Adverse Ruling Against Apple Expected in European Tax Probe

[Nunyabinez]

The European Commission is poised to hand down an adverse ruling against Apple next week following a three-year inquiry into the company's tax arrangements in Ireland, according to Financial Times.The Brussels-based body, led by competition commissioner Margrethe Vestager, has been investigating whether Apple's alleged "sweetheart deal" with Ireland constitutes illegal state aid, which it determined based on its preliminary findings in 2014.

The commission has accused Apple of sheltering tens of billions of dollars by transferring revenue to multiple subsidiaries in Ireland, where it pays a significantly lower tax rate of around 2%, compared to the country's headline corporate tax rate of 12.5%.

An adverse ruling could result in Apple owing up to $21.2 billion in back taxes, although a previous study placed the figure around $8 billion, and some analysts believe the amount could be as low as $1 billion.

Apple is one of several large corporations accused of tax avoidance in Europe over the past three years, joining the likes of Starbucks, Fiat Chrysler, Amazon, Google, IKEA, and McDonald's. Starbucks in particular is currently appealing its case in Netherlands, where it was ordered to pay as much as 30 million euros in back taxes.

Apple CEO Tim Cook, who has insisted that his company fully complies with international tax law, said last month that it would appeal any unfavorable ruling in European courts. Apple has also said it is the largest taxpayer in the world.

Earlier this week, the U.S. Treasury department warned that an adverse ruling against Apple could "set an undesirable precedent." It also said the European Commission is becoming a "supranational tax authority," going beyond acceptable enforcement of competition and state aid law.

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Article Link: Adverse Ruling Against Apple Expected in European Tax Probe

In the interest of accuracy, tax AVOIDANCE is completely legal. Tax EVASION is illegal. So, Apple can't be charged with tax avoidance, only evasion.

Example, there is a toll on a bridge and I want to get to what's on the other side. I can drive three miles down and take a free bridge. It's some extra work, but it allows me to AVOID paying the toll.

On the other hand I could drive through the gate without paying and get arrested for EVADING the toll.

So, by definition, if someone has accused Apple of avoiding taxes, the answer without any question is yes they did.

The question here is have they avoided those taxes illegally, in which case it is not avoidance, it is actually evasion.

 

[jnpy!$4g3cwk]

In the interest of accuracy, tax AVOIDANCE is completely legal. Tax EVASION is illegal. So, Apple can't be charged with tax avoidance, only evasion.

This is U.S. usage. Based on what we've seen posted, I'm not sure that the entire English-speaking world shares this usage. Or, at least it doesn't translate well.

But, I agree with you that this is U.S. usage.
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I'd rather phrase that in a way that only because Apple has so much money do they even have the possibility to negotiate such a shameful deal that makes them pay 2% (!) taxes. It's only those super rich mega-companies that can avoid paying taxes. I have an extremely hard time understanding anybody that defends such a behavior.
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We can discuss whether me paying about 40% taxes is too much / not enough but 2% is just out of the question imo. By a large margin.

We're mixing Apples and oranges here in two different ways.

First, Apple is not a person, it is a "legal creation". A legal entity. There is no particular reason why income tax that you pay and income tax that a corporation pays should be the same. Many have argued that corporate income tax is inherently double-taxation and is harmful to your grandmother living off of her stock dividends. Others have argued that corporate income tax doesn't work very well in a world where there is so much value in non-tangible things (gag -- I hate the term, but, they call it intellectual property).

Second, in all seriousness, it might be better in a lot of ways if corporate income tax was zero, and, we make up the difference in personal income tax.

Whether it was illegal or not remains to be seen, but America has no problem to intervene (for the good imo) into all kinds of stuff (Swiss banking system in general, German banks operating in the US, German car manufacturers selling cars in the US, etc. pp.) - and that should go both ways. Those companies may be founded in one country or another but they operate 100% globally so setting double standards because of nationalistic perspectives harm all of us.

Sure, but, I also think Europe, and, increasingly the U.S., made a big mistake in going with VAT/sales tax. I think that property tax and personal income tax work better. Proof? Well, the super-rich keep pushing sales tax in the U.S. and hate on personal income tax and property tax. That's all the proof I need. They spend billions on accountants who study these things-- if they hate personal income tax, I love it.

