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EU The Almighty Buck Apple

Apple May Owe $8 Billion To the EU After Tax Ruling (bloomberg.com) 148

Robotron23 writes: An investigation by the EU Commission may make Apple liable for up to $8 billion in back taxes. Bloomberg Intelligence estimates Apple has paid only 1.8% tax on profits between 2004 and 2012 — this ruling increases their liability to 12.5%. This decision comes hot on the heels of a tax avoidance settlement Apple reached with Italy last month for $347 million.
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Apple May Owe $8 Billion To the EU After Tax Ruling

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  • Good! (Score:4, Funny)

    by nospam007 ( 722110 ) * on Saturday January 16, 2016 @11:34AM (#51313679)

    Bummer!
    And now Ireland gets punished by having to accept those 8 billion dollars of back taxes, that will teach them.

    • by Anonymous Coward

      Steve Jobs must be doing 8 billion R.P.M.

    • It's actually the whole of Europe that wants a check from Apple. Just close the focking loop holes if you want the tax money.

      At least we know what the cash is for. [cnn.com]

      • Follow the money. EU politicians aren't getting political donations the way US and national governments in Europe are.

        They want some too! Why d'ya think they went into power to begin with?

  • $8 billion only? (Score:3, Insightful)

    by NotInHere ( 3654617 ) on Saturday January 16, 2016 @11:41AM (#51313715)

    Great deal apple managers!

    Greek pensioners and the debtor countries still have to pay a high price for the tax hole your evasion created.

    • by Anonymous Coward on Saturday January 16, 2016 @11:51AM (#51313773)

      ^This

      The unfortunate side-effect of tax avoidance: lower wages means lower standard of living, which leads to lower health and education. Then, to compensate for that, the government has to create programs. If the government can't fund those programs (because low wages means low tax revenue), then they shut them down, which increases the lower standard of living, health, and education.

      Tax evasion really screws things up for everyone, in the long run. A few hundred dollars a year from everyone is a lot, so it's not just the super rich, big corporations.

      It may be politics, too; maybe the corporations know that, if the tax dollars can't be collected, they'll end the programs. It will hurt the other party's image, and thus, their friends get elected, thereby passing laws to help their greed a bit longer.

      • $8 billion won't dent Greek's debts, much less divided among Europe.

        The problem lies squarely and mechanically on the ability and desire to borrow from future generations to pay for current consumption (and not for things that arguably benefit future generations, like infrastructure, and war.)

        These are literally people who didn't sav enough for retirement, not just personally, but through government plans either. They don't carry their own weight.

      • by JaredOfEuropa ( 526365 ) on Saturday January 16, 2016 @06:29PM (#51315637) Journal
        Not just that. Complicated and expensive (in terms of an absolute euro value) tax evasion schemes benefit large corporation but remain largely unavailable for small companies and middle class individuals due to complexity and cost. This puts smaller companies as a competitive disadvantage. I'm still paying 20% tax on profits for my company, and in many other EU countries that amount is higher still. Meanwhile larger companies are paying bugger all.

        This is a well known fact in political circles, of course. A few years ago an entrepreneur started a fiscal consultancy firm to advise smaller companies on how to avoid paying tax on profits, and to do the legal and bureaucratic legwork for them for a reasonable fee. It didn't take long for the tax office, the finance minister, and the public prosecutor to catch on, and they went after him with a vengeance. Can't have the little people have their break after all... In that sense it is only fair that they are going after the big boys now... as long as they stay within the law doing so, and only prosecute for actual wrongdoings, not just for "unethical behaviour"
        • The better solution is just to abolish corporate income taxes. Corporate taxes ultimately come out of the pockets of real people anyway, whether customers (in the form of higher prices), employees (in the form of lower wages) or investors (in the form of lower gains), so corporate taxes are really just a way to tax real people (AKA "voters") in a hidden way. They don't know they're paying those taxes or how much the taxes are because the taxes are washed through the corporation -- which incidentally makes i

          • You know the best way to abolish corporate income taxes? By abolishing corporations.

            • by khallow ( 566160 )

              You know the best way to abolish corporate income taxes? By abolishing corporations.

              Because we didn't really want that developed world society anyway.

            • by Anonymous Coward

              Says dipshit in his corporate built house, on corporate built computer, with corporate built software, wearing corporate built clothes, while his wife is out fucking a CEO while he sits around crying about corporations.

