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Facebook Could Face Tax Issues in the EU Like Apple Did

Neha Gupta - Author
By

Nov. 14 2018, Updated 4:10 p.m. ET

Apple’s Irish tax issues

The European Union may open a probe into Facebook’s (FB) tax deals with Ireland, according to Politico. Probes into the tax affairs of several American multinationals have resulted in huge fines in Europe. A probe into Apple’s tax deals with Ireland resulted in the company being ordered to pay around $15 billion in back taxes. And last year, Amazon (AMZN) was ordered to pay nearly $300 million in back taxes to Luxembourg, following a European Commission probe that faulted Amazon’s tax arrangement with Luxembourg. Both Apple and Amazon deny wrongdoing.

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It’s not all about fines

Back in 2015, Starbucks (SBUX) and Fiat Chrysler (FCAU) were ordered to pay around $34 million each in back taxes after the European Commission ruled that their tax arrangements with Dutch and Luxembourg authorities, respectively, were unlawful.

But it’s not certain that a probe of Facebook’s Irish tax affairs will result in fines against the company. In September, the European Commission closed its investigation of a tax arrangement that McDonald’s (MCD) had struck with Luxembourg without fining the company.

European revenue increased 32%

Facebook has its European headquarters in Ireland. The company generated revenue of $3.3 billion in Europe in the third quarter, an increase of 32% YoY. Europe is Facebook’s second-largest region by revenue after the United States and Canada.

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