_{Ken Odeluga, 11th June 2014, 400 words} 

Apple shareholders have not had a great deal to complain about so far this year. Sure, because Apple is a corporate titan with a market capitalisation of more than $500 billion, basic questions that worry the overall market (like ‘how much longer can the rally last’?) concern Apple holders too.

But with AAPL having gained around 17% in the year to date (adjusted for Monday’s 7-for-1 stock split) Apple buyers have already had a chance to reap a solid harvest in 2014.

So what should Apple shareholders think about news reports, like this one, suggesting the European Union has started an investigation into Apple’s tax affairs (and those of other big US names) similar to the probe by US tax authorities, last year?

Well, to answer that question, first, we need to note one subtle but important difference between the IRS’s beef with Apple, and the one the EU appears to have.

The IRS said it was going after Apple because of the tech giant’s ‘stateless income’ (that basically means offshore wealth).

But the EU’s alleged investigation is directed at a few European countries with looser taxation rules on the basis that these may represent indirect state aid.

So, in the US, the blame was directly on Apple (and others) but in the EU, Apple is only indirectly in the firing line.

The major upshot from that difference: even if the EU decides beneficial taxation is a form of state aid in disguise, there is unlikely to be direct punitive action against Apple.

(Even in the unlikely event that Apple does face a penalty, like a fine, for instance, history suggests it would be immaterial, compared to Apple’s enormous profits.)

But keep in mind that Apple could end up paying more tax regardless of the outcome of the EU’s investigation.

That’s because Ireland has already signalled it will abolish, within a year, the soft tax rules that Apple and other global corporate giants have benefited from.

Even so, that puts a potential hit on AAPL two years into the future and realistically, such an early warning gives Apple ample time to take steps to offset any tax hit.

All this translates into a likely neutral near-term impact on Apple’s stock price.

Again, like the overall market, Apple’s stock will face its day of reckoning, sooner or later. But that day is unlikely to be the same day Apple pays its next European tax bill.

Ken Odeluga

_{Disclosure note: I do not own any class of Apple Inc. stock, bonds, or derivatives that can be written off any of such assets, nor have I ever owned such assets, although I may do so in future. I have not sold Apple Inc. stock or any other Apple Inc. financial asset short, but may do so in future.}