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

Discussion in 'Politics, Religion, Social Issues' started by MacRumors, Aug 29, 2016.

  1. MacRumors macrumors bot


    Apr 12, 2001

    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.
    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.

    Note: Due to the political nature of the discussion regarding this topic, the discussion thread is located in our Politics, Religion, Social Issues forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

    Article Link: European Commission Rules Apple Received Illegal State Aid From Ireland, Owes Billions in Back Taxes
  2. Bbqthis macrumors 6502a


    Apr 12, 2015
    Bay Area, CA
  3. jkcerda macrumors 6502a


    Jun 10, 2013
    Criminal Mexi Midget
    will the iPhone 7 be $300 more to compensate?
  4. justperry macrumors G3


    Aug 10, 2007
    In the core of a black hole.
    So, consumers should pay it instead of shareholders?
  5. Alumeenium macrumors regular

    May 15, 2013
    I wonder which economic zone won't be recieving any iProducts this holiday season...
  6. usersince86 macrumors 6502


    Oct 24, 2002
    Columbus, Ohio
    No matter where you live, the tax man cometh...
  7. NT1440 macrumors G4


    May 18, 2008
    Hi, welcome to America, you must be new here. ;)
  8. needfx, Aug 29, 2016
    Last edited: Aug 29, 2016

    needfx macrumors 68040


    Aug 10, 2010
    macrumors apparently
    Good job EU, I sincerely hope it is in the 21B neighbourhood, even though I am an apple fan.
    2% taxation is ridonculous
  9. shk718 macrumors 65816

    Jun 26, 2007
    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.
  10. usarioclave macrumors 65816

    Sep 26, 2003
    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.
  11. wschutz, Aug 29, 2016
    Last edited: Aug 29, 2016

    wschutz macrumors 6502

    Jun 5, 2007
    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 ;)

    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.
  12. HJM.NL macrumors 65816


    Jul 25, 2016
    Its called THE Apple tax :eek:
  13. syan48306 macrumors 6502a


    Apr 15, 2010
    Just jack up the prices of the iPhones in Europe to cover that 21.2 billion deficit. ;)
  14. leroypants Suspended

    Jul 17, 2010
  15. Nozuka macrumors 68020

    Jul 3, 2012
    no. they'll just reuse an old design and remove the headphone jack to save money ;)
  16. justperry macrumors G3


    Aug 10, 2007
    In the core of a black hole.

    Please, enlighten me why it is a moronic decision!
  17. Cineplex macrumors 6502a


    Jan 1, 2016
    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 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.
  18. ibookg409 Suspended


    Apr 20, 2016
    Portsmouth, NH
    For the base model...
  19. dampfnudel macrumors 68030

    Aug 14, 2010
    Brooklyn, NY
    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.
  20. KALLT macrumors 601

    Sep 23, 2008
    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.

    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.
  21. bsolar macrumors 6502a

    Jun 20, 2011
    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.
  22. ozaz macrumors 65816

    Feb 27, 2011
    Which European companies get away with 2% tax in the US?
  23. a.gomez macrumors 6502a


    Oct 10, 2008
    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
  24. shk718 macrumors 65816

    Jun 26, 2007
    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?
  25. usarioclave macrumors 65816

    Sep 26, 2003
    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?

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