Apple Loses Major Tax Dispute in Europe, Must Pay Ireland €13 Billion

[MacRumors]

The European Union's Court of Justice today said it has confirmed the European Commission's 2016 decision that Ireland had given illegal tax benefits worth €13 billion to Apple from 1991 to 2014. This is a final ruling, so Ireland is now required to recover these funds, which were placed into an escrow account by Apple around six years ago.

In 2020, the European Union's General Court reversed the Commission's decision, as it found that the Commission had not sufficiently established that Apple had received preferential treatment in Ireland. On appeal, the Court of Justice has now set aside the General Court's judgment, meaning that the Commission's decision is now upheld.

Ireland's government had sided with Apple in its attempt to appeal the decision, but today it said it will "respect" the Court of Justice's findings and recover the €13 billion from Apple that is considered to be illegal state aid.

“We are disappointed with today's decision as previously the General Court reviewed the facts and categorically annulled this case," said Apple, in response to the Court of Justice's ruling. "There has never been a special deal," added Apple.

"Today is a big win for European citizens and for tax justice," said the European Union's competition chief Margrethe Vestager.

The 2016 Decision

Following a three-year inquiry, the European Commission in 2016 found that Apple paid between 0.005% and 1% in taxes in Ireland between 2003 and 2014, compared to the country's headline 12.5% corporate tax rate during that period.

Here is how Vestager explained the scheme in her remarks today:

These tax rulings attributed the bulk of taxable profits - of two Irish subsidiaries of Apple - to stateless "head offices". These head offices existed only on paper. No tables, no chairs, no activities. The profits were thus not taxed anywhere. As an example, in 2011, one of Apple's Irish subsidiaries recorded profits of approximately 16 billion euros. Of these, thanks to the tax rulings, only around 50 million euros were taxable in Ireland. So, this subsidiary paid less than 10 million euros of taxes in Ireland in 2011 - an effective tax rate of about 0.05% of these overall annual profits.

At the time, Apple CEO Tim Cook described the accusations as "total political crap," and he said the 0.005% tax rate was a "false number."

Ireland's government today said it has already changed its laws regarding the attribution of profits to branches of non-resident companies operating in the country. It said the laws that applied to Apple are no longer in force.

Update - 6:09 a.m. Pacific Time: In a filing with the U.S. Securities and Exchange Commission today, Apple said it "expects to record a one-time income tax charge in its fourth fiscal quarter ending September 28, 2024, of up to approximately $10 billion."

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Article Link: Apple Loses Major Tax Dispute in Europe, Must Pay Ireland €13 Billion

 

[Prof.]

Can’t wait for them to pass that off to the consumer. 🙂

 

[Macusercom]

Well, that happens if you dodge taxes

 

[sw1tcher]

I'm sure someone will say Apple should pull out of the EU.

Or just raise prices across the EU for all pruducts to make those in the EU pay for this. Call it the CTF (Core Technology Tax Fee)

 

[Koudspeel]

Way to go EU!

 

[tomtad]

1 Sept 2016 — Apple Chief Executive Tim Cook described the European Union's imposition of a $14.5 billion back tax bill as "total political crap"

Well Tim...

 

[augustrushrox]

Well, that happens if you dodge taxes

Dodging taxes is a good thing.

 

[JonathanX64]

Good. If you can't eat the rich, then at least tax them.

 

[JordanCautious]

A quick Google search says Apple has $60B in cash on hand. I don't know if it counts the Escrow account in that number but thats like 1/6th of their available cash. This is actually kinda insane.

I just know Tim has been stressing about the EU all year lol. USB-C, App Store, and now this. Tough

 

[WarmWinterHat]

Dodging taxes is a good thing.

For the company alone. Every else gets bent over.

 

[Stella]

A company making billions of dollars in profit doesn't need corporate welfare.

 

[MDTyKe]

Ireland should give every taxpayer a €3000 Apple gift card.

 

[Channan]

Ireland's government had sided with Apple in its attempt to appeal the decision, but today it said it will "respect" the Court of Justice's findings and recover the €13 billion from Apple that is considered to be illegal state aid.