            • You know the best way to abolish corporate income taxes? By abolishing corporations.

              What alternative structure would you use to perform capital-intensive projects? Unless you're going to turn all production of goods and large-scale services over to government (we've seen how well *that* works), corporations, or something very much like them, are necessary to provide a means for many individuals to pool their resources in order to do big things... big things like manufacturing essentially all of the goods that you use on a daily basis, including the computer you're reading this on.

              While c

        • ... A few years ago an entrepreneur started a fiscal consultancy firm to advise smaller companies on how to avoid paying tax on profits, and to do the legal and bureaucratic legwork for them for a reasonable fee. It didn't take long for the tax office, the finance minister, and the public prosecutor to catch on, and they went after him with a vengeance. ...

          Evidence/References please? I don't doubt you, I want to learn more. FYI, there is a UK-tv programme coming up Wed 20th Jan 2016 on a similar subject, I haven't seen it yet so I don't know the details. ref is

          • sorry, I didn't realise the reference would be removed. It's www.bbc.co.uk slash programmes slash b06ygl19. Search for inurl:bbc "The Town That Took on the Taxman"
          • This was the firm "Haags Juristen College" in NL, ran by Toine Manders. I found only Dutch articles on Google. If you do a search, be aware that there are two famous Toine Manderses around, and that most articles on his company are rather biased one way or another (for or against).
      • How do you figure tax avoidance leads to lower wages? If anything, it should mean lower prices (lower costs mean you can lower prices to gain volume and still make profit) or higher wages (if the tax bill on your profits is too high, give out some bonuses so your profits drop).

        Lower wages lead to lower prices, which means standard of living isn't necessarily diminished by as much as wages are, and lower prices generally means more tourism. If prices and wages are lower, then while tax revenues are also low
  • Saudi Aramco dwarfs Apple

    http://www.independent.co.uk/n... [independent.co.uk]

    "Based on its est reserves & a (conservative) valuation of $10 p barrel, #Aramco cld be worth more than $2.5 tr. 4 times the size of Apple"

    • Re: (Score:3, Insightful)

      "Based on its est reserves & a (conservative) valuation of $10 p barrel" :rolleyes:

      They're comparing one company's total future raw material value to another's present stock value? And you think that's interesting?

      The measure in question is the total *possible future value* of the company. Eventually they will run out of oil and be worth nothing. They are estimating total sales between now and then.

      In comparison, Apple has nothing to run out of and can continue selling updates to their existing products

      • Their infinite innovator died a few years back. Currently it's back to golden parachute squatters hoping to bail before their lack of innovation loses too much value.

      • Net present value (Score:4, Insightful)

        by sjbe ( 173966 ) on Saturday January 16, 2016 @02:28PM (#51314537)

        They're comparing one company's total future raw material value to another's present stock value? And you think that's interesting?

        Sure. Present stock value is a consensus estimate of the Net Present Value [wikipedia.org] of all future free cash flows [wikipedia.org] of a company. In both cases you are looking at an estimate of the future prospects of the company.

        The measure in question is the total *possible future value* of the company.

        Correct. That is what is being measured in both cases, albeit with a different measuring stick.

  • by Tony Isaac ( 1301187 ) on Saturday January 16, 2016 @12:08PM (#51313869) Homepage

    Tim Cook says Apple pays every tax dollar it owes [arstechnica.com]. Maybe the key word is dollar here. He never said Apple pays every euro it owes!

    • by gstoddart ( 321705 ) on Saturday January 16, 2016 @12:28PM (#51314005) Homepage

      No, they just creatively define "owes" like every other corporation who feels it should be their right to not pay any taxes.

      When broke humans pay more as a percentage in tax than mega rich corporations, there's a problem.

      Given that they've been outsourcing all the fucking jobs, they don't get to pretend like they drive the economy any more.

      Corporate tax rates should increase proportional to job cuts and off-shoring ... that way they can stop fucking pretending to be the economic driving force they no longer are.

      What's that? You laid off 25% of your work force to move it overseas? Well, that will be a 25% tax increase, assholes.

    • Re: (Score:1, Insightful)

      by Arkham ( 10779 )
      In Europe they are fine saying "Yes you complied with every tax law but we just changed our minds. Pay us $8B" and there's nothing you can do if you want to continue to do business there. It's not the US.
      • by AmiMoJo ( 196126 ) <mojo@worl[ ]net ['d3.' in gap]> on Saturday January 16, 2016 @03:19PM (#51314841) Homepage

        They didn't change their minds. Apple thought it had found a way to avoid a lot of tax, but the courts disagreed and said that they misinterpreted the rules.

