EU Moves Forward With Appeal Against Apple's 'Contradictory' Tax Case Victory

[MacRumors]

The European Union has set out its grounds of appeal against Apple's victory in its $13 billion euro ($15.8 billion) tax dispute, saying that judges used "contradictory reasoning" when they ruled that Apple's business in Ireland was not liable for significant payments (via Bloomberg).

In a summary of its appeal published earlier today, the EU set out its determination to challenge the court judgement from last year. In July 2020, the EU's General Court sided with Apple, and said the EU's executive arm, led by antitrust chief Margrethe Vestager, had failed to show Ireland's tax arrangements with the company were tantamount to illegal state aid.

The appeal alleges that the court improperly conflated Apple's number of employees at two of its Irish units and the company's level of responsibility for intellectual property on iPhone and iPad sales across Europe. Judges are said to have failed to properly weigh the EU's own analysis of Apple's Irish branches and showed "contradictory reasoning" in their findings.

The argument essentially centers on where value is created and, in turn, where it should be taxed. Apple argues that all important company decisions are made in its Cupertino headquarters, so profits should be taxed in the U.S.

July's ruling came as a surprise to EU commissioners, who have in recent years set about probing national tax rulings that effectively serve as illegal subsidies and closing tax loopholes that allow some multinational companies to lawfully pay less tax in Europe. The final decision will now be made by the EU's highest court, the Court of Justice of the European Union (CJEU).

Though losing the appeal would be seen as a major setback for the European Commission, it would not stop it from pursuing other lines of investigation into the tax arrangements of multinational companies such as Apple. However, the Commission would need to be able to demonstrate more clearly that tax rulings confer a financial advantage to the company in question and therefore constitute illegal state aid.

Article Link: EU Moves Forward With Appeal Against Apple's 'Contradictory' Tax Case Victory

 

[5232152]

Paying 0.5% in tax (or less) is fraudulent when everyone else is paying much much more. Sure you might have found a hole in the law, but your intention is to scam - end of the story. There is nothing to debate here: Pay your tax or redraw from the market.

 

[Bokito]

This will be a difficult one for the EU. The appeal mentions several technicalities, but it doesn't seem like they directly appeal the court's decision about the argument that Apple didn't receive illegal state aid (the EU's first and most important claim).

 

[I7guy]

Paying 0.5% in tax (or less) is fraudulent when everyone else is paying much much more. Sure you might have found a hole in the law, but your intention is to scam - end of the story. There is nothing to debate here: Pay your tax or redraw from the market.

Seems there is plenty to debate as Apple won the first round.

 

[Unsupported]

Paying 0.5% in tax (or less) is fraudulent when everyone else is paying much much more. Sure you might have found a hole in the law, but your intention is to scam - end of the story. There is nothing to debate here: Pay your tax or redraw from the market.

There is a difference between Tax avoidance and Tax evasion. One is legal, the other is not.

 

[sofila]

All of Apple defenders pointing to that hole in the law but knowing inside that 0.5% taxes is simply a scam. Long live to mighty AAPL

 

[skippermonkey]

Hey Apple, the UK is no longer in Europe so feel free to come and dump a load of cash over here

 

[mazz0]

The argument essentially centers on where value is created and, in turn, where it should be taxed. Apple argues that all important company decisions are made in its Cupertino headquarters, so profits should be taxed in the U.S.

Wow, this is a complex issue isn’t it? What is “value”? Value for whom? If it’s value for the user then yeah, it comes from Cupertino. If it’s value for the shareholders then it comes from the sales, which happen where the customers are.

I think people would have more sympathy for Apple’s position if people thought they paid the right amount of tax in the US, but rightly or wrongly we get the impression that they don’t.

Imagine two companies:

Awesome Things:
Designs it’s products in Alistan.
Sells 100 units a year in Alistan.

Brilliant Stuff:
Designs it’s products in Alistan.
Sells 50 units a year in Alistan.
Sells 50 units a year in Boboa.

Their costs are the same, and their units sell for the same amount.

The hypothetical countries Alistan and Boboa have identical tax rules.

Intuitively you’d think Awesome Things and Brilliant Stuff should pay the same tax, but they don’t do they? Brilliant Stuff somehow ends up a lot less doesn’t it? Intuitively therefore it seems they’re avoiding their far share of tax.

 

[KidAKidB]

I hope the EU wins. Apple and Ireland blatantly colluded together to give Apple a better deal than everyone else.

 

[RobbieTT]

Given that this was a sweetheart deal to shelter big money via a complicit economic minnow I nearly fell off my chair when the EU lost in the first round. No doubt they will have their case suitably polished for round two.

The fact that Éire fought against receiving the tax windfall (hardly a usual position for any government) removed any and all doubt that the value in this deal was not simply the taxed collected.

 

[Agit21]

Good luck Tim. You’ll need it with the new administration. They won’t help you fight the EU 🙂

 

[whooleytoo]

Paying 0.5% in tax (or less) is fraudulent when everyone else is paying much much more. Sure you might have found a hole in the law, but your intention is to scam - end of the story. There is nothing to debate here: Pay your tax or redraw from the market.

It's kind of a tricky situation. Everyone enjoys the benefits of taxation here - even Apple - so everyone should pay taxes.