Ireland taking Apple’s money:

 

[Harry Haller]

Apple should just buy the EU. /s

 

[one more]

Ireland should give every taxpayer a €3000 Apple gift card.

Well, if they have to give a gift card to each of EU 448 million citizens, it will be closer to €30.

 

[bLackjackj]

Its not illegal Tim, you're right,..but it most definitly is immoral.

Since Tim took over, Apple has become a money hungry slave to its shareholders and lost every ounce of the innovation that Steve himself brought to Apple.

 

[Gloor]

Finally, way to go EU. I'm fed up paying close to 40% taxes whilst these companies pay peanuts. The disproportion is crazy

 

[jicon]

I saw some video the other day, apparently within the last year it was possible to order a ten year old Mac Pro trash can that couldn't run the latest Mac OS, for quite a few bucks. But, because the hardware was so old, if you tried to trade it in, they'd only recycle.

Zero sympathy for the charge coming their way.

 

[Glideslope]

Can’t wait for them to pass that off to the consumer. 🙂

The monies have been in escrow accruing interest for the past 6 years. Any costs have long been passed along.

 

[dynamojoe]

Can’t wait for them to pass that off to the consumer. 🙂

You literally don’t. The money has been in escrow so really they already have passed it along to the consumer.
You‘re now paying for future lawsuits.

 

[Chet-NYC]

Not quite sure why they will take a charge of up to $10 billion for this ruling. The money to pay has been set aside in an escrow account for years, and has actually accrued quite a bit of interest.

Anyway, while there's no doubt the Irish government made a nice deal with Apple years ago as a way of getting a large corporate presence from Apple in the country, I think the decision on the part of the EU is wrong. It can easily be seen as morally wrong, but not illegal. The EU forcing Ireland to stop the deal is fine, but not make the change in law ex post facto.

In any event, with Apple having something like $160 billion in cash and as I said, the money for this decision already set aside, it will be just a blip in the larger story that is Apple.

 

[satchmo]

I'm sure someone will say Apple should pull out of the EU.

Or just raise prices across the EU for all pruducts to make those in the EU pay for this. Call it the CTF (Core Technology Tax Fee)

Or the Cork Tax Fee

 

[djphat2000]

I'm sure someone will say Apple should pull out of the EU.

Or just raise prices across the EU for all pruducts to make those in the EU pay for this. Call it the CTF (Core Technology Tax Fee)

What do you think will happen? If costs of doing business goes up. That cost is passed to the consumer when they purchase.

And yes, I am for any corporation to pay their fair share of taxes. I fully get the requirements for doing so. All should pay what they owe. However, I don't agree with (because I don't think the EU should have such rights over sovereign countries in what that country wishes to charge ANY company) the EU in doing this or being able to do this. Whatever Ireland "owes" to the EU, they owe and should get that however they need to do so. If they wish to tax people more than corporations, that's on them. If they wish to tax corporations more or less. That should be on them to do so. They should get to figure out how they generate it and pay whatever they owe to the greater EU. And of course how they manage taxes within their own country to take care of roads/schools/healthcare/etc.

I don't think its right to have the EU (effectively but not the same as the US Fed) come in and change/alter any tax agreements any country has come up with, within its borders for its citizens and corporations (foreign or domestic).
So say the EU wants 10% of any countries GDP. Say Ireland had a GDP of 100B Euro's. So 10B Euros is owed to the EU. However they wish to come up with that, should be up to that country.

But, Rock on EU. Do you!

 

[AppliedMicro]

but thats like 1/6th of their available cash. This is actually kinda insane.

Just about a year of dividend payments (with Apple having relatively low yield of less than 0.5%, and a dividend payout ratio below 20%).

No biggie.

 

[Robert.Walter]

1 Sept 2016 — Apple Chief Executive Tim Cook described the European Union's imposition of a $14.5 billion back tax bill as "total political crap"

Well Tim...

He’s paid not to admit that Apple got preferential tax rates and treatment for setting up its European HQ in Cork Co Ireland, and this location plus other income shifting strategies saved Apple a bundle over the years.