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

[Markoth]

The ones which are responsible are Apple and their shareholders if they are found guilty, and do you really think Apple will raise prices again by quite a bit in Europe, don't think so because more and more people think iPhones are getting too expensive in Europe, even more people will go somewhere else, read Samsung or others.

Don't be surprised if services take even longer to come to Europe now. Not providing services for Europe (or delaying them) will be the likely way they choose to eat up the addition cost, without raising the price of their devices. Most Apple services are paid through iOS device sales.

 

[cube]

This is why I don't understand why countries remain in the EU. Why should a governing body in another country dictate the tax rates in another country?

That the EU offices are in another country is irrelevant. The Irish chose to be part of and have a say in the EU, the latter is not a dictatorship.

 

[jeffg819]

Ideally, a business should be mature* and accept the penalty for overt wrongdoing instead of pissing on the customers by jacking up rates, apart from the old phrase "what else is new" being thought of by millions of people at this point. But most people also know the iphone 4 (and 5, apparently) were sold despite antenna defects known to the CEO, who was prompt in blaming the customer in "holding them wrong" as the cause of the reception problems. Apple pulling that **** was bad enough to begin with... I've posted the links before and all sources were mainstream tech news outlets. Not esoteric or shrouded or requiring 3rd degree Wiccan priestess privileges to get at...

* ran by "grown-ups", for which Cook seems to be more of one than Jobs, but by how much still remains to be fully seen

In business, an expense is something to factor into the selling price. Taxes are an expense. And paying the government of Ireland the tax rate negotiated is not "overt wrongdoing". Not sure what's gotten under your saddle, but it's not based on facts.

 

[wschutz]

Don't be surprised if services take even longer to come to Europe now. Not providing services for Europe (or delaying them) will be the likely way they choose to eat up the addition cost, without raising the price of their devices. Most Apple services are paid through iOS device sales.

Ignoring half a billion potential market is simply stupid... but hey... if Apple ain't interested in the European market I am sure other companies will be happy to take over that piece of the cake

 

[jayducharme]

Let's see if now Apple considers bringing its Ireland operations back to the U.S. $21 billion could build a really nice corporate office stateside.

This appears to be a desperate cash grab by the EU. How come it's taken them so long to come to this conclusion when Apple has been doing business there for decades?

 

[Markoth]

Ignoring half a billion potential market is simply stupid... but hey... if Apple ain't interested in the European market I am sure other companies will be happy to take over that piece of the cake

How is delaying services equal to ignoring an entire population? Please think carefully before responding. Services already take longer to get to Europe. What I'm saying is that now they'll take even longer, if they even get there at all.

 

[mtneer]

will the iPhone 7 be $300 more to compensate?

They just removed the headphone jack - maybe they will just make the phone work with $300+ Beats only...

 

[macfacts]

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

Every other company in Ireland pays 12%, this is about Apple getting special deals in Ireland so that they pay 2%.

 

[jkcerda]

This is basic economics here. The price that customers are willing to pay doesn't change because of the companies tax rate. Obviously, a monopoly and related arrangements are the exception to the rule. Which is why they are controlled.

I still think they will increase the price & see if it flies. worked for Disneyland, same product just more expensive.

 

[frankgrimes]

That the EU offices are in another country is irrelevant. The Irish chose to be part of and have a say in the EU, the latter is not a dictatorship.

Well technically you are right but in fact it is some sort of dictation because Brussel a foreign city is telling other cities what they can do and what they can't. Altough I doubt Brussel and therefore Belgium knows better whats best for Ireland than they do.

I'm sure Apple will pay the fine but they are going to appeal and drag this out as long as they can, I could see them raise prices for the appstore bit and charge more for services which is sucks for the customers.

 

[vpro]

And... This is how Europeans don't have to pay for education/health etc and get many weeks of paid vacations.

This is how the rest of us are screwed out of all the above because huge multinational corporations steal from us

YAY. Justice.
[doublepost=1472516131][/doublepost]

I still think they will increase the price & see if it flies. worked for Disneyland, same product just more expensive.

Doesn't matter how high they raise their ridiculous prices, you're paying for ridiculous non sense anyways.

People won't learn They don't value the power of their money to vote away corruption on the corporate level. People always JUSTIFY why they should pay more, oh well, they raised the price, doesn't stop me, I'll just work harder (sticks out their tongues). YAY.

