Adverse Ruling Against Apple Expected in European Tax Probe

[apolloa]

This is ONLY about retroactively changing the agreement in order to collect more money. Apple's had offices in Ireland since 1980 and hoards of cash there for decades. Why wasn't this disputed during all that time? Oh, that's right, now that Apple's the biggest company in the world the EU suddenly want their money by conveniently claiming it's illegal. Can't wait until Apple pulls out of there, cash, products and all. Losing EU sales would be like losing sales in one US state anyway.

No, I suspect laws and regulations have changed and Apples relationship to Ireland has changed, and if you are going to attempt to try and make this out as picking on Apple because they are big or rich? You really have no idea about how the EU courts and bodies work and what they have and are doing. Google and Amazon and as mentioned in this story Starbucks haven't escaped.
Giant corporations not paying taxes is also a VERY public issue across Europe and so another reason action has been taken.
If Apple pulled out of Europe I would guess their profits would drop by a third or so, good luck with that idea.

 

[Frosties]

Does Slovenia have jurisdiction in California tax matters? If you know the answer to this question, you'll know if the US has jurisdiction in a EU country.

US banking law has demanded for years that all Banks report to the US for tax. We can not even hold cash in safety deposit boxes due to US law. So yes, tax and banking law is international. Deal with it.

 

[Cybbe]

US banking law has demanded for years that all Banks report to the US for tax. We can not even hold cash in safety deposit boxes due to US law. So yes, tax and banking law is international. Deal with it.

Exactly what jurisdiction are you claiming the US has over EU state aid rules and Irish tax affairs?

 

[KALLT]

US banking law has demanded for years that all Banks report to the US for tax. We can not even hold cash in safety deposit boxes due to US law. So yes, tax and banking law is international. Deal with it.

US banking law is not the reason why foreign banks report this data to US institutions. The reason for that is because of international treaties to which some, certainly not all, countries agreed voluntarily. In any case, it is in substance the international application of a domestic law by way of nationality of the person. Countries can always claim jurisdiction over their nationals, regardless where they are, whether they can enforce this jurisdiction is an entirely different matter.

This has nothing to do with the Apple case though. Whatever the US demands from Apple, European assets are always subject to European laws first. There is no ‘repatriation’ over whatever sum the European Commission orders to repay.

 

[Frosties]

US banking law is not the reason why foreign banks report this data to US institutions. The reason for that is because of international treaties to which some, certainly not all, countries agreed voluntarily.

US banking law is the reason for this yes. US law is from 2010 and facta were in treaty years later for example 2012, in sweden 2014.

 

[KALLT]

US banking law is the reason for this yes. US law is from 2010 and facta were in treaty years later for example 2012.

This time the chicken came first, before the egg.

US law has nothing to do with the international enforcement. The treaties are the reason why other countries have enacted laws to compel their own banks to report data on US citizens. If any data was reported before, then it was voluntary or a matter of courtesy.

 

[wschutz]

US banking law has demanded for years that all Banks report to the US for tax. We can not even hold cash in safety deposit boxes due to US law. So yes, tax and banking law is international. Deal with it.

The US can claim jurisdiction over companies with HQ or subsidiaries in the US... but little can do about subsidiaries or HQ outside US soil (it can of course require the HQ in the US of some subsidiary to answer to the US and of course can ask the HQ outside the US of some subsidiary in the US).
Moreover, there can be bilateral agreement with countries to avoid double taxation or things like that (sharing data for example), but within the EU... the EU legislation is over any national law regardless of whatever agreement the EU member reaches with the US. Deal with it

 

[Kaibelf]

They are not applying any law retroactively. If Apple has received illegal state aid from Ireland the company has to pay it back. Breaking the law needs to result in consequences.

Wouldn't that be IRELAND at fault then?

 

[wschutz]

Wouldn't that be IRELAND at fault then?

Possibly... but that is a matter between the EU comission and Ireland for reaching agreements outside the EU legislation to which Ireland is subject to.

However, this doesn't get Apple free from this (yummy) sum of taxes to pay back (and I hope with interest as well and a fine) because Apple is subject to local, national and european union's laws... and the latter have preference over any other one given the strong fiscal union that the EU (luckily) is.

