Apple Expects Appeal of Irish Tax Ruling to Take 'Several Years' With No Impact on Near-Term Financial Results

[0098386]

So, with all this tax stuff are us regular customers allowed to do whatever we can to secure lower prices? My cheeky cousin buys all his Apple stuff with a university email address, and then gets the VAT back off it too as he "uses it for business". Which I guess he does. But that's a student discount+VAT removed, I think he bought a £2000 a month ago and got £500 off it and free Beats headphones.

But surely that's okay these days, after all everyone just wants to pay the lowest price be it Apple, Amazon, or customers.

 

[mrochester]

So, with all this tax stuff are us regular customers allowed to do whatever we can to secure lower prices? My cheeky cousin buys all his Apple stuff with a university email address, and then gets the VAT back off it too as he "uses it for business". Which I guess he does. But that's a student discount+VAT removed, I think he bought a £2000 a month ago and got £500 off it and free Beats headphones.

But surely that's okay these days, after all everyone just wants to pay the lowest price be it Apple, Amazon, or customers.

We already do what we can to secure lower prices by choosing to shop in places that offer those lower prices. Ironically, they tend to also be the same companies undertaking in measures to lower their tax burden. Expect prices to go up if they are required to pay more tax.

 

[gnipgnop]

One of the basic principles of EU is the single market. And to uphold this idea only exceptionally are member states allowed to give preferential treatment aka state subsidized aid. Otherwise the competition becomes unfair, and businesses in other states will not have the same terms.

If Ireland don't want to be part of the EU single market they shouldn't have agreed to it in the first place.

State Aid through the use of the tax system has recently been a greater focus and is the reason why high profile cases like these are surfacing now.

Other notable state aid cases have been airports and airlines, Estonian Air and Cyprus Airways had to close because illegal aid was given. Other airlines was basically barred from their primary markets because they were able to operate at operational loss. Other large cases have been Spanish football clubs and some Greek ports which have to repay the Greek government.

There are legal ways to give state aid, usually to develop impoverished areas, but the rules are relatively strict.

The problem for the EU is that they have to provide convincing proof that the tax break itself gave Apple a competitive advantage for it's products in the EU. That's the only way they can successfully claim that it qualifies as "state aid". Seems like a fairly high bar, as most of the reactions to the rate Apple paid are more about "they're too successful to pay such a low rate" and not "they never would have been successful without that low rate".

 

[mrochester]

The problem for the EU is that they have to provide convincing proof that the tax break itself gave Apple a competitive advantage for it's products in the EU. That's the only way they can successfully claim that it qualifies as "state aid". Seems like a fairly high bar, as most of the reactions to the rate Apple paid are more about "they're too successful to pay such a low rate" and not "they never would have been successful without that low rate".

This. There are many products already in the market much cheaper than Apple products yet Apple continues to be hugely successful. So it's not like any tax break resulted in them to undercutting their competitors.

 

[Rocketman]

Where do you get this? If i recall correctly this is from the amsterdam & lisbon treaty both accepted by Ireland .

CNBC/Reuters, and many since. The horse's mouth on Ireland Finance minister and Treasury Secretary Lew.

 

[Larry-K]

Let's put it this way, the tax demand is about 6% of their cash on hand. But they'll fight it tooth and nail for years, even if they'll have to spend those 6% on tax attorney fees.

Probably be some late fees as well.

I had two bosses with a $7K tax dispute, ended up costing them $21K plus $20K in lawyers. It was genius to hold out.

 

[9081094]

Both parties have something in common: GREED

And both parties are hypocrites in my point of few. The EU for going back in time and the letter of Tim Cook that Apple invested heavily in the economics of Ireland. We all know it's about the $$$$.

 

[cube]

This. There are many products already in the market much cheaper than Apple products yet Apple continues to be hugely successful. So it's not like any tax break resulted in them to undercutting their competitors.

It's not only about hardware, also about services.

Having a lot of money also gives you an edge in R&D.

And let's not forget about European phone platforms. Dead and emerging.

 

[KALLT]

"The problem with socialism is you eventually run out of other peoples money." -- Margret Thatcher

Expect more stuff like this from the EU after Brexit.

Nigel Farage said it best when he addressed the EU General Assembly right after Brexit. He called them a bunch of people that never owned a business nor created a job. They just tax and chase some rainbow of a social ideal that never exists while suppressing the rights and freedoms of millions.

When the British Bankers are free of EU regs, expect them to do some very sweetheart deals that will make Irish banks sweat.
[doublepost=1472584999][/doublepost]
Socialists do not deserve tribute in the form of taxes.

Ironically, the fact that the EU punishes the Irish Republic is evidence of hardline free-market thinking on the European Commission’s part. Socialism has absolutely nothing to do with this and the strict application of state-aid law is not something that a socialist should want.

 

[bladerunner2000]

They should get taxed an extra 1 billion dollars for every month they stall this payment. Apple's been a greedy scumbag company for a while now.

 

[Cole Slaw]

They should get taxed an extra 1 billion dollars for every month they stall this payment. Apple's been a greedy scumbag company for a while now.

I think it may be more than the 13 billion Euros in the end, as I read it's 13 billion plus interest. And this all took place over a period of years, so that'll add up.

 

[BaldiMac]

I think it may be more than the 13 billion Euros in the end, as I read it's 13 billion plus interest. And this all took place over a period of years, so that'll add up.

They'll put the money in escrow to avoid interest while the appeal plays out.

