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EU Iphone Apple Hardware

Apple Ordered To Pay Up To $14.5 Billion in EU Tax Crackdown, Cook Refutes EU's Conclusion (bloomberg.com) 564

Apple has been ordered to pay a record sum of 13 billion euros ($14.5 billion) plus interest after the European Commission said Ireland illegally slashed the iPhone maker's tax bill, in a crackdown on fiscal loopholes that also risks inflaming tensions with the United States Treasury. According to the European Union regulator, Apple benefited from selective tax treatment that gave it an unfair advantage over other businesses. In the meanwhile, Apple has refuted such accusations, saying that EU's conclusion has "no basis in fact or law." EU Competition Commissioner Margrethe Vestager said, "If my effective tax rate would be 0.05 percent falling to 0.005 percent -- I would have felt that maybe I should have a second look at my tax bill." Apple CEO Tim Cook said, "Over the years, we received guidance from Irish tax authorities on how to comply correctly with Irish tax law -- the same kind of guidance available to any company doing business there. In Ireland and in every country where we operate, Apple follows the law and we pay all the taxes we owe."
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Apple Ordered To Pay Up To $14.5 Billion in EU Tax Crackdown, Cook Refutes EU's Conclusion

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  • Good (Score:5, Insightful)

    by MitchDev ( 2526834 ) on Tuesday August 30, 2016 @10:53AM (#52796051)

    Long overdue

    • Re:Good (Score:4, Interesting)

      by nospam007 ( 722110 ) * on Tuesday August 30, 2016 @12:46PM (#52797133)

      "Long overdue"

      Indeed. Being forced to accept >14 billions from Apple will teach the Irish that this is a bad idea. :-)

      But seriously, this will just encourage other countries to do even worse, since now they know they'll get the billions anyway later, it's the best investment one can do.

  • Okay so the judgement is made. What can the EU do to enforce their decision? Can Apple appeal? I'm sure the bribes to guarantee a favorable ruling is less than 14 billion so when can we expect them to come out on top?
    • Re:SubjectIsSubject (Score:5, Interesting)

      by ArgonautThief ( 2611499 ) on Tuesday August 30, 2016 @10:56AM (#52796083)

      Both Apple and the Irish Government have already confirmed their intent to appeal and their confidence that same will be successful.

      • by oh_my_080980980 ( 773867 ) on Tuesday August 30, 2016 @11:15AM (#52796233)
        Really? Tim Cook undermines his argument by pushing to get a tax holiday to re patriot his Irish earning to America. If he was sincere about Apple' revenues being "earned" in Ireland, then he would keep them there instead if engaging in this ponzi scheme.
        • Re: (Score:3, Interesting)

          by aaarrrgggh ( 9205 )

          Not sure why you think those are related. Operationally, Apple has only 5,000 employees in Ireland and a lot more in other places, so money needs to be pushed around. From a tax perspective, the cash in the Irish subsidiary are retained earnings, and repatriating them is necessary in order to distribute to shareholders... who are subject to US taxes.

          • by MightyMartian ( 840721 ) on Tuesday August 30, 2016 @11:51AM (#52796619) Journal

            In other words, the money wasn't earned in Ireland, and Ireland and Apple colluded to create a partial tax shelter, just like the EU is claiming.

          • Not sure why you think those are related. Operationally, Apple has only 5,000 employees in Ireland and a lot more in other places, so money needs to be pushed around. From a tax perspective, the cash in the Irish subsidiary are retained earnings, and repatriating them is necessary in order to distribute to shareholders... who are subject to US taxes.

            Apple Ireland is not the subsidiary, Apple US is a subsidiary of Apple Ireland. Apple is on paper an Irish company for the discussed tax benefits, not American.

    • Re:SubjectIsSubject (Score:5, Interesting)

      by jabuzz ( 182671 ) on Tuesday August 30, 2016 @11:06AM (#52796151) Homepage

      Freeze assets worth 14 billion Euro that are present in the EU, and/or prohibit them from doing further business in the EU till they comply. Walking away from a market the size of the EU is a tough call even with back taxes being asked for.