OK, analogy fans, particularly those aiming invectives at Apple, Inc. Here it is (stipulating that it's only accurate until it's proved that Apple (not Ireland or anyone else) violated a law):

Blaming Apple for paying an exceptionally low tax rate is like blaming exotic car drivers for going 140mph on the Autobahn.​

That is actually a good analogy. If you think, as I do, that unlimited speeds are a bad idea -- change the law.

 

[twietee]

T

[doublepost=1472484483][/doublepost]

We're mixing Apples and oranges here in two different ways.

First, Apple is not a person, it is a "legal creation". A legal entity. There is no particular reason why income tax that you pay and income tax that a corporation pays should be the same. Many have argued that corporate income tax is inherently double-taxation and is harmful to your grandmother living off of her stock dividends. Others have argued that corporate income tax doesn't work very well in a world where there is so much value in non-tangible things (gag -- I hate the term, but, they call it intellectual property).

Second, in all seriousness, it might be better in a lot of ways if corporate income tax was zero, and, we make up the difference in personal income tax.

Sure, but, I also think Europe, and, increasingly the U.S., made a big mistake in going with VAT/sales tax. I think that property tax and personal income tax work better. Proof? Well, the super-rich keep pushing sales tax in the U.S. and hate on personal income tax and property tax. That's all the proof I need. They spend billions on accountants who study these things-- if they hate personal income tax, I love it.

You probably misunderstood me: nowhere did I mean that my personal taxation should be the vey same as the one of a corporation (e.g. apple paying 40% taxes like me). It was just to highlight the incredible discrepancy.

And of course, I agree, there are multiple ways to tackle the problem (=our infrastructures need vast amounts of money - rightly so I might add. Although of course there is also a vast margin of improvement on efficiency and outright profusion on the wrong parts / underfunding. But that's another topic on its own). But since personal income tax for the super rich or inheritance tax is just not anywhere near where it should be - I think you can't just practically outplay one with the other.

Why do people hate personal income tax? Eventually it's easier to avoid them altogether when doing it via corporations, because you have countries like Ireland who think it's a good idea to make deals as the one we talk about. Since you always need at least two parties to tango I don't see where it's only Ireland's fault btw. Especially when it's most likely that Apple even paid the better representatives/experts than Ireland itself.

Anyway, be it taxation of corporations of personal income tax: as long as countries don't start pulling more or less (!) on the same string we will lose incredible amounts of money to tax-heavens. And while those few rub their hands (and even get applauded from some shareholders) those others (and even some of the shareholders too ) will have to pay the huge differences and will ultimately have less and less. I see that as one of the major problems of and threat to our societies.

 

[weckart]

In the interest of accuracy, tax AVOIDANCE is completely legal. Tax EVASION is illegal. So, Apple can't be charged with tax avoidance, only evasion.

This nice distinction obtains under UK law and I suspect Irish law, too. Probably everywhere where English is spoken.

 

[SBlue1]

It's retroactively changing the taxes after 12 years because you are going broke .

They are also not changing any existing tax. Apple got an state aid by getting a big reduction on the regular tax which is still in existence.

 

[daveathall]

It's 13 Billion. For those posting earlier, the EU doesn't get this money, Ireland (A non UK country so nothing to do with Brexit) gets it. Ireland will appeal against the ruling because, not to do so would be an admission that they had done something wrong, Apple will also, but with the added 13 billion incentives.

 

[jnpy!$4g3cwk]

This nice distinction obtains under UK law and I suspect Irish law, too. Probably everywhere where English is spoken.

If you say so. We've had people on these threads claim otherwise. The usage doesn't matter particularly to me, but, conceptually, the two are different-- I'm completely in agreement that conceptually they are different. (There are a lot of people on these threads who argue that point, also. )

I'm in favor of people and companies paying taxes exactly as they legally owe, and, if the taxes are unjust, fix the tax laws.

 

[daveathall]

Yes, does this investigation cover all of Ireland or just the Northern Part?

It is nothing to do with the Northern part at all and is not part of the investigation.
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If you say so. We've had people on these threads claim otherwise.

He is right, it also means the same in UK usage.
[doublepost=1472574159][/doublepost]

I'm in favor of people and companies paying taxes exactly as they legally owe, and, if the taxes are unjust, fix the tax laws.

I agree completely.