Apple Reaches Deal With France To Pay Estimated $571 Million In Back-Taxes (macrumors.com) 114
Apple has reached a deal with French authorities to pay an undeclared amount of back-dated tax. While the amount isn't disclosed, French media suggest the sum is around $571 million (500 million euros). MacRumors reports: France has been working diligently to stop tech companies like Apple from exploiting tax loopholes in the country. The loopholes are said to have allowed Apple to "minimize taxes and grab market share" at the expense of Europe-based companies. French President Emmanuel Macron is one of the leaders behind the tax crackdown on international tech companies, with a goal of bringing a more unified corporate tax system across the nineteen euro area states.
As noted by iPhon.fr, Apple and French tax authorities reached the agreement for the payment of several years of unpaid taxes in December, according to French newspaper L'Expansion. The agreement followed a meeting in October between Apple CEO Tim Cook and President Macron, in which both reportedly agreed that a solution would ultimately be enacted by the European Union rather than France.
As noted by iPhon.fr, Apple and French tax authorities reached the agreement for the payment of several years of unpaid taxes in December, according to French newspaper L'Expansion. The agreement followed a meeting in October between Apple CEO Tim Cook and President Macron, in which both reportedly agreed that a solution would ultimately be enacted by the European Union rather than France.
good. (Score:5, Insightful)
These large companies are built on civilisation, which is paid for by taxes. Everybody needs to pay in so success stories like Apple can exist. And it's certainly fair that those that benefit the most pay the most.
Anything else is fleecing the middle class to pay for the extravagance of the ultra rich. A strong middle class is needed for a strong economy and demand. If the Apple's of this world all actually got what they wanted they'd be screwed since there would be no one to buy their "premium" offerings.
It's pure hypocrisy. The excuses for doing it are just terrible too and amount to saying it's ok doing something deeply unethical and borderline illegal if you do it for money.
Re:good. (Score:4, Interesting)
I'm glad it's Apple too, because they are one of the worst abusers. They invented the Double Irish with Dutch Sandwich tax dodge.
By tackling the worst one first they set a precedent that will make it much easier to get the rest to pay their fair share too.
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Of course, we hold all the power here. As much as we like Apple products, Apple likes our money even more.
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As much as we like Apple products
Speak for yourself. I've never actively, on purpose given them a single penny, ever.
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I seemed to have missed the news that Apple is pulling out of France. Do you have a link for me? (To a reliable source; Breitbart, Infowars or the Daily Mail will get you pointing and laughing).
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The people who buy the products are the ones paying for the taxes. They're the ones generating the revenue for Apple, and a portion of that revenue is used to pay for taxes. For OECD nations, the purchasers are predominantly middle class people.
Your belief isn't entirely wrong. It's true in countries whose development has stalled at around $10k per capita [wikipedia.org]. Those countries typically have a small group of extreme
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Anything else is fleecing the middle class to pay for the extravagance of the ultra rich. A strong middle class is needed for a strong economy and demand. If the Apple's of this world all actually got what they wanted they'd be screwed since there would be no one to buy their "premium" offerings.
Speaking of which, how's all you US folks tax returns looking this year?
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So you believe in 100% TAXATION??!?! Communist Fool!
There's no taxation in communism, since there's no state. :-p
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Re: good. (Score:2)
All true communists live in liberal capitalist societies.
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Uh, leaders of actual Communist nations...
What communist nation is Kim the leader of? North Korea isn't communist, it's a Democratic People's Republic.
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So what?
All you have is a definition from books full of fallacies. We have history. That makes you _wrong_.
Totalitarianism is wrapped into all command economies. Marxist economies are command by definition, having no way to self organize, no price signals etc.
You are like a Hubbardist who cites Dianetics. Circular in reasoning and clueless.
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All you have is a definition from books full of fallacies.
There's not a lot of books *without* fallacies, most of them mathematical.
We have history. That makes you _wrong_.
You're not the only one to have history. I have history, too. Does that make you wrong?
Totalitarianism is wrapped into all command economies. Marxist economies are command by definition
Could you quote Marx' writing on that? I must have missed that part.