        • by larkost ( 79011 )

          To be more specific: Apple negotiated with Ireland to have effectively a lower rate, by agreeing to a specific amount ahead of time, which both knew was too low, and in return Apple moved much of their profits into Ireland (by using "transfer pricing" games). So Ireland got more tax revenue than they would have, while Apple got to pay lower taxes. Of course this denied the tax revenue that would have gone to other countries.

          The problem for Apple here (beyond any morality involved), is that the European Unio

      • I guess it didn't enter into their thinking that if those loopholes really existed, the European companies would be paying less tax. Why would Apple think it would pay less local tax than the locals? It seems like an irrational expectation.

        If Apple was being told to pay more than what average European competitors pay, then I might be more sympathetic to your point.

        • I guess it didn't enter into their thinking that if those loopholes really existed, the European companies would be paying less tax. Why would Apple think it would pay less local tax than the locals? It seems like an irrational expectation.

          What makes you think that the big European companies pay more taxes than Apple? E.g. Fiat has been ruled to pay to little taxes in Europe because they shelter in Luxembourg.

          • Apple doesn't "think", it is a corporation made up of people. Apple doesn't "feel", either. Apple does have financial advisors that tell them how to handle their money. A few paragraphs back, there was discussion about the mini line and its lack of upgrade path. Coming from the Windows world, my entrance into mac-dom, I was impressed with with the hardware, and the newly ported created Mac OS X as well. I swallowed a lot of cool-aid about how Apple cared. Since then I bought the most expensive computer
      • by jbssm ( 961115 )

        Seriously where did you go to get those ridiculous statements? The laws didn't change along the way. Apple thought they found a loophole and tried to exploit it, well, according to the law - i.e. the rulling of the courts - Apple was wrong, though luck. No new laws where passed along the way like you are implying.

        Also it's quite interesting that you are taking sides with a bunch of billionaire pricks that hire a battalion of attorneys in order to try and find loopholes to avoid paying taxes while the common

        • Seriously where did you go to get those ridiculous statements? The laws didn't change along the way.

          Exactly. They didn't change - yet. That's why "Apple may owe tax after ruling (which hasn't happened yet)". Gees, how fucking difficult is understanding that?

          Taking tax advice from you guys is a sure way to get in touch with the law.

          • by jbssm ( 961115 )
            You clearly don't understand the concept of ruling.
            • You clearly don't understand the concept of ruling.

              You clearly don't understand the concept of RTFA. You should try that before you look any dumber. The whole lot of you.

              Key segments from TFA:

              European Commission investigation seen concluding by March

              If the Commission decides to enforce a tougher accounting standard, Apple may owe taxes

              There has been no ruling yet. Period. And if that ruling comes, (and if that ruling actually comes out as expected - it still may not) it means the Irish tax laws will have to be changed retroactively. To be fair, that information can only be found in better articles. Like this (older) one [irishtimes.com] or this [forbes.com]

    • It's like a shoplifter saying he paid for everything he bought or a groper claiming that his hand never left his arm.

    • Sometimes I feel like I'm the only person who was listening when he said that, because people keep thinking he said "Apple paid already every tax dollar it will owe for years in which we've already filed." But that isn't what he said. He said that they pay everything they owe. If their filing is rejected or revised afterwards, then his statement is just a statement of fact that they'll pay it after they're found to owe it. It was a complete non-statement. He could have said instead, "look, we're a business

    • In reality, the EU disagrees and sees Apple as being $8 billion + (interest and penalties) short.

    • Tim Cook says Apple pays every tax dollar it owes [arstechnica.com]. Maybe the key word is dollar here. He never said Apple pays every euro it owes!

      Errm, TFA doesn't say anything about "owing" money, but that it could in the future owe back-taxes because Ireland didn't ask for enough taxes.

      Anyway, if you think this is bad news for Apple, think what it means for other companies (mentioned in TFA, read it) who will have a much harder time paying their back-taxes, not to mention the IRS, who will get less taxes if Apple ever brings home their foreign money.

  • by ilsaloving ( 1534307 ) on Saturday January 16, 2016 @12:10PM (#51313881)

    They may owe 8 billion, but what's the chances they'll actually have to pay that? If this were the US, they'd end up just making a settlement for a tiny fraction of that.
    Since this is the EU, who actually make more of an effort to hold corporations accountable for their greed, the amount would be comparatively larger, but I still have trouble seeing them extracting the full amount.