Apple is free to sue Ireland but I doubt it will do it because I even doubt there is any agreement of liability between Apple and Ireland (and should there be one... Apple would be admitting taking advantage... and Ireland would even be in more trouble).

 

[Frosties]

US law has nothing to do with the international enforcement. The treaties are the reason why other countries have enacted laws to compel their own banks to report data on US citizens. If any data was reported before, then it was voluntary or a matter of courtesy.

The us law became international treaties because high penalities was stipulated by US law if data was not reported voluntarily. We have different opinon on this let it END there.

 

[Kaibelf]

No, it would be a problem for other EU countries and Apple’s competitors. The whole point of the Internal Market is that EU Member States relinquish a lot of their authority to regulate markets in favour of a supranational body. Ireland used public money to persuade Apple to come/stay and invest in Ireland. That is prima facie illegal.

Apple is not innocent in this. They should have refused to accept the deal and reported it to the European Commission, if they believed that competitors would benefit from it. Instead, they accepted it and that risk is on them.

Odd. In America it is common for states to use public money to provide tax breaks in order to lure business from other states, and it's perfectly legal. It seems that the EU didn't really work this through for the past several decades or simply didn't care until Greece and other states started going broke. It's not like this is a new question.
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Possibly... but that is a matter between the EU comission and Ireland for reaching agreements outside the EU legislation to which Ireland is subject to.

However, this doesn't get Apple free from this (yummy) sum of taxes to pay back (and I hope with interest as well and a fine) because Apple is subject to local, national and european union's laws... and the latter have preference over any other one given the strong fiscal union that the EU (luckily) is.

Apple is free to sue Ireland but I doubt it will do it because I even doubt there is any agreement of liability between Apple and Ireland (and should there be one... Apple would be admitting taking advantage... and Ireland would even be in more trouble).

So if Apple was misled by something Ireland failed to do properly, you hope they are fined with interest because an EU state essentially lied. No wonder the bloc is coming apart. There seems to be no actual state accountability and everyone but the people who make the laws are somehow punished for the officials' incompetence.

 

[jonnysods]

Welcome to the EU Apple.

 

[KALLT]

The us law became international treaties because high penalities was stipulated by US law if data was not reported voluntarily. We have different opinon on this let it END there.

No, you simply do not understand how law works. If you believe that this is a matter of opinion, then there is no point in attempting to convince you.

Odd. In America it is common for states to use public money to provide tax breaks in order to lure business from other states, and it's perfectly legal. It seems that the EU didn't really work this through for the past several decades or simply didn't care until Greece and other states started going broke. It's not like this is a new question.

Contrary to popular belief, the European Commission is not a big institution and is actually quite understaffed, particularly the Directorate-General Competition. Not all state-aid measures have to be cleared by the European Commission before they can be implemented, which is why companies have to tread carefully. This is why these high-profile cases are so often in the news, because these are the juicier targets to spend the limited resources on.

The connotations about Greece and the financial crisis and their relation to this crackdown are entirely speculative on your part.

 

[MH01]

The EU has to be very careful about applying taxes ex post facto. That would run counter to just about all accepted law, especially if they are targeting only a handful of companies.

Try tax evasion or avoidance ...... And when your tax office comes knocking explain to them how they need to becareful post facto.... It's post facto that evasion / avoidance is discovered .

Investing individuals or companies is on an individual basis. Tax office cannot investigate everyone at once.

 

[H2SO4]

Apple - legally - did NOTHING wrong.

Those, who answer to shareholders, have an obligation to minimize their spendings.

But Apple, like many international subsidiaries, are not taxed in a reasonable and fair way, in Europe.

Apple did not do due diligence, they had an obligation to shareholders to make sure that they were not entering into an illegal deal. They were either stupid enough not to ask the right questions of Ireland AND the EU or more likely chose to ignore the elephant in the room.
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This would set a dangerous precedent. Apple and all other companies do what they can to legally avoid tax.

Could you argue it's against the spirit of the law? Probably. But that doesn't stand up. Who would pay more than they have to, if it's legal at the same time?

If there's a legal tax loophole to stop paying as much, you're damn right you'd take it. Every company does and every person does. It's within the letter of the law. Apple are being targeted because they're ludicrously rich, and that's a slice of Apple pie people are happy to dig into.

