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

[surferfb]

Whatever taxes they paid in the U.S. is wholly meaningless.
They did not book book the income for Irish tax purposes - as they were ultimately found to have to.

It's not wholly meaningless. As Ben Thompson explained, Apple will be getting a foreign tax credit on this money from the US that now has to be paid to Ireland. Apple will have to pay the interest without getting that money back from the US though.

So pretty much, the U.S. is going to have to cut Apple a check for the tax payment going to Ireland. Which is why Thompson raised the point that the U.S. is probably not going to be happy about giving Ireland money, that Ireland doesn't want, just because the EU says so.

I honestly don't think the US will do anything about it, but I admit that it'd be nice to see to see the US push back on the EU's vendetta against American tech companies.

 

[Macusercom]

EU simply don’t like countries competing on taxes and call it “tax dodging”.

I am amazed how Europeans like how the EU can dictate how Ireland should tax their companies. Ireland has no sovereignty anymore.

The EU's action in the Apple case focused on enforcing state aid rules, not dictating tax policies. Ireland offered Apple selective tax benefits, which the EU deemed illegal state aid, violating competition laws.

Ireland retains sovereignty over its tax rates, but must follow agreed-upon EU regulations that prevent unfair advantages. The goal is to ensure fair competition, not to eliminate tax competition

 

[webkit]

The dam exists as a thinly veiled attempt at consumerism but in reality take applesmorofits away by providing free access to the App Store. There is no duopoly as there are hundreds of manufacturers, things are getting made up.

The existence of multiple companies or alternatives does not mean a duopoly or even a monopoly can't exist. There were several desktop OS alternatives to Windows in the 1990s yet Microsoft was still declared a monopoly with Windows.

Regarding mobile app stores, are you saying the App Store and Play Store don’t have a duopoly in the EU? What are the two largest mobile app stores in the EU? What percentage of the EU app store market do they have?

Regarding mobile operating systems, are you saying iOS and Android don’t have a duopoly in the EU? What are the two largest mobile operating systems in the EU? What percentage of the EU mobile OS market do they have?

 

[BaldiMac]

The existence of multiple companies or alternatives does not mean a duopoly or even a monopoly can't exist. There were several desktop OS alternatives to Windows in the 1990s yet Microsoft was still declared a monopoly with Windows.

Regarding mobile app stores, are you saying the App Store and Play Store don’t have a duopoly in the EU? What are the two largest mobile app stores in the EU? What percentage of the EU app store market do they have?

Regarding mobile operating systems, are you saying iOS and Android don’t have a duopoly in the EU? What are the two largest mobile operating systems in the EU? What percentage of the EU mobile OS market do they have?

Please don't start the same argument that you've had in countless threads in a thread about a tax dispute.

 

[webkit]

Please don't start the same argument that you've had in countless threads in a thread about a tax dispute.

It's his choice to respond or not, but I don't recall ever asking what the specific basis of the "there is no duopoly" stance was which is why I did here since he mentioned.

 

[djphat2000]

But this was an agreement with a$$le

Agreed. And I'm sure other compromises had to be made to make it all work.
IMHO, it is still ridiculous.

 

[surferfb]

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.

I've had more than enough of Tim's Apple at this point

Tim, you're one to talk about "political crap" and "false numbers". I wonder if he really believes this or if it's part of his "I care about people and the environment" persona he invented when he took over in 2011. Gotta hand it to him, Tim was woke before it was cool to be woke.

Also, I love multiple people in this thread blaming Tim Cook for this when it was established in 1991 under CEO John Sculley, continued through the Michael Spindler and Gil Amelio eras, Jobs' return to Apple, and then ended when Ireland caved to EU pressure and changed their laws to end these sorts of structures in 2015.

 

[I7guy]

[…]What percentage of the EU mobile OS market do they have?

What percentage the eu market by manufacturer? It’s how you ask the question to trap the answer. Eh?

Now about that tax dispute?

 

[AppliedMicro]

But that doesn't change the fact that Vestager calculated the .005% number by dividing tax paid by revenue instead of income

How do you know then - when Apple doesn’t release the figures?

Did you notice that your quote was about behavior prior to the dates that we are talking about? And before Ireland implemented a 12.5% corporate tax rate in 1996?

Read the article (from 2013!). “Since” doesn’t mean “before” and it doesn’t mean that it ended in 1996. The tax ruling contested by the EU dates back to 1991.

And that low single digits isn't below 1%?

It isn‘t - but over time decreased down to that.

Apple has been booking income in the US before and after the dates in question

…and that tells us what about tax liability in Ireland?

