European Commission Rules Apple Received Illegal State Aid From Ireland, Owes Billions in Back Taxes

[MacRumors]

The European Commission on Tuesday will rule that Apple received illegal state aid from Ireland, according to a 130-page judgment known by Financial Times.

Competition commissioner Margrethe Vestager circulated the final ruling to her counterparts in the EU's executive branch only on Monday morning, deploying a fast-track procedure in a bid to minimize leaks. The usual notice period is two weeks.

The ruling follows a three-year investigation into Apple's tax arrangements in Ireland, where it has reportedly paid around 2% or less in taxes compared to the country's headline 12.5% corporate tax rate.

The commission's ruling asks Dublin to raise a new tax assessment on Apple, which could have to restate its accounts as a result of the ruling, according to the report. One area of focus is Apple's tax arrangements for its intellectual property assets, which is "a hotly disputed area likely to lead to a large claim for back taxes."

The ruling means Apple could owe several billions of euros in back taxes. JPMorgan estimated the company could be forced to pay up to 19 billion euros ($21.2 billion) in back taxes, although a previous study placed the figure around $8 billion, and some analysts believe the amount could be a comparatively lower $1 billion.

Europe's competition commissioner Margrethe Vestager will provide an actual estimate of Apple's potential tax bill when the European Commission's findings are publicly released on Tuesday, according to the report.

Apple declined to comment on the matter, reiterating that the company fully complies with international tax law and that it is the largest taxpayer in the world. Apple said last month that both the company and Ireland would appeal any unfavorable ruling in European courts.

Apple joins the ranks of Starbucks, Fiat Chrysler, Amazon, Google, IKEA, and McDonald's as one of several large corporations accused of tax avoidance in Europe recently. Starbucks in particular is currently appealing its case in Netherlands, where it was ordered to pay as much as 30 million euros in back taxes.

Last week, the U.S. Treasury department warned that an adverse ruling against Apple could "set an undesirable precedent." It also said the European Commission is becoming a "supranational tax authority," going beyond acceptable enforcement of competition and state aid law and singling out U.S. companies.

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Article Link: European Commission Rules Apple Received Illegal State Aid From Ireland, Owes Billions in Back Taxes

 

[Bbqthis]

Appeal in 3...2...1...

 

[jkcerda]

will the iPhone 7 be $300 more to compensate?

 

[justperry]

will the iPhone 7 be $300 more to compensate?

So, consumers should pay it instead of shareholders?

 

[Alumeenium]

I wonder which economic zone won't be recieving any iProducts this holiday season...

 

[usersince86]

No matter where you live, the tax man cometh...

 

[NT1440]

So, consumers should pay it instead of shareholders?

Hi, welcome to America, you must be new here.

 

[needfx]

Good job EU, I sincerely hope it is in the 21B neighbourhood, even though I am an apple fan.
2% taxation is ridonculous

 

[shk718]

world war III won't involve bombs - its going to be a war of taxes. So I assume the European union wants the U.S. to raise taxes on European companies doing business here. Who ultimately will be the ones hurt - us the consumers. Thank you EU for another of your moronic decisions. No wonder England left.

 

[usarioclave]

That's odd. Does that mean that every foreign company in Ireland will be hit with back taxes as well?

I can see the appeals process on this taking years. I mean, does the commission even have jurisdiction over this? Does that imply that every favorable government tax rate may be in violation of EU regulations?

This might be the European equivalent of the 14th amendment equal protection clause.

 

[wschutz]

I wonder which economic zone won't be recieving any iProducts this holiday season...

Are you sure that Apple will want to exclude a region of half a billion people (that's more than the entire population of the US

That's odd. Does that mean that every foreign company in Ireland will be hit with back taxes as well?

I can see the appeals process on this taking years. I mean, does the commission even have jurisdiction over this? Does that imply that every favorable government tax rate may be in violation of EU regulations?

This might be the European equivalent of the 14th amendment equal protection clause.

No, not every company has the resources to actually take these loopholes...

Sure the appeal will take some time but Apple has little to nothing to win, and the longer it takes... the bigger the amount will be (interests and no reduction should that be possible).