    • by jbssm ( 961115 ) on Saturday January 16, 2016 @12:16PM (#51313911)
      We don't have "settlements" in EU like you do in the USA. When a case is presented to a legal court (consumer arbitral court is different) the matter can only get settled by the court itself, the parties cannot go around the court. The only thing they can do now it to appeal to an higher court.
      • We don't have "settlements" in EU like you do in the USA. When a case is presented to a legal court (consumer arbitral court is different) the matter can only get settled by the court itself, the parties cannot go around the court. The only thing they can do now it to appeal to an higher court.

        That is exactly how it works in the US too, settlements are done through the court whenever a case has been filed, and a response also filed. So once you're past the very first step that happens before any court hearings, then the settlement has to go through the Court. Sometimes settlements are rejected by the Court, too.

        However, in this case it is a Commission investigation, not a court case. That will follow. And most likely, there will indeed be a settlement, because that is how these things usually end

      • Actually I think it varies from state to state certainly corporations here in the UK have made deals to pay just a fraction of what they owe
  • ... of him shall be much required.

    Doesn't seem like Apple is holding up their end of the deal.
  • by Anonymous Coward on Saturday January 16, 2016 @12:24PM (#51313977)
    ...and so is Starbucks, and Amazon. and McDonalds, and Google, and Fiat-Chrysler ... et cetera ad nauseam. I hope they all get to pay billions in back taxes. Tim Cook, Eric Schmidt and the rest of those corporate demigods can regurgitate all the capitalist free market ideological diarrhea they want. As long as I'm paying something like half of what I earn in various taxes, they and their corporations can pay up too. According to Google's 2014 results statement their effective tax rate was 16%, that's a tax rate I can only dream of.
  • by Maury Markowitz ( 452832 ) on Saturday January 16, 2016 @12:53PM (#51314121) Homepage

    Apple has, what, $200 billion in the bank? Their quarterly income is what, $50 billion? I'm sure they're quaking in their boots.

    Here's the absolute "worst" case scenario for the company: they pay the fine from change they find on the cafeteria floor, and then send out a press release with a mild complaint about it but saying they're happy as long as the money is put to good use. Ireland cuts them a side deal for the inconvenience, and Apple agrees to remain in Cork for the foreseeable future.

    So basically zero change whatsoever.

    • by phorm ( 591458 )

      Well one nice result would be if they move back tax operations to North America/USA, seeing as though they're paying it anyways.

    • by ebvwfbw ( 864834 )

      Should be hit with a penalty. I mean heck, 1.8% instead of 15%? Any accountant should have spotted that one.
      I'm sure they'll simply write them a check. Here you go. Don't spend it all in one place.

  • Apple May Owe $8 Billion To the EU After Tax Ruling

    Sure, they might owe it. They'll probably never get around to having to pay it, though. About 0.1% of that amount should be more enough to pay for the lawyers to keep it tied up in court indefinitely.

    • "indefinitely" means you don't know how long it will go on. It doesn't mean it goes on without ending. The wheels of justice grind, and money may slow that down, but they do keep grinding.

  • $8 billion is piddly squat next to their profits, and they benefit handsomely from Europe's robust social programs (health care for their employees, education, roads, the Internet, etc, etc).
  • For money earned in the US, the corporate tax rate is ~40% (at least for the Fortune 500 co I work for). That would be a $25B tax bill for Apple on the $64B in net. I'm pretty sure that if Apple ever wants to bring the earnings back to the US, they get joy of paying the difference between the 12.5% and the 40%, but IANAL or CPA. Of course the tax experts and EU law experts here on /. can explain why Apple, Google, and anyone else who has significant earnings in the EU have been using this apparently flaw
  • An honest company would pay 30% of its revenue as tax. And they would not try to trick, as they know without a working state and society they cannot exist. However, all the big companies ignore that, as they do not feel responsible for the mayhem they cause and the effects do not occur immediately. Therefore, like a 2 year old they ruin their surrounding. Unfortunately, there are no parents around to stop them.

    • Where do you get this? Is it a figment of your hippie mind?

      • That is what all the small companies have to pay here in good old Europe. Therefore, big companies should too.

        • That is what all the small companies have to pay here in good old Europe. Therefore, big companies should too.

