Last I checked Ireland was not part of the UK. Only the UK is "brexiting".
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European Commission Made 'Fundamental Errors' in Irish Tax Ruling, Says Apple
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I'm not a European lawyer and have essentially zero knowledge on the court system there; for that matter Brexit is unprecedented so perhaps it would all come down to theory anyway. I'm curious though, EU courts currently have jurisdiction over Ireland due to membership in the EU. With that changing in the (relatively) near future would any EU ruling be enforceable. The order as I understand it is for Apple to pay additional taxes and interest to Ireland; surely Ireland could decline to collect and then what recourse would any EU court have in response in a post-Brexit world?
Any EU lawyers here that can educate me?
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Evidently I don't know geography either, I was thinking about Northern Ireland. Thank you.
Yeah, it's pretty hard to argue that Apple doesn't pay its fair share of taxes in the United States. One might argue that Apple doesn't pay its fair share of (income) taxes (to foreign nations) on foreign earnings, but its domestic tax situation is quite different.
I walked through some of the numbers in a different post so I won't go through them again here. But if you were to just look at what you refer to - profit attributable to its sales in the U.S. - then the rate that Apple pays to the U.S. government (i.e. not including state income taxes) would be well above 40%. The statutory rate is only 35%, so obviously Apple is (as it should, based on normal accounting practices) recognizing as profit in the U.S. more than just that profit attributable to its U.S. sales.
Apple does leave much of the profit of its foreign subsidiaries unremitted (to the parent company) so that it doesn't, for now, have to pay U.S. taxes on those legitimate foreign earnings. And it does make great use of tax avoidance techniques when it comes to those foreign earnings in order to greatly reduce its foreign tax liability. But the same can not fairly be said when it comes to its domestic earnings and domestic taxes.
Exactly. Maybe someone on here is a tax attorney or familiar with Apple's internal tax accounting, but we're all just fishing.
AFAIK, Ireland is part of the EU and the EU keeps subsidizing Ireland because of tax revenue shortfalls.
The EU is holding both the Irish Government and Apple responsible for subverting "standard" Irish corporate tax rates by making backroom deals. Ireland is the Delaware of the EU, but in the alleged case against Apple, they are not paying the official tax rate in an already low-tax corporate haven. TTBOMK, all EU profits are funnelled thru shell companies and taxed thru Apple's irish holding company at the alleged 0.005% rate, hence robbing both Ireland and other EU countries of tax revenue of profits generated there. The job creation defence doesn't hold water, as many other companies create jobs also but are taxed at nominal rates.
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Great Britain (England, Scotland, Wales, one of the Irelands) exited EU. Italy and France are likely to vote on it. Ireland says they are committed to stay in the EU, but since it is not a fiscal union, but only a monetary and trade union with essentially no border control, it will be increasingly pressured to dissolve or fail.
The solution is a fiscal union with strong border control. Not happening.
This ruling is intended to extract the billions from the US Treasury and transfer it to the EU.
http://appleinsider.com/articles/17...nst-european-commissions-14-billion-tax-edict
What you say gets at the heart of the (or one of the) problem(s) with the EU. It represents shared monetary policy without shared fiscal policy. For whatever net good the EU represents - and I'm withholding an assessment on that front, I think there are great things about the EU as well as bad things about it - that divergence represents a significant weakness. Shared monetary policy without shared fiscal policy will always tend to create certain kinds of problems.
They are borrowing large sums for things like stock buybacks.
This article, albeit dated, explain some of the strategies:
https://www.bloomberg.com/view/articles/2014-04-28/why-apple-has-to-borrow-17-billion
I think much of the US based profits are offset by operating/borrowing costs to minimize tax liability.
The Cupertino "spaceship" building alone is a huge investment and tax write-off.
No person or company pays their taxes when they're very rich.
The President of the United States pays LESS taxes than Apple, or even less than someone making $20,000 a year.
Oh yeah, I'm familiar with what Apple's been doing in order to return capital to shareholders without having to remit most of its foreign earnings to the parent company.
And, of course, its revenues are offset by its expenses when it comes to determining it earnings, the latter (generally) being what income taxes are paid on. As for its borrowing costs, that's correct. They would reduce its tax liability by somewhat. But overall they are more than offset by Apple's investment income (e.g. interest on its savings). In other words, Apple makes more from investment income than it pays in interest on its debt.
APPLE: Stop short-changing society. You've made great products to help humanity, now share some of the revenue with the citizens of the country you operate in. Cash hoarded by any person or company does no one or no society any good if it sits under a mattress and does nothing. In effect, that's capital taken out of that economy for good.