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You know, there are other percentages than 0 and 100. I know you try to exaggerate, hoping that people follow your reductio ad absurdum, but in general you'll find few people are dumb enough for this to work.
If it causes a company to fold if it has to pay the taxes that every other company (ok, ok, only the smaller ones, the others can do the double-Dutch Sandwich trick) do pay, I guess then this company should not do business in such a country. Avoiding taxes this way is actually legal, you know? Simply no
Re:This is still a drip in the ocean (Score:4, Informative)
Compared to what they owe planet wide.
They and every other megacorp out there.
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Okay, I'll bite. How much do they owe planet wide? And why do they owe whatever amount you specified?
And do remember to refer to the relevant sections of the tax codes of each and every country on the planet that will be affected by paying "what they owe the planet"....
Myself, being something other than a tax lawyer (French or otherwise), I suspect that they pay an SI buttload of tax lawyers to make sure that they pay the absolute minimum they can LEGALLY pay....
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That's a good deal for Apple because they got to keep the money for so long. Meanwhile potential local competition had to pay up from day one and never got to grow to their level.
Re: This will end up being very expensive for Appl (Score:2)
Local competition to Apple in Europe?
Bwahahaha!
Complicated issue with no simple solution (Score:5, Insightful)
Since this is slashdot, where the average IQ is meant to be a little higher, I'll have a go at explaining this issue. While I completely agree that having these companies not pay taxes in the local countries that they operate in is a bad thing, I think that the way everyone is trying to make this equivalent to someone's personal tax situation (and, let's be fair, most people get their employers to calculate, file and pay their taxes, so don't even need to understand the tax code) is not useful. We saw this sort of shallow argument during the whole occupy movement, where everyone knew what the banks were doing was bad, but they couldn't articulate exactly what it was that was wrong and how it could be fixed. The end result is the occupy movement fizzed out and nothing much changed.
The fundamental issue here is that Apple owns the complete value chain (apart from a small cost of manufacturing that goes to China). Most people would agree that some of that value should be taxable in the country of purchase. But most would also agree that rest of the value should be taxable in the USA (where Apple is based). The question then is, how much should be attributable to each country? To further complicate matters we tax profits, not value, otherwise a high volume low margin product would be disproportionately taxed vs a high margin low volume product. To calculate profits you need to attribute costs. So after you've decided what value add should be taxable, how do you apportion Apple's operating costs to each country? Then you've got intangible assets such as the money spent on R&D for a product.
At the moment the answer to these questions is 'its complicated'. But 'fortunately' for all these multinationals there are giant loopholes in various EU country's tax laws that allow them to avoid that question by reducing in country profits to zero. So guess, what, that is what they all do.
The solution then is two fold, and not entirely simple. Firstly, the EU needs to shutdown the loopholes that countries like Ireland, Luxembourg, the Netherlands, and the UK have that are really only there to give those countries a competitive advantage over other EU countries. So far that is taking a very long time (so who's fault then is that?). Secondly, there needs to be some sort of agreement on how much of Apple's profits are attributable to each country in which it operates. This is no easy thing to do, and may not even be possible as the best way to do this would be to reach some sort of agreement with the IRS to have it share tax take. But the US itself has a bunch of tax loopholes that allow these countries to avoid US taxes, so you would first have to get those shutdown (again, why is that taking so long...) and then get the IRS to agree to a profit sharing deal (good luck with that). The whole thing is a huge beauacratic mess, and frankly, Apple and its ilk are simply making the most of rules as they stand.
I'm not really sure what the solution is. Personally I think the best approach is to go after the ultimate recipients of the profits (the shareholders) and ensure they cannot avoid income taxes as easily as they are currently able to do. Companies themselves can only invest their profits (which ultimately is good for the economy) or distribute them to shareholders, so going after the shareholders (who it is much easier to lock down to a jurisdiction) seems like the better approach, but that would require voters to educate themselves on the loopholes that get introduced to benefit the 0.1%, and given the current state of western democracies I seriously doubt the ability to deal with these issues.