          What a bloody idiot. You say small companies have to pay 30% of their revenue in tax? UK Corporation tax rate in 2015 is 20% _of profit_, not on bloody revenue. If you don't know what you are talking about, shut up. Or do you really not know the difference between revenue and profit?

      • Ah, the famous "you're wrong because... hippies!" argument. Slam dunk, right?

        • No, it's utter baseless nonsense, and not amenable to logical rebuttal. In fact, it's "not even wrong", merely illucid.

          • Well, if it is "wrong" to utter baseless, illucid nonsense in the context of commentary is a moral question.

            I stand by it being wrong. You should be mildly embarrassed, at least. If not... shame on you.

            But actually, your defense is a failure. It isn't baseless nonsense at all; it is nonsense based on the claim that hippies have some sort of mental deficiency that leads to an inability to tell imagination from reality. Therefore, it is not even entirely illucid. Just hateful, and such a weak statement that i

    • Re:Honest Company (Score:4, Insightful)

      by CanadianMacFan ( 1900244 ) on Saturday January 16, 2016 @03:05PM (#51314725)

      All companies take advantage of the methods given to them to reduce the taxes owing. If the governments don't like them then they shouldn't have provided the methods in the first place and change the tax code.

      And why would a company pay 30% of it's revenue as tax? What if their margin is only 5% or 6%? Organizations don't pay taxes on revenue but on profit.

      So may I assume that you don't make use of any deductions on your income tax? After all you should feel responsible for your impact on society.

      • And why would a company pay 30% of it's revenue as tax? What if their margin is only 5% or 6%? Organizations don't pay taxes on revenue but on profit.

        Because years ago, someone decided that instead of "profit", "net revenue" was a better term to use. There is probably some technical difference between "net revenue" and "profit", but the term is confusing to many.

        In this case, I think that the GP means 30% of net revenue.

        • And why would a company pay 30% of it's revenue as tax? What if their margin is only 5% or 6%? Organizations don't pay taxes on revenue but on profit.

          Because years ago, someone decided that instead of "profit", "net revenue" was a better term to use. There is probably some technical difference between "net revenue" and "profit", but the term is confusing to many. In this case, I think that the GP means 30% of net revenue.

          Well, then he should have said so, because there sure as hell is a difference between "revenue" and "net revenue".

      • Re: Honest Company (Score:4, Insightful)

        by Namarrgon ( 105036 ) on Saturday January 16, 2016 @07:04PM (#51315771) Homepage

        Corporations already get a sweeter tax deal than "real" people ever did. People can't deduct their rent or supplies or other daily costs of being able to get work done.

        Imagine if you only got taxed on your disposable income. Better still, imagine if you lived simultaneously at home and in a tax haven, and your working self paid most of your net revenue as a skill-set licence to the tax-free self who was living it up for you in the Bahamas.

        • Yes and no. My wife is self employed, with her place of business being our home. She can claim all sorts of deductions on her tax so while her income is more than mine, by the time the deductions are taken off I'm earning more.

          Some of the deductions seem to me to be stupid; for instance she can claim depreciation on her car as well as portions of our electricity and home heating bills. All of which we would be paying if she were employed.it probably amounts to about 20% of her income all told.

    • You do realise that revenue is not profit, right? Most "blue chip" multinationals earn less than 20% (pre-tax) profit on their revenue, 15% is considered a good return on investment for a very large corporation, 5% is not uncommon at the big end of town. Large corporations have the same organisational costs as large governments. Human cooperation just doesn't scale very well, anymore than a handful working towards a common goal and we suddenly need an org chart and lots of people who spend all day coordinat
    • An honest company would pay 30% of its revenue as tax.

      30% of its revenue as tax? What are you smoking?

      As an example, Walmart makes $480bn revenue per year, with $34bn profit. How on earth would Walmart be able to pay 30% = $144bn in tax?

      • by jewens ( 993139 )
        Can we assume the GP was implying that if the 30% "Apple" tax in the Apple App Store is good enough for Apple then it should be good enough for Apple?
    • Why should you be taxed on revenue? You should be taxed on profit.
      • Why should you be taxed on revenue? You should be taxed on profit.

        Well, what about Amazon? They have a huge revenue but usually very little if any profit. Yet they use public infrastructure like no other company.

  • If what Apple did is legal or not, but if it paid only 1.8% tax on its profits that's wrong and it should have to pay more.

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