Want to stop this kind of thing? Then change the tax rules for everybody, to avoid these sort of loopholes. As the old mantra goes: don't hate the player, hate the game.

The precedent that has been set is that the EU will kick the behind of any large conglomerate that makes sweetheart deals, even years down the line. It is a good and worthwhile precedent.
Secondly, it’s not me, you, anybody on this forum or the EU that is arguing what is in the spirit of the law. It is and was TIM COOK specifically. He actually said it.
They need to lock him away and change his name to Wayne Kerr.
He has a responsibiltiy to be ethical and make sure what he is getting involved in has been looked at to the nth degree. He did not.

 

[CelestialToys]

I tought after brexit, EU can't interfere any longer... hmm

1. Ireland is not part of the UK

2. The UK is still part of the EU, as is Ireland.

 

[jimbobb24]

Apple...Apple...when are you going to learn that you need to pay off more politicians. All these bureaucrats and politicians just want a bigger piece of the pie. It's the new system. Spread around some cash. Donate to the right foundations so you can have access to the right people. In the long run, as they will assure you, it's cheaper to play ball.

 

[wschutz]

So if Apple was misled by something Ireland failed to do properly, you hope they are fined with interest because an EU state essentially lied. No wonder the bloc is coming apart. There seems to be no actual state accountability and everyone but the people who make the laws are somehow punished for the officials' incompetence.

Maybe you want to read the initial accusation from the EU commission, back in 2014, in this post: https://www.macrumors.com/2014/09/30/eu-ireland-apple-illegal-state-aid-taxes/ you can read the following: In its findings, the regulatory body stated that deals between Apple and Ireland struck in 1991 and 2007 helped Irish authorities "confer a selective advantage upon Apple" that resulted in a lowering of its tax liability. The Commission also added that Apple's increase in sales for its business in Ireland appear to be inconsistent when related to comparable operating costs that would come with growth. Furthermore, the Commission notes that there was a reported increase in "sales income" by 415%, but states that most of the profit-generating work was done elsewhere.

That's not Apple being misled... that's Apple taking advantage. Most operations of Apple in the EU go thru Ireland up to the point that in some countries Apple makes millions per year but gets taxes back due to the tax game it plays. Yes... it may be legal under current law, but from the previous is inconsistent as well because Apple doesn't make millions in Ireland where it declares all this.
And that's Apple taking advantage of the law that is meant to avoid double taxation among other things, not to be used it to reduce the taxes that you, as a corporation, are obliged to pay.
And should you tell me that Apple follows the law, then you should answer first: do you condone that a corporation avoids paying 23% of the taxes it should if it was in the US? (and note that you have some examples in the US... Delaware for example .

As you can see no state lied... each EU member has certain freedom when implementing EU legislation. Another thing is that Ireland didn't oblige Apple to do the right thing even when it is supposed to. And that's the reason why the EU comission has taken the matter under investigation..

And no... the EU will never fall apart. We are a strong union. It took many years to get to what we are, a multi-cultural union of dozens of countries (and please, don't come now with UK... the biggest mistake ever... of UK not the EU... a union of more than 500 million people... and growing

 

[Solomani]

Apple...Apple...when are you going to learn that you need to pay off more politicians. All these bureaucrats and politicians just want a bigger piece of the pie. It's the new system. Spread around some cash. Donate to the right foundations so you can have access to the right people. In the long run, as they will assure you, it's cheaper to play ball.

Yep, agreed. Apple needs to learn Political Lessons from Samsung. In South Korea, Samsung owns the government. And for historical reference, past Korean MPs (National Assembly is their version of Parliament) that tried to expose corruption between the Government and Samsung ended up being kicked out of office (in disgrace). Link

Apple needs to do the same thing if they want to avoid being constantly harassed by the US Government. Pay to play. Pay the right Washington DC politicians. And learn to pay the right toads in the EU.

 

[macs4nw]

Too much heavy-handed meddling by Brussels in individual countries' tax policies can only lead to more exits from the EU.

If countries can not proceed with pursuing the tax policies they perceive to be in their long term best interest, they may have second thoughts about the advantages of the Union vs their associated loss of autonomy.

 

[Solomani]

Too much heavy-handed meddling by Brussels in individual countries' tax policies can only lead to more exits from the EU.

