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

[H2SO4]

Was it illegal for Irelamd to offer that aid? If not then what did Apple do wrong by taking it, other than act like any business in the game of maximizing profit.

Oh My God, how many times?
If you suspect a deal to be illegal and you close your eyes to it you are guilty by association.
[doublepost=1472536218][/doublepost]

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?

Maybe Aple and Ireland had concoted such a cover up it was difficult to find the evidence?
[doublepost=1472536365][/doublepost]

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

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

There, fixed that for you.

 

[HiRez]

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

I really wish Apple would stop spouting this nonsensical argument. They are the most profitable public company in the world, they should be the largest tax payer. That argument has nothing to do with whether they're paying their fair share of taxes or not. A very misleading, diversionary defense.

 

[bsolar]

Was it illegal for Irelamd to offer that aid? If not then what did Apple do wrong by taking it, other than act like any business in the game of maximizing profit.

That's why I don't think Apple will be fined. Note that paying back what is due is not "punishment" even if it looks like it: if I paid less taxes than due because of a mistake not on my part but by my tax authority, if they discover it in time it might be that I'll still have to pay the due taxes I didn't pay, but of course without fines on top of that.

 

[weckart]

That's why I don't think Apple will be fined. Note that paying back what is due is not "punishment" even if it looks like it: if I paid less taxes than due because of a mistake not on my part but by my tax authority, if they discover it in time it might be that I'll still have to pay the due taxes I didn't pay, but of course without fines on top of that.

Back payment of taxes usually incurs an appropriate interest charge to account for the time value of money due but it remains to be be seen how the EU has calculated how much Apple has to refund the Irish Exchequer.

 

[Jax44]

I believe Apple has kept aside the funds to account for this possibility.

 

[Ramchi]

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?

I agree except that the Irish-Apple deal was selective! If Irish government extends this to all then it is a different story

 

[Mildredop]

Time for the soon-to-be independent UK to do a deal with Apple.

 

[macgabe]

The point that everyone seems to be missing is that any money that goes to Irish or EU coffers is money (at least 25% of which) that was destined for the US taxman. So the US Treasury is furious!

The longer the $200b+ cash hoard stays in Europe, the more likely it is going to be the target of EU governments hoping to find some much needed cash to fix their deficits.

This puts further pressure on the IRS to offer an amnesty or reduced tax rate for repatriation, which they should have done years ago. The alternative is enter to into a tax arms race, by imposing punitive sanctions on EU companies.

The problem is the US already punishes European companies far more severely than US companies (eg BNP or BP) with tens of billions in fines, while EU fines are negligible by comparison. And the US already taxes EU companies at the full rate for all earnings in the US, which, again, the EU often does not do.

So it's hard to see how more aggressive the US can get here, but I'm sure they'll find a way.
[doublepost=1472551141][/doublepost]Breaking: $13 b is the number! Wow.
[doublepost=1472551262][/doublepost]For context $13b is 40 times bigger than the previous largest demand by the European Commission
[doublepost=1472551631][/doublepost]Ireland could soon be swimming in money - Google, Facebook, Dell, Microsoft, Medtronic, Covidien and hundreds of other companies - Ireland could be owed hundreds of billions in back taxes, this is amazing. The US could lose tens of billions in taxes from this ruling.
[doublepost=1472551675][/doublepost]Luxembourg could also be a major beneficiary.

 

[thekev]

This puts further pressure on the IRS to offer an amnesty or reduced tax rate for repatriation, which they should have done years ago. The alternative is enter to into a tax arms race, by imposing punitive sanctions on EU companies.

They did it in 2004. It was deemed a failure. The WSJ wrote about this in retrospect, but their article isn't that interesting. I don't expect it to happen again. It's a bad idea when they don't know what to do with tax policy, as it just begins a new cycle. The US isn't really lacking in liquidity of any kind, so I don't see what would motivate them to grant tax amnesty.

 

[MRU]

RTE

"The Revenue Commissioners is to collect up to €13 billion from Apple following the EU’s investigation into the company’s tax arrangements in Ireland.

The money will be managed by the National Treasury Management Agency here.

Minister for Finance Michael Noonan will seek Government approval to appeal the decision tomorrow.

