EU: Apple, you owe $14.5 billion in taxes

Apple is in hot water with the European Union this morning after antitrust regulators hit the company with a $14.5 billion tax penalty, plus interest. Okay, so let's break this down for us non tax accountants. Back in the day, Apple set up shop in Ireland, and over time, reached agreements with the country to pay a lower tax rate than the 35% they'd pay here in the United States. In exchange, Apple would hire more workers there. That happens a lot with companies here in the US who choose to store earnings in companies offering lower tax rates. So it can keep more profits for itself. The EU feels Ireland has been giving companies like Apple too big of a tax break, and according to the commission, Apple has been paying a .005% tax rate on all their profits across the EU. Because the company recorded all sales in Ireland and not in individual EU countries where the products were actually sold. Which is in effective tax rate of almost nothing especially compared to Ireland's already low 12.5% tax rate. So now the EU commission said Apple needs to pay up in back taxes they feel are appropriate. Of course Apple is appealing this ruling with Tim Cook firing off a scathing letter about the decision. Stating quote, In every country where we operate, Apple follows the law and we pay all the taxes we owe, unquote. He also claimed, this is an overreach by the European Union, and an attempt to rewrite Irish tax laws. Obviously this is going to play out for awhile because of the appeal, but it will be interesting to see what the outcome is. You can bet other major companies are keeping a very close eye on this case, and if a precedent is set, it's likely we'll see more rulings like this one in the future. In other news, how do I figure out how to pay 0.005% in taxes? I think that would come up to, I don't know, like a dollar fifty. Listen I didn't get into hosting to do maths, which is probably why I pay such high taxes. That's it for this tech news update am Ashley Scaver and you can stay on top of the biggest stories at CNET.com/update