If countries can not proceed with pursuing the tax policies they perceive to be in their long term best interest, they may have second thoughts about the advantages of the Union vs their associated loss of autonomy.

The main argument with Brexit is that the EU has become a de facto pan-national Government that controls every aspect of the member-nations. Originally, the EU was founded to be an economic alliance. But the British pessimists were right, and Farage predicted correctly…. that Brussels would assert more and more and more control, turning the EU into a heavy-handed "federal super-state". Today, EU wants to regulate and control the tax laws of all its member-states, and is making an example out of Ireland. What happens next, the EU will want to enforce the clothing regulations and enforce burka-beach-bans across all of Europe? Give it a couple of years, and that's what Brussels will try to do.

 

[macs4nw]

The main argument with Brexit is that the EU has become a de facto pan-national Government that controls every aspect of the member-nations. Originally, the EU was founded to be an economic alliance. But the British pessimists were right, and Farage predicted correctly…. that Brussels would assert more and more and more control, turning the EU into a heavy-handed "federal super-state". Today, EU wants to regulate and control the tax laws of all its member-states, and is making an example out of Ireland. What happens next, the EU will want to enforce the clothing regulations and enforce burka-beach-bans across all of Europe? Give it a couple of years, and that's what Brussels will try to do.

Yes I do remember that. But power is addictive after all, and with the European parliament they've obviously gone far beyond a merely economic alliance, perhaps hoping to create a powerful European counterpart to the USA.

But I believe that mission is far from accomplished and likely never will be, short of a civil war where the vast regional differences between member countries can be worked out, and a real Constitution agreed upon. A common language might also help.

 

[A.Goldberg]

US banking law has demanded for years that all Banks report to the US for tax. We can not even hold cash in safety deposit boxes due to US law. So yes, tax and banking law is international. Deal with it.

There is no law against keeping cash in a safe deposit box in the US, though some banks in their agreement restrict it. It's just not recommended as safe deposit box contents are not necessarily/most likely not insured/only partially insured while money in a bank account is fully insured. I have some cash in my SDB, just incase of an emergency.

----

If Apple broke the law, then of course they should pay up. If Ireland colluded in breaking the law, they be responsible should too.

If this is just a matter of skills navigation of corporate tax loopholes, then the governments need to stop crying for and actually change their laws.

Apple, like all other companies being investigated here is a business. Businesses exist to make money. Businesses will do whatever they can to maximize their profit. Paying 40% US tax on money when they don't have to isn't a matter of moral obligation, it's being smart. I think if the EU comes up with some crazy number like $22B it decreases their chances of winning anything and will scare off future business. So they should be careful.

 

[Solomani]

Apple, like all other companies being investigated here is a business. Businesses exist to make money. Businesses will do whatever they can to maximize their profit. Paying 40% US tax on money when they don't have to isn't a matter of moral obligation, it's being smart.

It's not just businesses. Individual citizens also will do anything to lower their personal income tax. In theory, if there is an IRS tax law that says I am allowed to deduct the expense of my iPhone as a "business expense", then that's exactly what I would do, especially if the tax rules do not mention anything about specifically being required to use the phone for business purposes. I would use the iPhone as a nice tax deduction, even if I used it 100% for personal use (like playing Pokemon Go). As long as the letter of the law allowed for the tax deduction, why wouldn't I do it? And so would 99% of all tax-paying Americans.

 

[H2SO4]

It's not just businesses. Individual citizens also will do anything to lower their personal income tax. In theory, if there is an IRS tax law that says I am allowed to deduct the expense of my iPhone as a "business expense", then that's exactly what I would do, especially if the tax rules do not mention anything about specifically being required to use the phone for business purposes. I would use the iPhone as a nice tax deduction, even if I used it 100% for personal use (like playing Pokemon Go). As long as the letter of the law allowed for the tax deduction, why wouldn't I do it? And so would 99% of all tax-paying Americans.

More to it than that. If I go in to some deal with an entity that looks legal but that I suspect may not be, it is MY obligation to contact the authorities and declare it for scrutiny, (as it was with Apple and the Ireland deal). You cannot tell me that with all of those people Apple have in their employ that not a single one looked at it and didn’t think, ‘Hmmm'.