      • Re:SubjectIsSubject (Score:5, Informative)

        by GNious ( 953874 ) on Tuesday August 30, 2016 @12:01PM (#52796711)

        From what I gather, it is not the EU ordering Apple to do anything, but the EC ordering Ireland to collect the money as outstanding taxes.
        If Ireland refuses, the EC could fine them, or better, remove Ireland from the Common Market, incl all effects this would have.

        If Ireland does end up having to collect the taxes, and Apple refuses to pay them, then freezing assets would be on the table.

      • On what grounds? The EU body does not have authority to levy taxes.

        Their compliant is with their own member countries giving sweetheart deals to companies at the expense of all the other members of the EU. None of the corporations broke any laws here, the countries stepped forward with tax breaks that were against the intent but not the legal structure of the EU. Their beef is with Ireland, Denmark and Lichtenstein, not Apple, Google and all the other companies from outside the EU that homed in these countr

        • Re:SubjectIsSubject (Score:5, Informative)

          by iris-n ( 1276146 ) on Tuesday August 30, 2016 @01:58PM (#52797707)

          ...the countries stepped forward with tax breaks that were against the intent but not the legal structure of the EU.

          This is not true. What Ireland did was patently against EU law, violating the no state aid [europa.eu] rule. And this is what the Comission decided today, that this sweetheart deal configured state aid because it was not available to all companies, it was only for some select few.

          And you are being disingenuous by suggesting that Apple did nothing wrong. The deal was obviously negotiated directly between Ireland and Apple. And to suggest that Apple didn't know this was illegal, come on. They can afford some pretty good lawyers, you know.

          This all, of course, without mentioning the massive scam that is establishing itself in Ireland in the first place. Apple pretends to make no profit in any EU country, all of it goes to Ireland. But this is apparently legal.

  • by Anonymous Coward on Tuesday August 30, 2016 @10:54AM (#52796057)

    They can crack the whip now and say that, going forward, the tax laws have changed and Apple should pay more.

    However, you can't claim you're owed past money when Apple wasn't hiding anything. They knew what Apple was doing and let it go. This is nothing but theft.

    I'm all for fixing the tax laws going forward, but I'm not for killing companies that played by the rules that were in place. Apple can survive this hit, but many companies cannot.

    • by jabuzz ( 182671 ) on Tuesday August 30, 2016 @11:00AM (#52796107) Homepage

      Apple got a special tax deal from the Irish government in exchange for locating their European headquarters in Ireland. This has been ruled illegal state aid which was illegal at the time.

      A number of other companies such as Microsoft, Dell and Google have similar arrangements and they are now all under investigation.

      • Re: (Score:2, Insightful)

        by frnic ( 98517 )

        Whether or not the tax breaks were illegal, Apple simply paid what the Irish government told them to pay, so as far I am concerned the EU can pound sand.

        I believe Apple has replied "You can have your back taxes or you can have our jobs - but not both."

        Good for them.

        • by Nidi62 ( 1525137 ) on Tuesday August 30, 2016 @11:22AM (#52796325)

          I believe Apple has replied "You can have your back taxes or you can have our jobs - but not both."

          Good for them.

          What jobs? These Irish headquarters barely produce anything or provide services except as a means to funnel corporate profits to a location with an extremely low tax rate. Apple does most of their design work in the US, manufacturing in Asia, and I can bet you most of their marketing is handled from the US as well. At most their Irish division might handle some EU marketing and customer service duties, but most of their employees are probably accountants and lawyers whose sole function is to keep the scam going.

          • The Irish subsidiary is (supposedly) the largest tax payer in Ireland. They have roughly 5,000 employees and are growing in Ireland.

            • by Nidi62 ( 1525137 ) on Tuesday August 30, 2016 @11:56AM (#52796679)

              The Irish subsidiary is (supposedly) the largest tax payer in Ireland. They have roughly 5,000 employees and are growing in Ireland.

