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EU Businesses Government The Almighty Buck Apple Hardware

European Commission To Issue Apple An Irish Tax Bill of $1.1 Billion, Says Report (reuters.com) 212

An anonymous reader quotes a report from Reuters: The European Commission will rule against Ireland's tax dealings with Apple on Tuesday, two source familiar with the decision told Reuters, one of whom said Dublin would be told to recoup over 1 billion euros in back taxes. The European Commission accused Ireland in 2014 of dodging international tax rules by letting Apple shelter profits worth tens of billions of dollars from tax collectors in return for maintaining jobs. Apple and Ireland rejected the accusation; both have said they will appeal any adverse ruling. The source said the Commission will recommend a figure in back taxes that it expects to be collected, but it will be up to Irish authorities to calculate exactly what is owed. A bill in excess of 1 billion euros ($1.12 billion) would be far more than the 30 million euros each the European Commission previously ordered Dutch authorities to recover from U.S. coffee chain Starbucks and Luxembourg from Fiat Chrysler for their tax deals. When it opened the Apple investigation in 2014, the Commission told the Irish government that tax rulings it agreed in 1991 and 2007 with the iPhone maker amounted to state aid and might have broken EU laws. The Commission said the rulings were "reverse engineered" to ensure that Apple had a minimal Irish bill and that minutes of meetings between Apple representatives and Irish tax officials showed the company's tax treatment had been "motivated by employment considerations."
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European Commission To Issue Apple An Irish Tax Bill of $1.1 Billion, Says Report

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  • by dfsmith ( 960400 ) on Monday August 29, 2016 @07:24PM (#52793215) Homepage Journal
    ... because they don't have a catchy portmanteau.
    • Re: (Score:3, Funny)

      by Anonymous Coward

      It's obvious..
      iExit

    • by Kohath ( 38547 ) on Monday August 29, 2016 @08:07PM (#52793379)

      Ireleave. Bye-rland.

  • What Ireland did to Europe is exactly what Europe is doing to America. We should cite this European ruling as a precedent and hit Apple with 2 billion dollars of dodged taxes.

    The corporate tax has been shrinking in America and the burden has been foisted on individuals. It is time to reverse the decades old trend.

    • by wierd_w ( 1375923 ) on Monday August 29, 2016 @08:51PM (#52793579)

      You are not understanding the problem.

      I will try to explain it to you.

      1) apple may be headquartered in Cupertino CA, but not all of its sales are in the United states.

      2) because of this, and the way international taxation works, there are "apple UK", "Apple china", "Apple Korea", etc. These are wholly owned subsidiaries of Apple USA, but the product produced and sold, is sold exclusively in the subsidiary's local market. This allows the local branch to be taxed by the locall tax authority, on the profits made by that local branch. In theory at least.

      3) what really happens is that Apple Ireland, which pays essentially zero taxes, claims sales volumes for markets outside of ireland, knowing that regulators cannot easily disprove that Apple Ireland is not just selling absurd numbers of apple products, and making all that profit legitimately. This is especially true, when Apple USA tells Apple EU to buy exclusively from Apple Ireland, and charge EU customers busing from them essentially a flat shipping cost that is the exact amount they buy fro. Apple Ireland. That artificially moves sales originating in the EU to Ireland's accounting. The actuAL sale occurs inside Ireland, and thus is billable in Ireland, under Irish tax law. (NEVERMIND where the product actually ships to.)

      4) Apple says this is perfectly legitimate, Ireland concurs, but EU feels otherwise. EU tells Ireland that sales from EU citizens are originating in the EU, and need to be billed and taxed accordingly.

      5)Apple USA, and Apple Ireland don't want those sales to be reported as originating in the EU, because then they have to pay taxes on those sales. Stamp little feet and threaten to take their ball and go home, or to go complain to their mommies.

      • What all these companies do is to shift profits. Apple USA sells the right to use Apple brandname and products to Apple UK. At what price? You can sell it at high price, and Apple UK will make a loss, Apple USA will make a profit, Apple pays tax in USA. Or it can sell it at some bargain basement price, make no profit in America, and make ALL its profit in UK. It is completely arbitrary and it is completely at the discretion of Apple.