In a statement the Government said it “disagrees profoundly with the Commission’s analysis. Ireland did not give favourable tax treatment to Apple.”

It added: “Ireland does not do deals with taxpayers. No fine or penalty has been levied against the Irish State. This decision has no effect on the 12.5% rate of corporation tax and is not about Ireland’s wider corporation tax regime.”

Apple will also appeal the decision.

Both appeals will be made first to the General Court of the European Union in Luxembourg and then to European Court of Justice.

At the centre of the Apple controversy are two of the company’s subsidiaries.

These firms were registered in Ireland, however, they were controlled in the US where they held their board meetings.

The companies were called Apple Operations Europe and Apple Sales International. The Revenue Commissioners taxed the companies on the basis of their activities in Ireland.

However, the finding by the European Commission says both companies should have been taxed by Ireland on the basis of their world-wide income.

The ruling applies to the companies’ activities from 2004 to 2014.

The Revenue Commissioners in Ireland has been mandated to calculate the amount of outstanding tax due.

In 2014 the Government closed the so-called Double Irish loophole, which has now prevented State-less companies from having to pay tax."

 

[apolloa]

This has made me chuckle, the EU has rulled Ireland to collect 13 billion Euros from Apple in back taxes, it rulled Apple was paying the equivalent of just 1% in corporation tax!!


http://www.bbc.co.uk/news/business-37220799

 

[Cybbe]

The European 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.

Commissioner Margrethe Vestager, in charge of competition policy, said: "Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules. The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014."

People interested in this decision should the press release in full:

http://europa.eu/rapid/press-release_IP-16-2923_en.htm

Some relevant articles:
http://www.ft.com/fastft/2016/08/30...n-of-undue-benefits-european-commission-says/
http://www.bloomberg.com/news/artic...d-apple-undue-tax-benefits-local-media-report

 

[Padaung]

[doublepost=1472551631][/doublepost]Ireland could soon be swimming in money - Google, Facebook, Dell, Microsoft, Medtronic, Covidien and hundreds of other companies - Ireland could be owed hundreds of billions in back taxes, this is amazing. The US could lose tens of billions in taxes from this ruling.
[doublepost=1472551675][/doublepost]Luxembourg could also be a major beneficiary.

Breaking news: It may be possible for the countries where the sales were conducted (before the cash was moved to Ireland) can claim a slice of the pie.
https://twitter.com/tconnellyRTE/status/770565721281662980

 

[MarkusL]

Ireland could soon be swimming in money - Google, Facebook, Dell, Microsoft, Medtronic, Covidien and hundreds of other companies - Ireland could be owed hundreds of billions in back taxes, this is amazing. The US could lose tens of billions in taxes from this ruling.

Or the US could gain tens of billions if multinationals operating from the US lose the opportunity to hide their assets in tax havens.

 

[shk718]

You can set your clock when the (USA) Empire strikes back.

Anything done retro actively is bad anyway, as there is no defense.

I think EU has a much bigger battle to fight to convince Ireland that what it allows is illegal.

They have no major industry to speak off, but have a lot to offer in well educated engineers etc.

In the end Apple will get a slap on the hand, pay a few million to make the EU look good and then it's on to business as usual.

My guess is that both Apple and Ireland will exhaust this until there is no higher court.
[doublepost=1472500075][/doublepost]

Unlimited, as most of them waste more than they do good, by not moving their people into this century. (Greece etc.).

True

 

[needfx]

so, 13B is the number, before appeals and whatnot

 

[tentales]

...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.

This has been going on since the 1980s. Apple has used Ireland as a tax heaven, offshoring profits and on-shoring costs or losses. Even the modest 12.5% tax rate "average" businesses pay in Ireland is too much for Apple. They've negotiated tax benefits that are close to zero. Always on the back of the old "we're creating jobs" argument. Yea... China jobs, not Irish ones, apart from some tax attorneys.

Never mind that the US looses out completely on taxing Apple. Joe Plumber's business pays 35% or more in taxes, while big Delaware corporations pay 0% - 2%. Fair, right ?

