Apple shares lost some of their shine yesterday after the European Union ordered the US tech giant to pay a record €13bn ($14.5bn) in back taxes in Ireland.
Shares in the iPhone and iPad maker were down 0.7% in late morning trading, making for a more than 3% 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.
Meanwhile in Europe, shares ended mixed.
Frankfurt’s DAX 30 finished up 1.1% at 10,657.64 points and the CAC 40 in Paris added 0.8% at 4,457.49 points 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% 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% 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% at 6,820.79 points after coming back from a long holiday weekend. The Euro Stoxx 50 was up 1.2% at 3,033.63 points.
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% 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.
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 30mn 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% in late morning trade.