But I still think the specific case that the EU is bringing (as I understand it) may be weak. Apple only received illegal state aid if they were given preferential treatment by the state; and that seems unclear. There were loopholes in Irish tax law, but they may not have been specific to Apple.

 

[ksec]

I think people would have more sympathy for Apple’s position if people thought they paid the right amount of tax in the US, but rightly or wrongly we get the impression that they don’t.

Apple is the largest Cooperate Tax Payer in World. They are just paying it all in US.

To the point where a shareholder may question if Apple is doing enough to dodge the US Tax code more. Because they are clearly not doing much of it compare to All other companies.

Whether Apple should Pay tax in EU is up to debate. Because EU companies also enjoy the same thing where value creation are in EU and also pay their tax in EU. It just happen that with Tech it has a tendency to form Single or Two winners takes all. And they are mostly in US.

 

[akash.nu]

Paying 0.5% in tax (or less) is fraudulent when everyone else is paying much much more. Sure you might have found a hole in the law, but your intention is to scam - end of the story. There is nothing to debate here: Pay your tax or redraw from the market.

That’s not how corporations work. The legal system is there for a reason. They wouldn’t become the most valuable company in the world by paying everything out the minute someone asks for it. That’s what capitalism is. And we live in that society.

 

[The Cappy]

Paying 0.5% in tax (or less) is fraudulent when everyone else is paying much much more. Sure you might have found a hole in the law, but your intention is to scam - end of the story. There is nothing to debate here: Pay your tax or redraw from the market.

If the law is wrong, change the law. But if someone acts carefully and within the law, they should not be liable to retroactive penalties.

 

[SWAON]

Nothing surprise me any more. All big companies are scammers.. one way or another. Welcome to modern slavery.

 

[5232152]

If the law is wrong, change the law. But if someone acts carefully and within the law, they should not be liable to retroactive penalties.

Wrong. In the western world, we define obvious misconduct in this way as following The Word Of The Law but not The Spirit Of The Law. Apple, which tries to be such a socially aware company fully understands the spirit of the law. They just don't care. That makes them a third country corrupt company from a financial standpoint.

 

[catean]

Hey Apple, the UK is no longer in Europe so feel free to come and dump a load of cash over here

And after that sell to where ? You need to be in the E.U. to sell to the E.U. without paying import duties. For example, if I order a MacBook from amazon UK to Romania, I need to pay 400 pounds in tax now. All the Europeans moved to buying from Amazon Germany due to this insane move named Brexit.

 

[bollman]

It really doesn't matter what tax Apple will have to pay in Europe. All they will do is let Apple US raise the price Apple EU har to pay (for everything), thus negating any profit from Apple EU.
This is a classic tax scam. The only difference with Apple is that they didn't go all in and put the IP in some tax haven to avoid taxation all together like so many other bug companies. Good on them for that, but it doesn't make avoiding paying EU (or in any other country than US) any better.

 

[akash.nu]

Wrong. In the western world, we define obvious misconduct in this way as following The Word Of The Law but not The Spirit Of The Law. Apple, which tries to be such a socially aware company fully understands the spirit of the law. They just don't care. That makes them a third country corrupt company from a financial standpoint.

Please report back if you ever win a case with that “spirit of law” argument. Thanks. And which country are you referring to by “western world”?! Clearly law and enforcement of it is not the same throughout the EU and the USA. Heck the law ain’t even the same in all of the states in the USA.

 

[CarlJ]

All of Apple defenders pointing to that hole in the law but knowing inside that 0.5% taxes is simply a scam. Long live to mighty AAPL

You should see what some companies in the US get away with for taxes here.

 

[gaximus]

I think I’m missing something? Apple made a deal with Ireland, Apples pays Ireland Taxes that they both agreed to. But the EU doesn’t like the deal, shouldn’t the EU be suing Ireland for making the deal? Apple hasn’t done anything legally wrong here. Does the deal expire? Can they renegotiate when it does?

 

[mazz0]

Apple is the largest Cooperate Tax Payer in World.

That’s completely irrelevant. The relevant ratio is tax paid vs profit, not to tax paid by Apple vs tax paid by other companies.

 

[Jetfire]

Paying 0.5% in tax (or less) is fraudulent when everyone else is paying much much more. Sure you might have found a hole in the law, but your intention is to scam - end of the story. There is nothing to debate here: Pay your tax or redraw from the market.

From what I understand, what Apple is doing is perfectly legal. This all comes down to treaties that need to be redone. In the USA a Treaty is one step below the Constitution.

Article VI​

• Clause 2
• This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.
  
  So Congress can't do anything about it. I'm pretty sure it's the same in other countries.
  
  So if they really want to fix this just redo the treaties that make this possible.
  
  
  

 

[5232152]

From what I understand, what Apple is doing is perfectly legal. This all comes down to treaties that need to be redone. In the USA a Treaty is one step below the Constitution.

Article VI​

• Clause 2
• This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.
  
  So Congress can't do anything about it. I'm pretty sure it's the same in other countries.
  
  So if they really want to fix this just redo the treaties that make this possible.
  
  

If your "legal" way of doing business is called a "Double Irish With a Dutch Sandwich", you are probably a bad person. They follow the word of the law but not its spirit and that makes them bad people regardless of how legal their ways are. When the company wants to be all about "equality", they could start by paying the local tax in the countries in which they do business.