The government tax rate of any EU country should comply with EU regulation. Ireland is not doing any different, but Apple took advantage of something Ireland offered and Ireland didn't do anything about it (because it was supposedly benefiting it as well...)

In general the EU legislation in fiscal and economical matters has priority over any national law of any EU member. That's what make the EU special.

 

[HJM.NL]

So, consumers should pay it instead of shareholders?

Its called THE Apple tax

 

[SuprUsrStan]

Just jack up the prices of the iPhones in Europe to cover that 21.2 billion deficit.

 

[leroypants]

Time for Apple to pay the Taxman.

 

[Nozuka]

will the iPhone 7 be $300 more to compensate?

no. they'll just reuse an old design and remove the headphone jack to save money

 

[justperry]

world war III won't involve bombs - its going to be a war of taxes. So I assume the European union wants the U.S. to raise taxes on European companies doing business here. Who ultimately will be the ones hurt - us the consumers. Thank you EU for another of your moronic decisions. No wonder England left.

Please, enlighten me why it is a moronic decision!

 

[Cineplex]

Good! I hope it drains the cash reserve enough for them to actually make good products again. If your not sitting on a large pile of cash...you might not be able to risk selling Macs with 3 year old tech in them for a premium. Timmy might actually have to put some thought into product design and not release the same iPhone every year. I really hope the EU sticks it to them.

 

[ibookg409]

will the iPhone 7 be $300 more to compensate?

For the base model...

 

[dampfnudel]

I wonder which economic zone won't be recieving any iProducts this holiday season...

With the iPhone 7 being a meh update, Apple needs all of the economic zones it has. Then again, a lot of iPhone users in Europe will probably switch to Android or will at least begin contemplating it if Apple doesn't hit a homerun with next year's iPhone.

 

[KALLT]

That's odd. Does that mean that every foreign company in Ireland will be hit with back taxes as well?
[...]
Does that imply that every favorable government tax rate may be in violation of EU regulations?

No, but it is of course possible that other cases are investigated. Ireland made individual deals with Apple, in other words, they weren’t treating companies the same to begin with. This ruling is not all that shocking from the perspective of state-aid law. It is always a possibility that the Commission may find that grants and tax breaks are illegal state aid, unless it declared so otherwise.

I mean, does the commission even have jurisdiction over this?

Yes, competition law is an exclusive competence of the EU. The Commission does delegate a lot of responsibility to the Member States, but it can always intervene, especially when it considers that the Internal Market as a whole is affected.

 

[bsolar]

That's odd. Does that mean that every foreign company in Ireland will be hit with back taxes as well?

The issue is not about being taxed in Ireland but about Ireland giving a selectively lower taxation to Apple and such Apple-ad-hoc taxation being considered state aid.

 

[ozaz]

world war III won't involve bombs - its going to be a war of taxes. So I assume the European union wants the U.S. to raise taxes on European companies doing business here. Who ultimately will be the ones hurt - us the consumers. Thank you EU for another of your moronic decisions. No wonder England left.

Which European companies get away with 2% tax in the US?

 

[a.gomez]

I wonder which economic zone won't be recieving any iProducts this holiday season...

Right, because who needs the 44billion in net sales in the EU. They tried to avoid taxes, it didnt work... Now they will pay up. Make "only" 30 billion or whatever - End of story

 

[shk718]

Please, enlighten me why it is a moronic decision!

who do you think will ultimately pay that increased tax rate? the consumer! Ireland had a great deal with foreign companies and got a ton of money - now - apple, and others, have no reason to be there - so they can pick up and go elsewhere - so Ireland will get screwed. tax tax tax tax tax - lets just tax everyone to death - build up our militaries and blow each other up. How much tax dollars do countries really need?

 

[usarioclave]

The issue is not about being taxed in Ireland but about Ireland giving a selectively lower taxation to Apple and such Apple-ad-hoc taxation being considered state aid.

How many other ad-hoc deals are there? And what's considered an ad-hoc deal? The Double-Irish methodology isn't an Apple exclusive, as far as I know, and it existed long before Apple.

It'll be fascinating how this plays out over time.

For example, to whom does Apple owe tax? The EU? The member nations? Ireland?