 

[AppliedMicro]

There is no duopoly as there are hundreds of manufacturers, things are getting made up.

Hogwash. No matter how often you’ll repeat that, there’s only two relevant operating systems.
And third-party developers and providers of services like Spotify develop mobile apps for these two systems.

The develop for iOS and Android. Not for Apple, Huawei, Samsung, Oppo, Sony, Nokia etc.
Your relentless attempts at diverting and distracting from the duopoly in operating systems are obvious - but futile.

What percentage the eu market

Apple is, by all accounts, considered to command more than 50% (more than half) of mobile app revenue in Europe.

The DMA is about operating systems and related services - and the market concentration therein.
It’s not about smartphone manufacturers.

You can keep trying distracting from it as long as you want:
👉 There’s no relevant monopoly, duopoly or oligopoly with regards to smartphone devices and their manufacturers.

And accordingly, there’s also no relevant antitrust / competition law legislation proposed known to me for smartphone devices. Not in Japan, not in Korea, not in the EU, not in the UK, not in the U.S. But there’s quite a lot of proposed or emerging legislation regarding smartphone software.

That of course is not going to stop you from rehashing your misleading ”there’s no monopoly or duopoly whatsoever, cause there’s so many (hardware) manufacturers” again and again and again.

Since 2020 the effective tax rate is about 15%.

The EU “tax case” against Apple concerned tax years way before 2020.

I’d still be curious where you got that 15% figure from?

 

[I7guy]

Hogwash. No matter how often you’ll repeat that, there’s only two relevant operating systems.
And third-party developers and providers of services like Spotify develop mobile apps for these two systems.

Nonsense. Any manufacturer can enter the fray with any operating system. There is no duopoly.

The develop for iOS and Android. Not for Apple, Huawei, Samsung, Oppo, Sony, Nokia etc.
Your relentless attempts at diverting and distracting from the duopoly in operating systems are obvious - but futile.

Again, any manufacturer can enter the fray with any operating system. There is no dupoly.

Apple is, by all accounts, considered to command more than 50% (more than half) of mobile app revenue in Europe.

As I said the dma is focused on revenue and not market share. It’s a protectionist bill masquerading as pro-consumer legislation.

The DMA is about operating systems and related services - and the market concentration therein.
It’s not about smartphone manufacturers.

The fan is about revenue protection disguised as a pro-consumer legislation.

You can keep trying distracting from it as long as you want:
👉 There’s no relevant monopoly, duopoly or oligopoly with regards to smartohone devices and their manufacturers.

Pointing fingers doesn’t make anything correct.

And accordingly, there’s also no relevant antitrust / competition law legislation proposed known to me for smartphone devices. Not in Japan, not in Korea, not in the EU, not in the UK, not in the U.S. But there’s quite a lot of proposed or emerging legislation regarding smartphone software.

That of course is not going to stop you from rehashing your misleading ”there’s no monopoly or duopoly whatsoever, cause there’s so many (hardware) manufacturers” again and again and again.

Nothing will prevent you from supporting the dma until the cows come home.

The EU “tax case” against Apple concerned tax years way before 2020.

I’d still be curious where you got that 15% figure from?

I used chatgpt to come up with apples recent tax margins.

 

[AppliedMicro]

Nonsense. Any manufacturer can enter the fray with any operating system. There is no duopoly.

There is no relevant third OS. And they can’t enter with a different OS - because users won’t buy phones without a rich established app ecosystem. That’s also been reason for the demise of BlackberryOS and Windows Phone.

Again, any manufacturer can enter the fray with any operating system. There is no dupoly.

The market shares of Android and iOS contradict that claim.

I used chatgpt to come up with apples recent tax margins.

🤣

If it weren’t so sad. ChatGPT is (if anything) a tool - not a source. Let alone a reliable one.

 

[webkit]

What percentage the eu market by manufacturer? It’s how you ask the question to trap the answer. Eh?

No trap. You mentioned EU duopolies and I am asking if you feel the App Store and Play Store have an app store duopoly in the EU? Do you feel iOS and Android have a mobile OS duopoly in the EU? What are you basing your answers on e.g., EU market share percentages?

Now about that tax dispute?

What about it? Apple appears to have lost in the appeal and will now pay, and record a one-time charge in fiscal Q4.

 

[I7guy]

There is no relevant third OS. And they can’t enter with a different OS - because users won’t buy phones without a rich established app ecosystem. That’s also been reason for the demise of BlackberryOS and Windows Phone.

