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Italy Investigates Apple For Alleged Tax Fraud 175

Posted by samzenpus
from the pay-the-man dept.
Frankie70 writes in with some more bad news for Apple in Europe. "U.S. tech giant Apple is under investigation in Italy for allegedly hiding 1 billion euros ($1.34 billion) from the local tax authority, two judicial sources with direct knowledge of the matter told Reuters. Milan prosecutors say Apple failed to declare to Italian tax authorities 206 million euros in 2010 and 853 million euros in 2011, one of the sources said, confirming a report by Italian magazine L'Espresso. The Italian subsidiary of Apple booked some of its profit through Irish-based subsidiary Apple Sales International (ASI), thus lowering its taxable income in Italy, the source said."
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Italy Investigates Apple For Alleged Tax Fraud

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  • italians (Score:5, Interesting)

    by Redmancometh (2676319) on Thursday November 14, 2013 @06:48AM (#45421189)

    Not the people to try tax evasion with...they are pros

    • Re:italians (Score:4, Funny)

      by Rougement (975188) on Thursday November 14, 2013 @09:57AM (#45422029)
      The Italians wrote the book on tax evasion. Then they failed to declare income arising from the book sales.
  • While despicable since megacorps like Apple have no defense for not paying what's owed as part of the cost of doing business, it remains to be said that the taxation system worldwide is completely out of control. No percentage will ever be enough for any government and thus tax paying entities must find techniques to minimize the fleecing.

    • Re: Predictable (Score:5, Insightful)

      by Anonymous Coward on Thursday November 14, 2013 @07:22AM (#45421313)

      Your tax is so high because these people don't pay any. 1 billion divided by 30 million taxpayers in Italy is 30 bucks each.

      • Re: (Score:3, Insightful)

        by tstur (38065)

        Trouble is that argument implies there is some magic number that equals Enough for the taxing authority, and there isn't. Or it's enough for that year, then it must be raised again. And again. And Again... Entities not paying tax are not the cause of ever increasing rates.

        • by Anonymous Coward

          Paying for the stuff being done is a "magic number that equals Enough for the taxing authority".

          Morover, when the subject is executive compensation, you're all about how it's allowed that they can just be given as much as they can get away with because "you can't put a limit on what someone earns".

          Yet when it comes to government, somehow, there's a magic number that they cannot spend above and must be limited.

          Hell of a double standard you've got there.

        • by AmiMoJo (196126) *

          Entities not paying tax are a direct cause of increasing rates, because the rates have to go up to compensate for the lost income from the criminals not paying their fair share.

      • by 0123456 (636235)

        Your tax is so high because these people don't pay any. 1 billion divided by 30 million taxpayers in Italy is 30 bucks each.

        Ha-ha. Who do you think pays the money to the corporations that they then hand it to the government?

        Hint: it's not the space fairies.

        Corporate taxes are just a way to tax more money from 'the people' while getting idiots like yourself to cheer it on. Every penny comes from increased prices, reduced wages, or reduced income for stockholders.

        • Ha-ha. Who do you think pays the money to the corporations that they then hand it to the government?.

          Let's see: If the American company Apple does business in Italy but moves it's money to Ireland to pay taxes there, the taxes lost to the Italian treasury are paid by... ah yes, here it is: The Italian people.

          The Italian people first pay the multinationalcompany for the products and then again have to make up for the taxes that this company evaded paying.
          And the multinational gets richer and richer...

        • by drinkypoo (153816)

          Ha-ha. Who do you think pays the money to the corporations that they then hand it to the government?

          Hint: it's not the space fairies.

          Corporate taxes are just a way to tax more money from 'the people' while getting idiots like yourself to cheer it on. Every penny comes from increased prices, reduced wages, or reduced income for stockholders.

          Look, that's a good argument when you're talking about a utility, or necessities. But an Apple computer is not a necessity, it is a Luxury. Same with the various iDevices. Even if you have a legitimate need for a device which does what they do, there's still a cheaper option that does the same stuff. Your argument simply does not apply. Putting the tax burden on corporations does indeed result in them raising their prices. Then the consumer can see up front the actual cost of their economic activity, and wh

        • Ha-ha. Who do you think pays the money to the corporations that they then hand it to the government?

          You are talking about tax incidence [wikipedia.org].

          Corporate taxes are just a way to tax more money from 'the people' while getting idiots like yourself to cheer it on.

          In many cases you are quite correct but that logic falls apart somewhat (though not completely) when you are talking about large multi-nationals where the company owners might not be citizens of the taxing country. The mere fact that Apple is headquartered in the US means relatively little by itself. Apple really is a bunch of companies under an umbrella company. Figuring out just how profitable the Italian subsidiary of Apple happens to be is a shockingly imprecise ex

    • Re:Predictable (Score:5, Insightful)

      by Anonymous Coward on Thursday November 14, 2013 @07:27AM (#45421329)

      it remains to be said that the taxation system worldwide is completely out of control.

      That depends massively on your point of view. Overall tax burdens in Scandinavian countries are reckoned to be among the worlds highest yet they also rank very highly for things like happiness, quality of life and medical care, things which are often moderated by tax-funded government schemes and departments. "Out of control" depends on what you think the taxation system should be achieving.

      Bottom line is that it doesn't matter whether or not you like the tax system: if you operate in a country then you operate under their tax laws.

      • by AmiMoJo (196126) *

        Some people think they have a right to make a profit. They are wrong. We have a right to decide who gets to operate a business in our society and under what terms. If they don't want to contribute back to what we have built we have the right to deny them access.

