London (AFP): Apple shares lost some of their shine on Tuesday after the European Union ordered the US tech giant to pay a record 13 billion euros ($14.5 billion) in back taxes in Ireland.
Shares in the iPhone and iPad maker were down 0.7 percent in late morning trading, making for a more than 3 percent loss in the two weeks ahead of the widely-anticipated decision.
Apple has vowed to appeal the ruling, as has Ireland, which has attracted multinational firms with its low corporate tax rate and willingness to negotiate specific tax treatment.
The European Commission concluded that Dublin had shown preferential treatment in an arrangement that allowed Apple to avoid virtually all tax on its business in the bloc, paying an effective corporate tax rate of just 0.005 percent on its European profits in 2014.
ETX Capital analyst Neil Wilson said investors were fretting over the longer term implications rather than the size of the fine.
“For Apple and others like it, this could be a watershed,” Wilson added.
– ‘Tough for multinationals’ -“Caught between an aggressive EC and the Obama regime’s clampdown on tax inversions, it’s looking increasingly tough for multinationals to avoid paying the going tax rate.”
The EU has recently stepped up its campaign against its member states giving huge tax breaks to firms, last year ordering US coffee giant Starbucks and Italian automaker Fiat to each repay up to 30 million euros in back taxes to the Netherlands and Luxembourg respectively.
Shares in other multinationals which run much of their international operations via Ireland, such as Google parent Alphabet and Facebook, also dipped.
Overall, Wall Street’s main indices were down around 0.3 percent in late morning trade.
Meanwhile in Europe, shares ended mixed.
Frankfurt’s DAX 30 finished up 1.1 percent and the CAC 40 in Paris added 0.8 percent as weak German inflation and a drop in eurozone business confidence reinforced expectations that the European Central Bank will have to step up stimulus measures.
The Economic Sentiment Indicator (ESI) for the 19-nation eurozone compiled by the European Commission fell one full point to 103.5 in August as Britain’s vote to quit the European Union continued to undermine eurozone business and consumer confidence in August, holding above the boom-bust line of 100 points.
Meanwhile Germany’s 12-month inflation rate dipped to 0.3 percent in August using the ECB’s methodology, an indication that its efforts to stimulate the eurozone economy and bring inflation back towards a more healthy rate of just under 2 percent are not yet bearing fruit.
“The ECB has reason to increase its policy support, perhaps as soon as next week,” Jack Allen at Capital Economics wrote.
Meanwhile London’s FTSE 100 index of top blue-chip companies dipped 0.3 percent after coming back from a long holiday weekend.
Asian equities mostly rose on Tuesday, but Tokyo ended slightly lower on tepid data and profit-taking.
– Key figures around 1540 GMT -London – FTSE 100: DOWN 0.3 percent at 6,820.79 points (close)
Frankfurt – DAX 30: UP 1.1 percent at 10,657.64 (close)
Paris – CAC 40: UP 0.8 percent at 4,457.49 (close)
EURO STOXX 50: UP 1.2 percent at 3,033.63
New York – DOW: DOWN 0.3 percent at 18,442.28
New York – S&P 500: DOWN 0.3 percent at 2,174.76
New York – Nasdaq: DOWN 0.2 percent at 5,220.50
Tokyo – Nikkei 225: DOWN 0.1 percent at 16,725.35 (close)
Shanghai – Composite: UP 0.2 percent at 3,074.68 (close)
Hong Kong – Hang Seng: UP 0.9 percent at 23,016.11 (close)
Euro/dollar: DOWN at $1.1146 from $1.1187 late on Monday
Dollar/yen: UP at 102.93 yen from 101.88 yen
Pound/dollar: DOWN at $1.3081 from $1.3105