There is no legal limitation for entering the market with any operating system. The above is just a red herring.

The market shares of Android and iOS contradict that claim.

Citation?

🤣

If it weren’t so sad. ChatGPT is (if anything) a tool - not a source. Let alone a reliable one.

Then your citation.

No trap. You mentioned EU duopolies and I am asking if you feel the App Store and Play Store have an app store duopoly in the EU?

No.

Do you feel iOS and Android have a mobile OS duopoly in the EU?

No.

What are you basing your answers on e.g., EU market share percentages?

Are you asking the question from a revenue point of view or market share point of view?

What about it? Apple appears to have lost in the appeal and will now pay, and record a one-time charge in fiscal Q4.

There some on topic discussion, although it may not be as cartel clear as you think.

 

[webkit]

Are you asking the question from a revenue point of view or market share point of view?

Whichever you used to conclude that there is no App Store/Play Store app store duopoly in the EU and whichever you used to conclude that there is no iOS/Android mobile OS duopoly in the EU.

 

[AppliedMicro]

There is no legal limitation for entering the market with any operating system.

Seriously? 🤔

Monopolies don’t require legal entry barriers to the market. We’ve spoken about natural monopolies before (though I‘m not sure you understood that, again, they don‘t require any physical entry barriers.

Since 2020 the effective tax rate is about 15%.

I am finding: You are unwilling or unable to provide a source - except saying „ChatGPT“.

Citation

https://www.statista.com/chart/3268/smartphone-os-market-share/

“In a detailed market study of the two companies, the UK’s Competition & Markets Authority (CMA) concluded that they “have an effective duopoly in the provision of operating systems that run on mobile devices”, as well as “substantial and entrenched market power over the users of their mobile operating systems” and “in the distribution of native apps within their ecosystems”

https://policyreview.info/articles/...titrust-net-neutrality-eu-digital-markets-act

“Android and iOS account for over 99 percent of smartphones in the United States”

https://www.govinfo.gov/content/pkg/CPRT-117HPRT47832/pdf/CPRT-117HPRT47832.pdf

“it can be said that the two main operating systems for apps (Google Android and Apple iOS) effectively form a duopoly on global markets, having a combined market share of more than 99 %.”

https://www.europarl.europa.eu/RegData/etudes/BRIE/2018/621894/EPRS_BRI(2018)621894_EN.pdf

Smartphone OS are a duopoly market.

 

[amartinez1660]

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

Would you be behind the idea, then, to narrow that disproportion in a different way? By lowering the citizen in the trenches taxes?

We only pay more and more taxes every year yet there’s more inflation, there are more “government programs” that help nobody in a substantial long term way, there’s more corruption, more crime, funny businesses around and about, etc.

Instead of asking for even more taxes, let me propose asking for less taxes for each of us.

For example, in the US, income tax in the 1917 was less than 5%? Now the maximum marginal tax rate is like 40%? Add property taxes, license/driving/etc taxes, school related taxes, add 15% sales taxes of each of those surviving dollars everytime we decide to use them… give me a break, this just shows that it will never end.

There’s the wealth extraction class and the wealth production class. Any single job position that requires tax payers to survive is part of the former, meaning, ALL government positions are wealth extraction positions.

I don’t agree with dodging taxes sneakily like what seems to be the case here with Ireland and Apple, however, I truly think we could try to think about this in other ways that’s not: “I pay a lot of taxes, so every one should pay a lot and then some more too”.

My 0.002 after tax cents

 

[I7guy]

Seriously? 🤔

Monopolies don’t require legal entry barriers to the market. We’ve spoken about natural monopolies before (though I‘m not sure you understood that, again, they don‘t require any physical entry barriers.

That's what a monopoly is ... it precludes the competition from "competing". There is nothing precluding, other than time, money and ingenuity in this market place. Time, money and smarts are fairly standard attributes in the business world.

I am finding: You are unwilling or unable to provide a source - except saying „ChatGPT“.

You cited nothing other than a wet finger in the air.

https://www.statista.com/chart/3268/smartphone-os-market-share/

“In a detailed market study of the two companies, the UK’s Competition & Markets Authority (CMA) concluded that they “have an effective duopoly in the provision of operating systems that run on mobile devices”, as well as “substantial and entrenched market power over the users of their mobile operating systems” and “in the distribution of native apps within their ecosystems”

https://policyreview.info/articles/...titrust-net-neutrality-eu-digital-markets-act

“Android and iOS account for over 99 percent of smartphones in the United States”

https://www.govinfo.gov/content/pkg/CPRT-117HPRT47832/pdf/CPRT-117HPRT47832.pdf

“it can be said that the two main operating systems for apps (Google Android and Apple iOS) effectively form a duopoly on global markets, having a combined market share of more than 99 %.”

https://www.europarl.europa.eu/RegData/etudes/BRIE/2018/621894/EPRS_BRI(2018)621894_EN.pdf

Smartphone OS are a duopoly market.