              They certainly will be once they pay back $14.5 billion in back taxes. In any case, say they are reporting $100 billion in profit in Ireland. At the rate of .005% that still $500 million in taxes paid. With the volume of sales and cash Apple has, it's easy for them to be one of the highest taxpayers in Ireland even with their ridiculously low rate.

        • by jabuzz ( 182671 ) on Tuesday August 30, 2016 @11:27AM (#52796381) Homepage

          The EU has enough clout that they easily enough force Apple to pay. They can either seize assets to the value of the back taxes and/or prohibit Apple from doing further business in the EU, which would even with a 14billion Euro back tax bill be economic suicide for Apple to pull out of the EU.

          Now while Ireland might be upset that the jobs are going, they are not going from the EU because Apple will still need an operation inside the EU to trade there, and the EU Commission does not favour the jobs being in Ireland over anywhere else inside the EU.

          So as far as I am concerned both Apple and Ireland can go pound sand.

        • by Richard_at_work ( 517087 ) <.richardprice. .at. .gmail.com.> on Tuesday August 30, 2016 @11:31AM (#52796413)

          Whether or not the tax breaks were illegal, Apple simply paid what the Irish government told them to pay, so as far I am concerned the EU can pound sand.

          Apple didn't simply "pay what the Irish government told them to pay", there was a huge amount of negotiation between the two parties, leading to an agreement.

          That agreement does not transcend EU rules, so it was illegal at the time and I'm sure you will understand that illegal agreements are not worth the paper they are written on.

          I believe Apple has replied "You can have your back taxes or you can have our jobs - but not both."

          Good for them.

          Wow. 6,000 jobs. When Apple already employ more than that in the UK, where they have no tax deal. What a wonderful deal the Irish got...

      • The real question is: what does the law say about how illegal agreements like these should be handled? In some EU countries at least, if an agreement between government and a private person or company is deemed illegal, it cannot be annulled just like that; the government is supposed to be a trustworthy partner and cannot strike a deal then simply declare it illegal. In some cases the agreement itself will be considered void, but the affected person or company will not be on the hook for the whole amount
    • by fluffernutter ( 1411889 ) on Tuesday August 30, 2016 @11:00AM (#52796113)
      Actually, if Ireland did indeed step beyond their bounds they can. Apple's bad for not ensuring it was cleared with the EU which has overall governance over Ireland.
      • by AmiMoJo ( 196126 ) <mojo@NOSpam.world3.net> on Tuesday August 30, 2016 @11:24AM (#52796343) Homepage Journal

        EU which has overall governance over Ireland

        That's not correct. In this case the EU can't actually force Ireland to collect the tax, but they will because they want to remain part of the club and not face other sanctions. The EU doesn't actually have powers to govern Ireland directly, although Irish law does recognize EU institutions.

      • by jeremyp ( 130771 )

        Actually, no. The EU does not have overall governance over Ireland. The EU does not set Irish taxes but only gives broad guidelines in an effort to keep the playing field as level as possible. As a member of the EU and its single market, Ireland commits to keeping to the guidelines. The EU says it has transgressed and Ireland says it hasn't. Either way, Apple has paid all the taxes that the Irish government said it needed to. Apple is not at fault here.

        • I used to work with a guy that lived in a $750K house despite the fact that he made $20K/year on paper. Everything was under his corporation and it was most definitely not legit. He was under the impression that he would claim ignorance and blame his accountant for all of it. But it doesn't work that way. It was up to Apple to unilaterally check with the EU and apparently they didn't.
    • However, you can't claim you're owed past money when Apple wasn't hiding anything.

      I don't know about EU law but in the UK this is, indeed the case.

      Tax avoidance schemes have to be registered with HMRC. If they are deemed to be invalid then you have to pay the tax that was due.

      If you decide to fight it through the courts and the courts find in HMRCs favour then your tax liability is a multiple (greater than or equal to 1) of the tax that you tried to avoid. (plus any legal fees)

      There was a very recent case

    • by GNious ( 953874 )

      Apple's legal council should have informed them that the tax-agreements with Ireland would/might violate Ireland's international agreements on state aid for companies...

