From the linked Bloomberg article, here’s the heart of the matter:

The European Commission contends that Apple’s corporate arrangement in Ireland allows it to calculate profits using more favorable accounting methods. Apple calculates its tax bill using low operating costs, a move that dramatically decreases what the company pays to the Irish government. While Apple generates about 55 percent of its revenue outside the U.S., its foreign tax rate is about 1.8 percent, according to the analysis. If the Commission decides to enforce a tougher accounting standard, Apple may owe taxes at a 12.5 percent rate, on $64.1 billion in profit generated from 2004 to 2012.

Here’s some simple math:

If Apple’s tax rate moves from 1.8% to 12.5%, they’ll move from paying:

• 1.8% of $64.1 billion = $1.15 billion

to paying:

• 12.5% of $64.1 billion = $8.01 billion

Two things:

• First, the way I read it, Apple’s 2004-2012 taxable income being pegged at $64.1 billion and the applicable tax rate being set at 12.5% are both worst case scenarios. Is there room for negotiation? Will Apple’s lawyers and accountants have something to say here? You betcha.

• Second, If Apple already paid $1.15 billion, they won’t owe $8.01 billion, they’ll owe something less than $7 billion. Just a nit, and I’m no accountant.