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> Companies themselves can only invest their profits (which ultimately is good for the economy) or distribute them to shareholders
No, they can also hoard cash. O2 does it in the Czech republic, Apple does it in the US. Or they can use it to inflate their value by buying back stock. Not really sure that counts as investment.
Even if they hoard cash, the shareholders will want it eventually, or they will use it for investment (see Apple). Hoarding cash does have issues, but avoiding tax directly is not one of them.
Buying back shares is again just an exploitation of tax loopholes which (in most countries) means that capital gains are taxed less than dividend income. It is why you always see CEOs taking $1 salaries. While they are doing press releases about how noble they are, the reality is that if the company is simultanously ru
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The simplest solution would be to put all earnings on the same tax rate and progression, something that the US (IIRC) actually do have.
Over here in Europe in most countries you're better off, tax-wise, if your income is from stocks and financial gains than from actual salaried work.
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Your investment is usually in business, which needs to thrive or there are no jobs.
The US politicians really rage about business being evil while in Europe not so much; they get you on income and sales type taxes.
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For a business to thrive, it needs to sell. That only happens if there's someone to sell to. That only happens if people have money to buy stuff.
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Which is utterly crazy when you think about it.
You work three jobs and pull in 100k a year; I sit on my arse whilst my stocks make 100k a year. You pay 34k in taxes and I pay 14k. (Actual numbers from UK this tax year)
Working for a living is clearly for chumps.
That's all so well and so good if you have 100k to put on stocks. That's the thing isn't it, the more money you have the easier it is to make more money. Now you may well be the one who started with a 1 pound investment and grew it into a fortune but chances are you inherited that in some form and just put it to work.
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In Europe, the difference would be that you only pay about 25k a year from your stock revenue instead of 34k.
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Capital is mobile. If a nation's after tax ROI isn't competitive it gets no investment.
Most first world nations have about the same effective tax rate on investments. They just split it differently between corporate tax and cap gains tax (plus 'corruption tax' some places e.g. India). Remember it's all multiplying average ROI, so that matters too.
Lower corporate tax to 0 and treat capital gains as normal income. In the USA you would land (for high earners) at about 45%. Which is about the world wide in
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Re:Complicated issue with no simple solution (Score:4, Informative)
It's not that complicated. Apple certainly knows precisely how much profit it is making, and there is a corporate tax rates levied on profits... So the amount they owe is a percentage of the profit made selling hardware and services in each country.
They try to hide it by paying bullshit licencing fees to a parent company based in Ireland, but we just ignore that. If they have R&D centres in a country they can show the accounts for them.
The IRS is irrelevant for EU taxation. It's up to the US if it wants to double-tax on profit made in the EU, but either way we are getting what is owed to us. That's the price of doing business in our extremely lucrative market.
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It's not that complicated. Apple certainly knows precisely how much profit it is making, and there is a corporate tax rates levied on profits... So the amount they owe is a percentage of the profit made selling hardware and services in each country.
You're oversimplifying it again. This is the perennial problem with the issue.
Your system would attribute 100% of the value add from sales in France to the French tax authorities. Firstly, why is that fair (France did not pay for the infrastructure that supports the workers in California). Secondly, what if Apple just goes back to what everyone did 20-30 years ago, and has a local french distributor who buys from them, adds 30% and sells it on to customers? Should France send a bill for a share of Apple's U
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> what if Apple just goes back to what everyone did 20-30 years ago, and has a local french distributor who buys from them, adds 30% and sells it on to customers?
Fine with me.
This will hurt their sales (less money flying from France)
33% benefits tax on 30% (+ benefits) is still 10%. That's better than today (=nothing)
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Firstly, why is that fair
Because because without those sales Apple would have made $0, so Apple can choose if it wants to make $billions and pay some tax or $0 and pay no tax.
a local french distributor who buys from them, adds 30% and sells it on to customers
They actually have that in their home country of Ireland. No Apple Stores at all, just distributors who add their own mark-up.
That's one reason why they don't sell that many iPhones in Ireland. Clearly they feel that it's worth having a presence in France and I imagine they enjoy higher sales because of it.