  • who forgot ... (Score:2, Interesting)

    by dltaylor (7510)

    I suspect the hottest question around Apple today is "who forgot to pay the Parliament's members bribes?" (or, at least, make the appropriate "campaign contributions", as we prefer to call them here in the USofA).

  • A crisply-produced short commercial of a Three Card Monte game involving Dollars, Pounds, and Euros backed by a jaunty piano soundtrack.

    Apple. Steal Different.
  • These things have been going on since forever and it has always been a well-known secret. But as times get increasingly desperate, governments and banks get increasingly worse about trying to squeeze money through taxes and fees respectively.

    But this is how you know when things are about to turn bad. Just as with the 2008 collapse, weird things were going on with banks. "Economists" on the news would stand up there claiming everything is doing well and that anyone who says different is a nut job. And wh

  • Every large corporation does it, and there are tons of lawyers and tax consultants who specialise in exactly this kind of stuff.

    It's probably the largest organized crime in the history of mankind, except that through lobbying or sometimes outright bribery, it's actually legal. Well, it's borderline legal, and you get cases like this every time a tax consultant became a tad too creative and crossed the line.

    But it's theft, plain an simple, and every idiot who cheers the corporations should hold it for a seco

    • by phayes (202222)

      It's not theft until it is an act defined as theft in the lawbooks! It's not a crime to follow the laws as they are written. If you want to outlaw the practice, then change the law.

      If it is your position that you get to define what is & what isn't legal without using the law well then so does everyone else. It becomes normal for me to call you a rapist whether or not you have committed acts prohibited by law for example.

      • by Tom (822)

        If it is your position that you get to define what is & what isn't legal without using the law well then so does everyone else.

        Legally speaking, you are entirely correct. However, we are not in a court of law, we are on an Internet blog. I can say "theft" here even if legally speaking it is tax evasion in the same way that corporate lawyers say "theft" or "piracy" in the media, but of course use the legally correct term "copyright infringement" when they are in front of a judge.

        And yes, I am all for changing the laws. Don't forget that a lot of the stuff common today used to be illegal until neo-conservatives corrupted our governme

    • by Vaphell (1489021)

      so how about keeping it simple. Set the corporate tax to 10% no ifs no buts and get rid of all the bs. Why is there a corporate tax anyway? Corps are merely pass-through entities that can uproot and move with few strokes of a pen. Just wait at the exit, where the money gets passed to the flesh-and-bone people who actually get to spend it.

      I've read somewhere that the compliance with the US tax code costs in aggregate something to the tune of 200 billion dollars. Nobody cares about that but that's countless m

      • by Tom (822)

        so how about keeping it simple. Set the corporate tax to 10% no ifs no buts and get rid of all the bs.

        A professor of economics in Switzerland once did this excercise. He calculated what the tax level would be if there would be a flat income tax for everyone, at the same rate, with no exceptions.

        It turned out that it was considerably below the level that most people pay today. How is that possible? Because the higher you get the more exceptions you can make use of.

        A short-lived attempt was made to bring this revelation into politics and thus tax laws. It was extremely short-lived. I only heard about it secon

        • by Vaphell (1489021)

          You've got it easy. I live in Germany. There's a legend that half of the tax laws world-wide are german.

          i'm not from the US :) Either way that legend is hard to believe. Reportedly the US code itself is 16k pages and with the IRS rulings you get to 73k o.O
          According to the internet France is somewhere around 2k pages and i doubt Germany is different.

          as for corps not being easy to uproot - well, what you say is probably true. Still, individuals don't hire whole departments of people whose only job is to shave off 1% here and there that will translate to hundreds of millions. With that kind of incentive you can

      • so how about keeping it simple. Set the corporate tax to 10% no ifs no buts and get rid of all the bs..

        But 10% of what? That's where the real issue is - what is a profit? Payroll taxes and dividend taxes are typically not an issue, it's easy to track money that actually goes to someone's pockets, it's what happens before it's actually given to someone, when it slushes around different country, that is the issue.

  • They don't explain the nature of the tax dispute in any detail in the article. What they do say makes it sound like the source of the dispute is that people are ordering Apple products in Italy and the orders are being fulfilled by their subsidiary in Ireland. So the profits are getting booked in Ireland vs. Italy because that is the unit that made the sale. It goes on to say that there is a proposal by the government of Italy to force any company that advertises in and sells online in Italy to do its orde

    • by gl4ss (559668) on Thursday November 14, 2013 @09:43AM (#45421915) Homepage Journal

      there's no issue about where the sales are made actually in this.

      what they have done is artificially move the on-paper profits to the ireland based entity - which is owned by the same people. sales are done in italy, but they're claiming that they make no profit from the sales in italy because they (on paper only, mind you, it's not like they're actually ferrying the shit through ireland) buy the devices at retail price from the another entity in the business which is based in ireland.

      why is it important to squash this practice eventually? well doh, there wouldn't be any taxes to be paid on any corporate profits stemming from sales anywhere else than ireland in europe if they don't do something about it(the alternative is in practicality to raise VAT so that all corporate profits taxing comes from VAT... which might not be that bad of an idea, alternatively force ireland to change it's laws to stop acting as a tax haven stopgap for this purpose)..

      "ASI contracts with mainly Chinese companies to manufacture iPads and iPhones. ASI then sells these products to another Irish company which resells them to retail subsidiaries in Italy and other European countries.

      The pricing of the inter-company transactions ensures that the lion's share of the profit ends up with ASI, the Senate report said. Low profits in countries like Italy mean low tax payments there."

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