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Losing money is painful. Unless, that is, you don’t even notice that you’re losing the money in the first place because you never actually see it. But Europe’s citizens have been suffering from these kinds of losses every day for years now. At stake are billions of euros that multinational companies like Apple, Google and Amazon sneak past European tax authorities.

The story behind this scandal can easily be told with a single figure: 9 billion euros. That’s the amount Apple should have been paying European governments in corporate taxes over the past five years for its most popular product alone, the iPhone. Even if you calculate generously and base your figures on the common tax rates the company is paying abroad, Apple paid at most a billion euros. That means it avoided paying 8 billion euros in taxes, more than the amount European governments are spending on its Youth Unemployment Initiative to combat rampant joblessness among young adults in Southern Europe. And those are just the taxes that would be due for a smartphone.

Few companies in the world are as bold as Apple when it comes to tax avoidance. As early as the late 1980s, earlier than others, the company began diverting its profits in Europe to places that levied lower taxes, like Ireland, where Apple established its European headquarters.

It’s a popular method of avoiding taxes, and it works like this: A corporation’s individual companies sell assets to each other so that the profits land in the country where the lowest tax rates are applied on those earnings. In the case of Apple, that means Ireland.

The method works particularly well for the technology company because Apple has many immaterial assets that are easily diverted from one country to another. They include patents, licenses and rights to markets. In countries with relatively high taxation rates like France or Germany, the Apple subsidiaries located in those countries pay fees to the company’s Irish subsidiaries for the use of the brand and copyrights – and they have been doing this for years. The subsidiaries in the country where it is more highly taxed can then deduct those payments from their taxes. This means that in the 2010-2011 fiscal year, for example, Apple only had to pay 5.3 million euros in German corporate taxes – and this despite the fact that the company generated billions in revenues from iPhones and MacBooks.

Until the beginning of this year, Apple was the recipient of generous tax breaks in Ireland, where the corporate tax is also very low compared to other EU countries. A report by the United States Senate two years ago revealed that Apple Operations International, an Irish subsidiary of the corporation, had been relieved for a time of paying any taxes. In the past years, the company had avoided paying an estimated $30 billion in taxes in this manner. Under pressure from Europe, Ireland has since eliminated some of these tax privileges. Nevertheless, Apple still managed to keep the tax rate paid on its profits abroad at below 5 percent during the last fiscal year.

Apple’s tricks aren’t illegal – they are the product of European tax law. Under the treaties governing the EU, companies are free to locate their headquarters and subsidiaries wherever they choose within the EU. Each individual member state independently determines how high it sets its corporate tax rate. This means that countries like Ireland, the Netherlands and Luxembourg are able to attract companies with low corporate tax rates without other EU member states being able to do anything about it. By diverting profits to low-tax countries, these companies are not being officially taxed in the places where they were earned. This deprives tax authorities in some countries of massive tax revenues.

At the same time, European states aren’t completely defenseless against the behavior by companies like Apple & Co. The European Commission has been trying to put an end to the diversion of profits to low-tax countries for decades now – so far without success. It first presented a plan this summer that would put an end to Apple’s tax strategy. The plan calls for the creation of a common corporate tax base.

The Commission wants to implement this common tax in two stages. In a first phase, all member states must come to an agreement on joint rules on how profits will be taxed in the individual countries. In a second phase, the countries would be bound to factor in profits or losses made in other countries. Then the tax revenues would be split between the member state according to an agreed formula.

Officials at the Finance Ministry in Berlin say that Germany would welcome a harmonization of tax rates. Finance Minister Wolfgang Schäuble himself has been pushing for a compromise within the G-20 nations to close some of the remaining loopholes. But the situation is quite different in the Netherlands, Luxembourg and Ireland, the countries that have so far benefited from their low tax rates. If the profits no longer flow into these countries, then they will also see their tax revenues sink. Ultimately, the chances are slim that the European Commission will succeed in achieving the unanimous vote that would be required for the change in the European Council, the powerful body representing the governments of the EU member states.