Remember that Apple doesn't just sell physical goods t
Re: Complicated issue with no simple solution (Score:2)
Actually, I would argue that the basis of taxation in most countries is flawed. We should get rid of corporation tax and replace it with some form of consumption tax like VAT or sales tax. Everything else encourages a race to the bottom where countries compete on tax (if not the headline tax rate, then by offering inducements and tax breaks).
Of course, this is an unrealistic simple solution, but I can't help think that the current method of tax does not work in an increasingly globalised world.
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Yes, consumption taxes are regressive, but over time, wages will change to compensate. Also, you could theoretically have some sort of flat universal benefit that would reduce the effective tax rate for the lowest earning members of society.
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A new retroactive French tax is not a great way to attract new and much needed US investment into the EU.
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The USA designs great consumer computers and OS that people in the EU select to use.
The freedom of choice to buy a fun US product over something approved by the UK or French government.
EU nations are great at taxing everything they can to pay for gov services and projects.
Then the EU nations go full tax when they have more gov projects to pay for.
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Globalization and the internet have made things more complicated, and convoluted than ever before. Obviously they have brought benefits. But like you said, it is no surprise that companies will take the path of least resistance rather than even attempt to navigate that mess.
If politicians have the same mentality as some of the people who replied to you, it is no wonder the needle isn't moving forward on tackling this. If
was this a loophole, or actual unpaid taxes? (Score:3, Informative)
"loophole" usually means finding a legal way to do something that would normally be illegal. "unpaid taxes" usually means illegally underpaying your taxes. So it can't be both.
I'm curious as to whether this was actually paying taxes they were legally obligated to do, or more of a settlement / concession / bribe to get them to quit harassing Apple for doing something they don't like but were legally able to get away with?
I could really see it being a case of them arguing "ok Apple, technically you don't have to pay this, but if you refuse to, we're just going to pass some laws that in the end will cost you more than what we're going to call a 'fine', just go get the public off our backs."
Tax loopholes are nothing shocking or new. Any person, group, or company with money uses them extensively to hang onto as much of their money as possible. This should surprise no one. "International tax havens" are very similar to your retirement account, they're both designed to entice you to invest your money somewhere in exchange for low property taxes. The investors aren't the ones that made the loopholes, they were created by the people that want to make money off YOUR money while they hang onto and protect it for you. (could be a bank, could be an investment group, could be a country) If you're getting mad at the investors because you can't legally tax them as much as you want to, you're focusing on the wrong party.
When the public gets upset over international tax havens, it's basically coming down to a problem of the benefit of they money being there having been shifted from taxes to something else in the country. They set up the loopholes in the first place to benefit the country in some way, be it increasing forein investments or something else. Wanting to have those benefits AND still tax the money the same is double-dipping, on a country-size scale. There's only one pie, and two different groups within the country both want the same slices. The loophole just changes the distribution of a few of the slices. In other words, it comes down to a problem created by the greed of a country.
And because you can't "fix" greed, this issue will never go away.
Imagine senators saying "hey, Merrill Lynch, our voters are mad at us since we created these tax shelters to increase your investments here, but the public is only looking at the lost tax revenue and thinks it's unfair they can't have their cake and eat it too. So if you don't pay us these token 'fines' so we look like we're 'addressing the problem', we're going to change the laws in a way that hurts your bottom line a lot more than the 'fines' would." Is this basically what's happening here?
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You are correct that what Apple did was to exploit the loophole of the tax laws in Europe. You could also be correct about how France forced Apple to pay.
However, the way you write sounds like it is OK to look for a loophole and exploit it. Your attitude sounds like it is the other's fault to leave the door open, so if the laws don't forbid(see the differences from the laws allow?), you will do whatever you want that benefit yourself. You completely separate ethics from laws. In this case, it is unethical (
More EU nations taxes (Score:1)
Investing in the EU is a trap.
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Nobody forces Apple, Amazon, Google, Facebook etc to offer their products and services in the EU.
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On innovative US brands. Investing in the EU is a trap.
Apple? Innovative?....HAHAHAHA good one +1 funny
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So you admit they owe nothing?
