oil behemoths such as ExxonMobil. The $14.5-billion payment demanded by Brussels represents just 6 percent of Apple’s $231-billion war chest.

“By many external brand consulting organizations, Apple is the most valuable brand in the world,” Ravi Dhar, director of the Yale Center for Customer Insights, told Handelsblatt Global Edition. “The financial value of the brand reflects the underlying attachment consumers have with the promise of Apple products.”

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