        USA does not want to mess with the internal of the company or how it pric

        • by jabuzz ( 182671 )

          Wrong under EU tax law a company registered in the EU only has to pay tax on it's profits generated in the whole of the EU in the country where it is registered.

          So if Apple Ireland sells a iPhone in the UK or Germany the profit it makes on that is taxable in Ireland.

          The problem is that Ireland cut Apple a special deal that says Apple only has to pay taxes on the profit made in Ireland. That's great for Ireland because it attracts Apple to locate it's headquarters in Ireland and that provides jobs, and they

      • Apple's "Stamp little feet" [businessinsider.com] response:

        Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe. Using the Commission’s theory, every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed.

        The EU's conundrum is that without the tax break there's no reason for Apple, Google, Amazon, Microsoft, etc. to have any European operations other than sales fullfillment. Do they really want to kiss those tens of thousands of jobs goodbye?

      • what really happens is that Apple Ireland, which pays essentially zero taxes, claims sales volumes for markets outside of ireland, knowing that regulators cannot easily disprove that Apple Ireland is not just selling absurd numbers of apple products

        Not quite.

        Regulators can easily tell how much revenue was generated in a given country from sales in that country. But profit is the difference between revenue and cost, and it's easy for Apple to artificially inflate the costs of the various subsidiaries. It could do this by jacking up the price the subsidiaries pay for the products they sell, but the more common approach is to license IP, such as trademarks, for amounts of money chosen to ensure that the subsidiary makes no profit, or even generates a l

    • That's a moral standpoint with no useful impact.

      I designed a Universal Social Security plan which reduces the tax burden on Americans by over $1 TRILLION per year. This plan completely remediates the welfare system; establishes a stable minimum income, eliminating many risks in providing goods and services to lower-income markets (currently, their income is unstable and can go away quickly, incurring massive costs for landlords especially); and slows and thus spreads the reduction of jobs by technical pr

  • So how do you like them apples?

  • Irish tax officials showed the company's tax treatment had been "motivated by employment considerations."

    So, low taxes attract jobs after all? And the European Commission admits it?

    • by tpgp ( 48001 )

      So, low taxes attract jobs after all? And the European Commission admits it?

      ReRTFA & its quite clear that the motivation in quote you're referring to ("motivated by employment considerations") is assigned to Irish Tax Officials and not to the European Commission. They're not admitting a thing.

      Note: I have no pony in this race & have no opinion on whether tax breaks create jobs or not. But your referenced quote is not the smoking gun you make it out to be.

      • ReRTFA & its quite clear that the motivation in quote you're referring to ("motivated by employment considerations") is assigned to Irish Tax Officials and not to the European Commission. They're not admitting a thing.

        Yes, the EU is saying that the Irish tax office wanted to attract jobs by giving tax breaks and that it is working. If it weren't working, then the EU wouldn't have to intervene.

        Note: I have no pony in this race & have no opinion on whether tax breaks create jobs or not. But your refer

    • Irish tax officials showed the company's tax treatment had been "motivated by employment considerations."

      So, low taxes attract jobs after all? And the European Commission admits it?

      No, they didn't, but that was the Irish movitation behind the move. The gave Apple a tax deduction of 10 billion euros, and Apple created at most 100 jobs in return.

    • The EU Commission accuses the Irish tax deals to be motivated by 'employment considerations'.

      And IRL will of course deny it..

      • The EU Commission accuses the Irish tax deals to be motivated by 'employment considerations'.

        Again: that implies that the EU commission admits that employment considerations are relevant to taxation; i.e., that higher taxes cause a country to lose jobs and lower taxes cause a country to gain jobs.

        And their political solution to this is to attempt to force every country into a high tax regime.

  • "Please don't give us that billion dollars we're told you owe us" said no one ever...except Ireland.
    • by Chrisq ( 894406 )

      "Please don't give us that billion dollars we're told you owe us" said no one ever...except Ireland.

      The thing is they probably got another billion in tax because Google was using them to sell into Europe. If they hadn't come up with this scheme Google would have probably gone somewhere else and they'd have got nothing ... not to mention the employment, wages, etc.

  • "You found a way to legally avoid paying about $1B of what we would normally collect from you. So we're going to fine you $1B for being so crafty!"

    No, that's not going to fly. And I don't care who it is that did it. That's not a practice I want applied to me, so that's not a practice that I want to see applied to anybody else.

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