 

[frankgrimes]

The sad part about all of this is that Apple could simply decide to close their headquarters in Ireland and boom thousands are without a job.

So it's not just black and white.

 

[tomwvr]

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?

The USA should impose a new 100% tax on all EU items, and tell them to go screw themselves

 

[macfacts]

I never said what was fair and what wasn't fair. I don't know what Apple's deal with Ireland is - I doubt most of us do - tax's are extremely complicated - i'm not a tax accountant. What I said was Ireland decided how much in taxes they wanted from the companies doing business there. I'm sure they got other benefits besides the actual tax dollars - employment requirements, infrastructure ... The EU is now dictating what tax rates it's members must impose. They're sounding more and more like the U.S.

I don't think that's what is happening. From the first post summary, it sounds like it says all the other companies in Ireland are paying about 12 % and Apple in Ireland is paying 2%. Either everyone pays 12% or everyone pays 2%. They are saying no special deals allowed.

 

[swajames]

Well technically you are right but in fact it is some sort of dictation because Brussel a foreign city is telling other cities what they can do and what they can't. Altough I doubt Brussel and therefore Belgium knows better whats best for Ireland than they do.

I'm sure Apple will pay the fine but they are going to appeal and drag this out as long as they can, I could see them raise prices for the appstore bit and charge more for services which is sucks for the customers.

This is not how it typically works. Within certain parameters, EU member states are absolutely free to set their own rules around direct taxation (it is different for indirect taxes, but they are not the subject of the current discussion). Those "certain parameters" generally speak to matters such as double taxation or tax avoidance. One such matter which also gets the attention of the EU, as has happened here, is if a member state takes actions related to direct tax that could in the EU's view amount to state aid - and this is specifically because it can be viewed as anti-competitive, something which is itself a breach of EU rules and principles.

Some of the EU bashing in this thread is a little misplaced IMO as the EU to my mind is generally pretty transparent in requiring and promoting a free market with fair competition for companies based in or operating in the territories of the member states (this point not aimed at your post to be clear!)

 

[groovyd]

American companies get tax credits in the US for taxes paid elsewhere, so the US Government wants to grab all the money.

ok so that is what i thought. if the EU gets it then the US does not. who has the lesser tax rate, that's who i will root for?

 

[frankgrimes]

This is not how it typically works. Within certain parameters, EU member states are absolutely free to set their own rules around direct taxation (it is different for indirect taxes, but they are not the subject of the current discussion). Those "certain parameters" generally speak to matters such as double taxation or tax avoidance. One such matter which also gets the attention of the EU, as has happened here, is if a member state takes actions related to direct tax that could in the EU's view amount to state aid - and this is specifically because it can be viewed as anti-competitive, something which is itself a breach of EU rules and principles.

Some of the EU bashing in this thread is a little misplaced IMO as the EU to my mind is generally pretty transparent in requiring and promoting a free market with fair competition for companies based in or operating in the territories of the member states (this point not aimed at your post to be clear!)

Thanks great read and information. While I do like some aspects others just are seemingly unneccessary with the EU. What this should have been from the get go is just a contract to do business but never that big 800 pound gorilla known as the european union.

All we can do is speculate why Apple got that 2 % tax rate deal, maybe they promised to create workplaces or something like that nobody knows but I highly doubt Ireland would do that without expecting some sort of benefit from it.

 

[512ke]

Apple should stop keeping money in Europe or investing there, in my personal opinion.

Apple can't rely on deals it negotiates with EU member nations to stick years later.

 

[Tech198]

That's money in the bank...

Companies should not have a choice which country they prefer to pay higher or lower tax..

After all. customers don't have that choice, so why should businesses...

You set up shop in a country u abide by 'the law'

if u don't, why are u in the U.S ? just a tip for making great products, because Apple wants to keep most of the money instead of paying much tax then otherwise...

Proof of this reveals alone of the Apple campus 2 ..

 

[osaga]

Is this how it works? I googled but it's confusing.

Say you live in California, and you open a store in San Francisco and also one in France that sells the products that you make in China. The San Francisco store earns $100k in profits, and you pay 35% of that to the US government in income taxes. The French store also generates a profit of $100k, and you pay French income tax on it, say 30%. But if you then "re-patriate" your $70k in French after tax earnings back into the USA, then you pay 35% on that 70k and you're left with $45.5k of your original $100k. UNLESS your company isn't based in California, in fact you negotiated a deal with Ireland to host all of your company's international business dealings in exchange for a 2% tax rate. But you can't bring those profits home to California, unless you pay more US taxes on it.