Here's a nice list of tax dodgers, despite TC's grin to claim Apple isn't. They are the biggest tax dodger of all.
http://www.marketwatch.com/story/if...er-most-of-the-us-education-budget-2016-07-27

 

[weckart]

The point that everyone seems to be missing is that any money that goes to Irish or EU coffers is money (at least 25% of which) that was destined for the US taxman. So the US Treasury is furious!.

As Apple had zero intention of repatriating its cash cow, funded by EU taxpayers no less, I see no reason why the IRS feels cheated out of monies that were never forthcoming, let alone belonged to it.

The only people who are going to be hurting are the shareholders, who turned a blind eye to this dodgy deal because they benefited from it.

Microsoft used to be the big bad company that ran roughshod over rules and relegations because it could. How soon things change. I hope this is the first of many rulings of this sort. Too many companies seem to think they are too large or too important to play by the rules that little people have to abide by.

 

[MRU]

Both the Irish Government and Apple will be appealing to the european court of justice. This will take up-to 6 or so years.

The Irish Government will not be collecting any money from Apple or have any windfall.

Any money given at this stage will have to be put into an escrow account and held pending any appeal judgment.

 

[Thunderhawks]

It's quite simple. Ireland chose to join the EU (for good reason). The EU forbids sweetheart tax deals for major corporations that would disadvantage the little guy (for good reason). Apple wants to avoid paying its legal share of taxes in the country where it's actually based, so it tried to take advantage of a loophole in Ireland and got swatted by the EU -- again, for good reason.

The EU, by the common consent of all its sovereign member states, including Ireland, has a right to regulate these kinds of shenanigans.

Yes, within the EU agreements they do, however where were they when Ireland made the sweetheart deals
and what did they do about it?

Blind?

I find it hard to believe that none of this was known and only triggered action after all this time. It is not only an Apple issue.

I worked for a company with a holding company in Switzerland and they funneled every $ they could there via licensing and upcharging for certain products, which would be billed from there.

That was before EU 35 years ago and guaranteed has been going on and will go on.

Most likely Ireland will leave the EU over this "retroactively" in 2003.

Apple will pay a little to make it look better and then retool and find the next tax haven.

All large companies do.

 

[dragje]

So paying what the government or Ireland asked you to pay is unethical? Remind me not to come play in your sandbox.

That's not what I wrote. It's unethical to abandon the EU rules that applies on each EU member. You simply can't state that for a given company, any, EU legislation is not relevant anymore, just because a given authority or company doesn't benefit from it.

Also unethical is the put my words out of context and put words in my mouth by doing so.

 

[cube]

Breaking: $13 b is the number! Wow.

Not $13B, 13 G€.
[doublepost=1472566604][/doublepost]This is almost the net payment of the whole UK to the EU in one year.

 

[shk718]

Turkey invites Apple to their country. Not that Apple will... http://appleinsider.com/articles/16...urages-apple-to-move-in-wake-of-eu-tax-ruling

 

[colourfastt]

From Business Insider:

"Back in 1991, Apple struck a tax deal with Ireland that was completely aboveboard and legal. The Irish government provided Apple with a "comfort letter" that said the company would pay very low rates of tax if it based its European operations in Ireland.

In the 25 years since, Apple has created thousands of jobs in Ireland. By 2015 it had 5,000 employees in the country. Another 1,000 jobs are planned for the headquarters in the Irish city of Cork. This year Apple will open its site near the town of Athenry, with another 200 jobs in the making.

The result of the deal between Apple and Ireland, intended or not, was pretty clear: Give us low taxes, and we will give you jobs. A note from a meeting between the government and an Apple tax adviser in 1990 said:

"Apple was now the largest employer in the Cork area with 1,000 direct employees and 500 persons engaged on a subcontract basis. It was stated that the company is at present reviewing its worldwide operations and wishes to establish a profit margin on its Irish operations."

Apple is now the single largest taxpayer in Ireland, so it has the kind of negotiating strength to get what it wants.

Apple has noted that its tax arrangements were agreed to repeatedly by Ireland's government. The European Commission itself says the agreements were legal, albeit mistaken. But Margrethe Vestager, the European Commission's competition commissioner, made Apple's Irish tax arrangements sound like a scam ..."

It sounds to me like the EU commissioner didn't like the deal .. not that the deal is illegal.

 

[cube]

Now Ryanair is ordered to repay aid to some airports in Europe.