As I said before, the entire DMA is built on a house of cards. Of course that was their finding and the justification for the DMA. They needed a "solid finding" to be able to write such legislation. Given Apple was given no opportunity to defend itself, the logical conclusion is the DMA is anti-American tech masquerading as a pro-consumer set of legislation. And as I said before there are hundreds of manufacturers of cell phones.

 

[weckart]

It's not wholly meaningless. As Ben Thompson explained, Apple will be getting a foreign tax credit on this money from the US that now has to be paid to Ireland. Apple will have to pay the interest without getting that money back from the US though.

So pretty much, the U.S. is going to have to cut Apple a check for the tax payment going to Ireland. Which is why Thompson raised the point that the U.S. is probably not going to be happy about giving Ireland money, that Ireland doesn't want, just because the EU says so.

I honestly don't think the US will do anything about it, but I admit that it'd be nice to see to see the US push back on the EU's vendetta against American tech companies.

I don't and I fail to see what the US can do about interfering in the tax policies of foreign sovereign entities. In fact, the US is irrelevant in this saga. Apple's tax sleight-of-hand led to the rest of the EU's taxpayers' subsidising Apple's shareholders since the effect of this tax deal pushed Ireland in to the bracket of a net recipient of EU payments when it should have been a contributor. Shame this ruling took so long but Apple isn't the only sinner here.

 

[AppliedMicro]

the logical conclusion is the DMA is anti-American tech masquerading as a pro-consumer set of legislation. And as I said before there are hundreds of manufacturers of cell phones.

You’ve said it countless times before - and no matter how often you misleadingly repeat it:
The DMA is not concerned with hardware devices and doesn‘t regulate them - it regulates their operating system software (and select other software/services provided in connection with them).

That’s why your “hundreds of manufacturers of cell phones” comment is misleading - given that basically all of those phones sold and used in the EU run one of the two dominant operating systems (iOS and Android).

I don’t know why it’s so hard to acknowledge:
Yes, there is a duopoly in operating systems for mobile phones.
(which is neither illegal per se, nor are does it mean that there are legal barriers preventing entry of competitors).

There is nothing precluding, other than time, money and ingenuity in this market place.

…and it still that that doesn’t mean there’s no duopoly.

“Monopolies may be naturally occurring due to limited competition because the industry is resource intensive and requires substantial costs to operate”

The upfront investment required to establish and market an competitive ecosystem of third-party app (in addition to developing an OS itself) prevents competitors from competing with iOS and Android.

 

[Abazigal]

There is no relevant third OS. And they can’t enter with a different OS - because users won’t buy phones without a rich established app ecosystem. That’s also been reason for the demise of BlackberryOS and Windows Phone.

Maybe the EU could pass legislation mandating that developers have to support all platforms equally. They seem to excel at that sort of stuff. 😏

 

[AppliedMicro]

Apple will be getting a foreign tax credit on this money from the US that now has to be paid to Ireland.

Possibly. And that foreign tax credit is provided according …U.S. tax law. Maybe (probably) only for tax paid to a foreign tax administration (according to the other country’s tax code and any applicable double taxation agreements.

So what? That doesn’t mean anything with regards to being subject to Irish tax according to Irish law.

I’m not sure to what degree I would take anything that “Ben Thompson” guy says at face value anyways, considering the article it titled “Apple’s E.U. Fine…” (though he later seems to acknowledge it’s not a fine.

So pretty much, the U.S. is going to have to cut Apple a check for the tax payment going to Ireland. Which is why Thompson raised the point that the U.S. is probably not going to be happy about giving Ireland money

Again: so what?

It‘s an entirely homemade U.S. issue. And just another case of U.S.-American global overreach in financial and fiscal matters. Maybe they should write their own (U.S.) tax code accordingly, and bring it in line with other countries:

“Under current U.S. tax rules, specialists say Apple would probably be able to claim a foreign tax credit for the repayment, allowing it to lower its tax bill in America, where the 35 percent corporate income tax rate is one of the world's highest. Unlike other industrialized countries, the U.S. taxes its multinational corporations on their global income — while allowing a dollar-for-dollar credit for the foreign taxes they've paid.”

https://digitaledition.baltimoresun...spx?guid=8fea9f86-6459-4c53-90c9-ffff51e24a9c

I don't and I fail to see what the US can do about interfering in the tax policies of foreign sovereign entities. In fact, the US is irrelevant in this saga.