 

[Khedron]

So many people think this deal is somehow legal because it was arranged by the government

Maybe putting it like this will help you understand:

Imagine if one of the states of the USA negotiated with a large company to make a law that their employees no longer had the protection of the constitution or bill of rights, and so could be enslaved, saving that company a lot of money

Would you say that was legal because it was authorised by the state? No, because there is a higher (federal) legal authority that says you cannot actually do that

That's what has happened here, and Ireland can appeal all they want but they won't win

 

[cmwade77]

Really, the simple solution is abolish all income taxes, personal and corporation. Then establish a fair (no more than 10% total for all jurisdictions, local, federal, etc. combined) flat sales tax whenever a product or service is purchased.

This would ensure everyone pays an equal percentage, making it fair for all and would eliminate all of these loopholes.
[doublepost=1472592070][/doublepost]

So many people think this deal is somehow legal because it was arranged by the government

Maybe putting it like this will help you understand:

Imagine if one of the states of the USA negotiated with a large company to make a law that their employees no longer had the protection of the constitution or bill of rights, and so could be enslaved, saving that company a lot of money

Would you say that was legal because it was authorised by the state? No, because there is a higher (federal) legal authority that says you cannot actually do that

That's what has happened here, and Ireland can appeal all they want but they won't win

That is not actually what happened here, what happened is:
Ireland has a set tax code that says a corporation pays x% of their income in taxes to Ireland.
Ireland said to Apple, come over to us and we will reduce the amount you pay to Ireland.

If the EU somehow has their own tax code, this cannot affect how much Apple would have to pay to the EU directly, but that doesn't seem to be the case, they are whining that Apple isn't paying enough to Ireland, when Ireland is perfectly OK with it.

In the U.S., this would be the equivalent of:
Texas having a set tax code
Texas saying to Toyota come over here and we will reduce your state tax liability

This is exactly what Texas did and no one said they can't do that or questioned the legality of it.

Why? Because each state is free to set its own tax structure, just as each country is free to set their own tax structure.

This obviously cannot change their federal tax liability, but it does reduce the taxes paid to Texas, really in this case there is no difference.

 

[Brookzy]

Really, the simple solution is abolish all income taxes, personal and corporation. Then establish a fair (no more than 10% total for all jurisdictions, local, federal, etc. combined) flat sales tax whenever a product or service is purchased.

This would ensure everyone pays an equal percentage, making it fair for all and would eliminate all of these loopholes.

You must be joking.

 

[rikscha]

Don't blame the whole of the U.K. Realise that he vote to Brexit was almost 50/50. There were lots of us quite content to remain part of the EU!! It's not like it was a landslide result.

Really? Nearly 30% of the people didn't care to vote but of course the UK blew its on trumpet again for what is an appalling turn up for a democratic vote.
The real result is more like 67% voted out and only 33% voted to remain in or 2 out of 3 wanted to leave the EU.
Their is a reality distortion field around the Uk when it comes to the EU hence why I don't think the UK is representative for the opinion across the EU.

 

[SBlue1]

Except the EU itself is hardly popular in the EU itself right now, and it could also come across as "why the hell is the EU interfering in the tax laws of a member state? Shouldn't they have the right to do whatever they want? A lot of people feel the EU is interfering too much. So it could go either way really.

The EU is actually very popular among consumers and young people. Its the old and uneducated people who think that in the good old times everything was better.

"Those Brussels politicians, they should just leave us alone" is what those people say in the pubs. Well, they used to say the same about London, Paris, Berlin and so on before the EU. They just forgot. They just need someone to hate and blame. The EU is an easy target. I hate those grumpy people.

 

[Lankyman]

Really? Nearly 30% of the people didn't care to vote but of course the UK blew its on trumpet again for what is an appalling turn up for a democratic vote.
The real result is more like 67% voted out and only 33% voted to remain in or 2 out of 3 wanted to leave the EU.
Their is a reality distortion field around the Uk when it comes to the EU hence why I don't think the UK is representative for the opinion across the EU.

Wow! I'm glad you're not managing my money with slight of hand figures like that.

 

[Brookzy]

From the EU Commission's press release:

The recovery period stops in 2014, as Apple changed its structure in Ireland as of 2015.

What changed?

Did Apple suddenly pay way more tax in Ireland from 2015, or have they just found yet another way to avoid it?

 

[headfuzz]

Wow! I'm glad you're not managing my money with slight of hand figures like that.

I would upvote this twice if I could.

 

[NovemberWhiskey]

I thought they have to put the money into escrow during the appeals process. If they do, does that affect their financial results?

 

[CarlJ]

It's not EU tax law, it's EU competition law.
EU competition law forbids special deals that amount to state aid to companies.
The state aid happened to have taken the form of reduced taxes.

So why is the EU punishing Apple, rather than Ireland, if it's Ireland that did the wrong thing?

 

[Nuvi]

So why is the EU punishing Apple, rather than Ireland, if it's Ireland that did the wrong thing?

They are not punishing Apple. They are only forcing Ireland to collect the same 12.5% corporate tax they are collecting from any other company.

 

[rikscha]

Wow! I'm glad you're not managing my money with slight of hand figures like that.

I'm glad I wasn't your grammar teacher The figures are correct though. What's your current balance? Maybe I can help.

 

[gnasher729]

Apple California makes all the profit, and is owed 40% of that in tax to the US, but doesn't need to pay until it takes the money home.

In the meantime the 6000 or so people working at Apple Ireland pay income tax, VAT, groceries, shopping, rent, mortgage, etc. in Ireland and not somewhere else.

If this ruling goes through, the USA will get less tax.