  • by fuzzyfuzzyfungus ( 1223518 ) on Tuesday August 30, 2016 @10:54AM (#52796059) Journal
    Did Cook actually 'refute' the conclusion, or did he just disagree with it? Those are very, very, different things.
    • Apple and Ireland are appealing, so I would say they are refuting it.
      • They are going to attempt to refute the ruling. Whether they refute it or not in fact depends greatly upon whether their appeal is successful.

        At any rate, Ireland's reputation for basically being a tax haven that allows cheap access to EU markets has long been established. The EU is finally getting around to fixing what amounts to a significant problem. If Ireland wants to be part of the Common Market, it needs to play by the Common Market's rules.

    • Did Cook actually 'refute' the conclusion, or did he just disagree with it? Those are very, very, different things.

      I think he was arguing that Ireland is a "tax distortion zone".

    • by AmiMoJo ( 196126 ) <mojo@NOSpam.world3.net> on Tuesday August 30, 2016 @11:34AM (#52796453) Homepage Journal

      The letter they posted [apple.com] is signed Tim Cook, and does indeed refuse the EU's claims, however it contains obvious lies of omission and seems to demonstrate a complete lack of understanding of how the EU works.

      The Commissionâ(TM)s move is unprecedented and it has serious, wide-reaching implications. It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been.

      No Tim, the EU member states have all agreed on some basic ground rules for taxation so that they can have a free market without any of them gaining a competitive advantage. It's hardly a shock to anyone that the extremely advantageous tax arrangements in Ireland were incompatible and the EU has been warning Ireland of this for many years. In fact Ireland changed its laws in 2010 to block companies from doing what Apple did, and as I'm sure you are aware even Apple will have to find a new corporate structure by 2020 or start paying that tax anyway.

      The letter is pathetic. It makes out that Apple did Ireland a massive favour by opening a factory and bringing jobs, ignoring that it only did so in order to dodge billions of Euros worth of tax that rightfully belonged to the Irish people.

  • Money (Score:5, Insightful)

    by Anonymous Coward on Tuesday August 30, 2016 @10:56AM (#52796079)
    Let's see.. $14.5B in tax savings... 6500 employees in Ireland...
    If they'd paid the Irish employees an average of $2.2M each, it would still not be as much as this tax bill.
    The point is, $14.5B went into Apple's pocket, and Ireland gets what out of it? 6500 measly jobs?
    • I don't know why this was downmodded.. It puts into perspective just how insane the deal was. Ireland really got very little out of it.
      • Re:Money (Score:5, Insightful)

        by AmiMoJo ( 196126 ) <mojo@NOSpam.world3.net> on Tuesday August 30, 2016 @11:55AM (#52796669) Homepage Journal

        They probably threatened to put the factory somewhere else, so Ireland thought it was a choice between getting nothing and getting 6500 jobs and a small amount of tax.

        The thing is, the EU doesn't play the "race to the bottom" game. The whole point of having a single market is that rules are harmonized and the playing field is level for everyone. No member state can offer terms like this to get business, which is ultimately bad for everyone except Apple anyway.

    • Re: (Score:2, Informative)

      by jabuzz ( 182671 )

      Yes but 6500 jobs plus the tax from profits in Ireland is better than nothing. That back tax which the EU want paying would not have been paid to the Irish government had they not given Apple the special tax deal. So the deal that Ireland cut Apple was good for Ireland. Problem for Ireland and Apple is the deal has been ruled illegal under EU state aid laws.

      • If they are going to argue over it, they can just give me the .005%

      • by AmiMoJo ( 196126 )

        Thing is, the letter linked in the summary admits that Apple needed an European base of operations, so chances are they would have built one in Ireland (being a source of relatively cheap by skilled labour in the 80s) even without the tax-dodge incentive. At the very least, it would have had to have been somewhere in the EU, and back then Eastern European countries were not members (the wall was still up).