It is - but tell that to many Americans.
Or (see above) their tax legislators and tax administration.
They believe their rules and laws and taxation (should) apply around the world.

 

[AppliedMicro]

They paid the taxes in the US (at a higher rate than they would have in Ireland) instead of the EU in accordance with international tax law

No - they paid tax additionally (not instead!) in the U.S. according to U.S. tax law:

“All countries tax income earned by multinational corporations within their borders. The United States also imposes a minimum tax on the income US-based multinationals earn in low-tax foreign countries (…) Most other countries exempt most foreign-source income of their multinationals.”

https://www.taxpolicycenter.org/briefing-book/how-does-current-us-system-international-taxation-work

Apple has been booking income in the US before and after the dates in question. You don't book the same income in multiple countries.

…but the U.S. tax administration does.

Apple didn't avoid or dodge tax. They paid tax on the money in the US

They dodged paying foreign (Irish) tax in this case.

I certainly hope you aren’t a tax preparer because if you are your clients are getting fleeced. As an expat because I pay taxes abroad I am absolved from paying taxes in my home country.

Next time you make a declarative statement you should make sure it’s actually true. In this case it’s very much not.

See above. Having to pay taxes in Ireland does not absolve Apple from additionally paying taxes in the U.S. - even though they may get credit for foreign tax paid.

 

[surferfb]

I don't and I fail to see what the US can do about interfering in the tax policies of foreign sovereign entities.

Can the US do anything in particular about this particular ruling? No. But they can bring up their displeasure with the EU, threaten retaliatory actions, tariffs, etc.

Again, I don’t think they’re going to do anything. But they could.

In fact, the US is irrelevant in this saga. Apple's tax sleight-of-hand led to the rest of the EU's taxpayers' subsidising Apple's shareholders since the effect of this tax deal pushed Ireland in to the bracket of a net recipient of EU payments when it should have been a contributor.

The US isn’t irrelevant at all. They were booking the money in Ireland in order to delay paying American taxes on the money, not European.

Shame this ruling took so long but Apple isn't the only sinner here.

Apple isn’t a sinner here.

I’m not sure to what degree I would take anything that “Ben Thompson” guy says at face value anyways, considering the article it titled “Apple’s E.U. Fine…” (though he later seems to acknowledge it’s not a fine.

Sure, ignore him because you don’t like the headline. He’s only a tech analyst. But given that this year he’s interviewed the CEOs of Microsoft, Wal-Mart, Netflix, Google Cloud, AMD, and Google’s SVP of Devices and Services, it seems the tech industry takes a lot of what he says at face value.

No - they paid tax additionally (not instead!) in the U.S. according to U.S. tax law

It’s clear you really have no idea what you’re talking about when you start talking about the US tax system. Which isn’t an attack on you, why would you know? But please stop talking so authoritatively about it because you’re making numerous errors and often making the exact wrong assumption about this case because of them.

 

[weckart]

Can the US do anything in particular about this particular ruling? No. But they can bring up their displeasure with the EU, threaten retaliatory actions, tariffs, etc.

Again, I don’t think they’re going to do anything. But they could.

The US isn’t irrelevant at all. They were booking the money in Ireland in order to delay paying American taxes on the money, not European.

The US cannot and will not want to do anything about this, least of all start a pointless and damaging trade war right now over the greed of a multinational, which did everything in its power to delay paying the taxes it owed to the US treasury until its hands were forced. This seems to be a peevish overreaction on the part of some commentators in this forum. Cooler heads prevail where power actually resides.

The US is irrelevant. It had nothing to do with the case. How Apple decides its tax affairs outside of the EU is Apple's business and the EU has no jurisdiction or even interest in that. The case involves sales within the EU and within the EU only. Apple's motivation for proposing this tax arrangement is also not the issue. The EU only looks at the legality of what was arranged and in this case it was illegal.

If the US is put out by having to forgo some tax revenues, that is on Apple for underdeclaring the tax it owed overseas. Apple's fault.

Apple isn’t a sinner here.

Apple dreamt up and cooked up this mess and the Irish government went along with it. As far as the EU is concerned the buck stops with Ireland but that doesn't wash Apple's hands of the matter. Those were Apple's tax advisors paid with Apple's money and they were found wanting.