Is that correct?

EDIT: No. after reading this:
http://blogs.wsj.com/digits/2014/09/30/how-apples-tax-structure-works/

It sounds like the French Apple store doesn't actually make any profit, because they pay a high cost for all the goods they sell. And Ireland doesn't count "Apple International's" income earned outside of Ireland as taxable income. In fact the payments to Apple International from the French Apple store, go straight to the cayman islands, and never pass through Ireland.

 

[unobtainium]

Do you realize corporations don't pay taxes. It's customers do. There is no such thing as a cost that can't be passed on to the consumer. Your anger will come back to you in short order.

Do you realize companies can't arbitrarily set prices? They can charge whatever the market will allow, i.e. what consumers are willing to pay. That's why corporate taxes can't simply be passed on, and therefore the tax will come out of corporate profits to one degree or another.

 

[kppolich]

Taking 35% of anything is absolutely ridiculous. This country doesn't deserve 35% of anything except the auto industry and banking industry that it bailed on in 2008.

Cities, States, and Countries all give special deals to people, businesses, and corporations in order to bring tax money INTO their region. This happens every day because everyone wants a piece of the pie and the truth is - Ireland was willing to take less of the pie with Apple (2%) compared to other nations that probably offered rates of 5% or 6%. Competition and special deals brought free money INTO Ireland - someone wining about it will take it right back out and to the next lowest bidder.

Why the U.S. doesn't lower or match the corporate tax rates of other other countries is beyond me. You really want to have ZERO money on part of the business rather than the ability to tax the entire business at a reasonable rate? That would encourage more businesses to stay in the country and more tax dollars for the government overall. Seriously, morons in Washington D.C. are literally letting this country hemorrhage money.

 

[ardent73]

The larger a company is, the more public resources it uses: roads, police, fire depts, healthcare and social programs for all of its employees, the bureaucracy that makes the market exist and run smoothly in the first place, education for all of its employees, not to mention all of the benefits that accrue to consumers in the European Union making it possible to buy an iPhone in the first place. The bigger you are, the more tax you owe, period.

Paying 2% is a slap in the face to people who are barely making a living and pay much more than that. It's shameful, and they should throw the book at them.

You just made the argument that businesses should pay no tax: Use of public resources is something that people (employees) use. Businesses are not directly taxed on the number of employees but on net revenue. Income doesn't use any public resources. An efficient tax system would not tax businesses in order to maximize employment of taxpayers. Business taxes are one causal factor of unemployment. If public sector employment goes up as private sector employment goes down that is not a wash. Public sector employees are parasitic to the private sector employees. (A beneficial parasite is still a parasite. The host and parasite need one another for both to live, but that doesn't change the relationship.) Don't be fooled by public sector employees also paying taxes, it doesn't change where the money came from in the first place. In conclusion, don't kill the goose that lays the golden eggs.

 

[cube]

And of course the EU bureaucrats are divenly ordained and have shimmering halos above their heads.

The EU is a democracy

Well technically you are right but in fact it is some sort of dictation because Brussel a foreign city is telling other cities what they can do and what they can't. Altough I doubt Brussel and therefore Belgium knows better whats best for Ireland than they do.

I'm sure Apple will pay the fine but they are going to appeal and drag this out as long as they can, I could see them raise prices for the appstore bit and charge more for services which is sucks for the customers.

Brussels is telling nothing to other cities.

The EU offices happen to be located there. Its officials come from all over Europe.

 

[unobtainium]

Use of public resources is something that people (employees) use.

That is...incorrect.

Do you think Apple would be able to function without the U.S. government? No roads, no security, no emergency services. I guess they'd build private fire stations and police stations? I guess the burden of educating and providing healthcare for employees and their families would fall entirely on Apple? And I guess their products would ship out by Apple-brand drones (since after all there would be no roads). But hmm..how would people PAY for Apple products without coinage? Come to think of it, how would they operate at all without a stable economy, financial regulations, trade agreements, law enforcement, and services and programs for the middle class that allow the middle class to exist and persist (after all, who else can afford to buy their overpriced phones?) And most fundamentally, what if Steve Jobs and the others who founded Apple had grown up in a country without all those things? Would they have founded it?

It seems like Apple makes great use of public resources, just like the rest of us. Let them pay for it in proportion, just like the rest of us.