    • While it doesn't change your point too much, you are off by an order of magnitude, since the tax is for 10+ years.

      The taxes that Ireland did get are jurisdiction shopping-- they got 1% of a very large number rather than 12.5% of a very small number. Ireland lost nothing by the arrangement, but the other EU nations did, at least in theory.

      Apple's presence in Ireland at the time of the agreement made a huge positive impact on Ireland, creating jobs at a time of a massive brain-drain and putting it on the map

  • demands (Score:4, Funny)

    by fluffernutter ( 1411889 ) on Tuesday August 30, 2016 @10:58AM (#52796093)
    The last time I was in Walmart I told them, "You can have the money for this USB flash drive or you can have the tax for it, but NOT BOTH". It didn't go so well.
  • And the EU just said that the Irish law was not right. And don't hide behind the people who did the dirty worrk.
    Just because your lawer says you are not guilty does not mean you are innocent.

    So apperently he hired the wrong people, because they gave him bad advice, or (more likely) they gave him good advice and he decided not to listen to the part that it might not work.

  • ... does the EU have over member nations' INCOME tax rates and collection policies? I know they have regulations covering the collection of VAT [wikipedia.org]. But Ireland doesn't want big corporate income taxes since they are burden on growth and economic health. Ireland already has a low income tax rate on domestic profits. So what's to stop them from setting it at 1% or 0.1% and just telling the EU to mind their own business?

    • by lgw ( 121541 )

      The central government never gets weaker. State's rights never get stronger. It's only a matter of time before the EU removes the provision allowing member states to leave.

    • LMOL ok Zippy. Taxes are are in no way, shape or form, a burden on economic health. Taxes pay for government services and infrastructure. You know roads and schools and water treatment. Economic growth started heading into the toilet the past 30 years when we started cutting and cutting taxes and companies stopped investing profits into the company and started paying them out to investors beyond what they normally paid out. Businesses became myopic and focused on short term gains.
    • by Zocalo ( 252965 )
      None, but that's the wrong end of the stick many seem to be grasping. The EU laws are pretty clear; a member state can set its own taxes (with some constraints on levels), but they have to set them equally with no specific tax breaks for specific companies - that would be considered State Aid. Dublin basically decided to give Apple (and probably all of the others under investigation) a tax break in return for them setting up shop in Ireland instead of elsewhere in the EU, but didn't extend the tax rate to
  • Tit for tat (Score:3, Interesting)

    by petes_PoV ( 912422 ) on Tuesday August 30, 2016 @11:15AM (#52796241)

    The american government fines european companies billions (BP, Volkswagen). Now the EU has started fining american companies in return.

    It seems fair.

  • It amazes me how a company, sitting on as much cash [fool.com] as Apple has tucked away (i.e., appx $200Billion), still needs to be the beneficiary of corporate welfare.
  • EU wins... (Score:5, Insightful)

    by frank_adrian314159 ( 469671 ) on Tuesday August 30, 2016 @11:25AM (#52796351) Homepage

    Apple CEO Tim Cook said, "... Apple follows the law and we pay all the taxes we owe."

    Yes, and the EU's law just said you owe 14 billion. Pay and quit whining about it - maybe if Apple had pulled its profits back into the US, they wouldn't be having these issues.

  • "Profits made in Ireland" "profit due to sales in EU" are all really meaningless. Apple A sells something to Apple B. It can price it such that A makes 100% of the profit or vice versa or any percentage it chooses. We do not want governments to enact laws, regulation about these internal details. Enforcement will be difficult, and compliance will be too onerous to the companies.

    What USA says is, "don't care who makes the profit where. Your total tax burden can not be below this threshold. Pay this much t

  • If the EC thinks Apple waddled through the labyrinth of loopholes, in order to minimize their tax bill, but did nothing illegal, sorry, but send the bill to Ireland.

    If apple bribed officials, or cheated, of course they should pay. That does not look like the case however.

    I am definitely not an Apple fan-boy, but if a company successfully navigated the laws, legitimately, then I see no reason to hand them a bill for more money.

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