If your law allows for something, then it isn't illegal. Why would you write a law allowing for a loophole and then get pissed that someone simply did that thing?
Not wanting to side with tyrannical mega corporations, but I don't see how theyre wrong to do this.
This new thing that is "assumed law" needs to end quickly, you don't get to say "well you knew what we wanted you to do" just because you can't control something, but want to control it
You don't allow for loopholes, they exist from mistakes/oversights and then you notice then exploit them. Loopholes that can be closed usually are.
Strategy (Score:3)
Amount isn't disclosed? (Score:2)
I'm not a tax guy, so could someone explain why the amount owed to the public (taxes) hasn't actually been disclosed to the public? I assume it has to be made public at some point, given that both parties have agreed to a deal and the amount isn't likely to change.
Also, I'm not sure this is to be celebrated, because it's rather likely that a negotiation took place, and Apple is likely paying less than it was originally supposed to. That's the way "deals" work, as opposed to "orders."
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Re:Protectionism by another name NO IT'S NOT (Score:2, Insightful)
This is NOT a fine.
And that's the problem.
This is just legally due taxes that ANY other corp would have paid in time.
Apple was(*) stealing money from France for years and nobody cared.
And when Apple finally paid they're not fined for trying to steal.
* and Apple IS STILL stealig money with help of Ireland.
And about EU fines against US I think you're all wrong :
when US levies fines on EU companies those are fined Billions and not Millions.
Re:Protectionism by another name NO IT'S NOT (Score:4, Interesting)
This is just legally due taxes that ANY other corp would have paid in time.
Tax evasion is illegally not paying due taxes, tax avoidance (tax avoidance being the legal use of tax laws to reduce one's tax burden) is legal and encouraged.
Did they avoid taxation or evade taxation?
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being that the agreed to a payment it seems they evaded. Why would they pay back taxes that the legally avoided and do not owe.
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being that the agreed to a payment it seems they evaded. Why would they pay back taxes that the legally avoided and do not owe.
Sometimes you pay for other reasons than "being guilty". It may be cheaper (or more profitable) to get the issue behind you and move on.
This is the equivalent of punishing a company because France regulators suck at writing tax code. If Apple is using loopholes, that is tax avoidance. Using the tax laws to your advantage is encouraged in the accounting field. So much so, that a quote about this was on the cover of my tax accounting book in college. The philosophy stuck with me...
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How convenient. They can arrest anybody any time they want under that code. I'd move ASAP.
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Or, they could use that tax money to create a universal healthcare system any time they want.
I'd move ASAP.
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Part of the problem with our complex tax situation and why any attempt to simplify the tax plan fails, is because taxes are used more then just revenue for the governments, but a tool to help manage behaviors especially towards large organizations.
Economist both liberal and conservative in general know corporate taxes are a net negative on the economy on the whole, which creates higher priced goods, slows down growth, and requires an expensive labor force to manage all the taxes correctly. which slows down
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There's a grey fuzzy area between avoidance and evasion which takes a court case to decide. Due to the uncertainty, they reach a settlement. If it is clear cut avoidance, the company would go to court, and likewise for the government. I'd guess the settlement depends on likelihood of one side winning.
Probably depends on amount as well. If the government claimed I owed another $100, I'd just pay it rather then arguing.
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Funny how the EU always levies fines on American tech companies, and never dares touch Chinese companies.
Maybe the Chinese companies aren't dodging taxes? Or they haven't been around in the EU market long enough for their dodginess to be uncovered? Non-tech Chinese products have been on the EU market for a long time...and the EU raised quite a big fuss over some of them [politico.eu].
Also you will be glad to know that besides dishing out fines for American companies, the EU happily does that for it's own companies and those from other countries (like Japan) as well when they break the rules [cnbc.com].
Re: Protectionism by another name (Score:1)
Can you not read? This is France, not the EU and it concerns payment of taxes Apple had not paid, not a fine.
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Funny how the EU always levies fines on American tech companies, and never dares touch Chinese companies.
Not paying taxes isn't a cornerstone of chinese business. They have their own set of problems to be sure but that doesn't seem to be one of them.