Mac, Apple is the LARGEST taxpayer in the US, please be specific on how much more they would have to pay to get your Fair Share award?
Does the exact amount matter? Ireland is very happy with the amount of taxes that it receives from Apple. Ireland created the tax code that encourages U.S. companies to set up what is called the "Double Irish" tax structure as it results in U.S. companies setting up organizational headquarter in Ireland. (Actually it might not be the Double Irish, it might the "single" version of it. But it is just normal tax structuring by a multi-national company.) Many tech companies have done this to take advantage of the English speaking population along with fairly limited time zone change and cultural differences. This wasn't Apple creating any new thing. And if the tax advantage wasn't there, then Apple would have no headquarters in Ireland and the taxes collected would drop even further.
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The problem is that this is not how E.U. tax laws work. The E.U. (and this is quite reasonable) does not tax foreign companies on the profit they earn overseas. Apple is a U.S. company and they earn their profit by designing and programing which is all done in the U.S. and by manufacturing (which is done in China). Not that much of substance happens in the E.U. There are Apple subsidiaries in the E.U. that can be taxed (I assume), but they are just retail shops, repair services and delivery functions.
If the E.U. wants to tax someone, they need an E.U. company making big profits. Apple is a U.S. company and under Irish tax law (because the subsidiary is fully controlled out of the US) the Irish subsidiary counts as a U.S. company as well.
Don't hate the player, hate the game.
Obviously. And the court's will determine if Irish tax law violates E.U. law. I guess the first case said that it did. But until that is fully resolved in the appeal process, Apple's Irish subsidiary should comply with Irish tax law. But fundamentally, Apple is a U.S. company (with the value and the profit created in the U.S. through design and programming) and it is hard for E.U. countries to get much in the way of taxes out of a U.S. company. And that is okay.
That's funny, the history of taxation is the history of special deals for various individuals and corporations. How does the European Commission square that unfortunate historical fact with their ruling?
In fact, using their logic you couldn't have multiple tax rates at all, because that is unfair.
In fact, using their logic you couldn't have multiple tax rates at all, because that is unfair.
Nations compete with each other just as businesses and people do. So, so long as nations are free to set their own tax policies as they see fit and so long as it's realistic for certain kinds of businesses to locate themselves (at least for legal purposes) in a variety of tax jurisdictions, yeah... there will be opportunities for businesses to take advantages of that competition between nations. That's as it should be. Similarly, customers are often able to take advantage of competition between businesses and that tends to encourage better business practices in the long run. If businesses were able to set prices however they wanted without worrying about competition from other businesses, a very unhealthy economic environment might emerge.
This competition on tax policy between nations wasn't as problematic (for the nations) years ago. It wasn't as easy for businesses to set up shop, so to speak, in various locations as it is now. And certain nations had major advantages when it came to attracting business operations such that even if they weren't competitive when it came to tax policy, they were attractive to businesses. I'm talking about, among other things, infrastructure disparities and disparities in the reliability of the rule of law. The United States, e.g., had huge advantages when it came to being attractive to business and thus could get away with (i.e. not suffer much when it came to economic activity as a result of) bad tax policies if it chose them. Those days are passing, advantages in other areas are narrowing, and thus competition on the tax policy front will continue to increase in importance. Extraterritorial taxation, e.g., will continue to become a thing of the past for nations desiring increased economic prosperity.
I got it from what happened. To quote from the article:
Apple must repay 13 billion euros ($14.5 billion) in back taxes dating back to 2003-2014, the European Commission has ruled (via BBC).
The Apple tax ruling was confirmed this morning, after the judgement was leaked to the media yesterday. In unequivocal wording, the EU commissioner Margrethe Vestager said Apple's tax benefits in Ireland are "illegal".
"The Commission has concluded that Ireland granted undue tax benefits of up to €13 billion to Apple. This is illegal under EU state aid rules, because it allowed Apple to pay substantially less tax than other businesses. Ireland must now recover the illegal aid."
If you are quibbling with me using the term the E.U. instead of the European Commission, give me a break.
No, this is a fine on State Aid.
"As a matter of principle, EU state aid rules require that incompatible state aid is recovered in order to remove the distortion of competition created by the aid. There are no fines under EU State aid rules and recovery does not penalise the company in question. It simply restores equal treatment with other companies."
This is not the E.U. going out of their way to tax a U.S. company and stating it that way is distorting the facts.
