European Union Accuses Ireland of Giving Apple Illegal State Aid with Tax Deals

Discussion in 'Politics, Religion, Social Issues' started by MacRumors, Sep 30, 2014.

  1. MacRumors macrumors bot


    Apr 12, 2001

    The European Commission today announced the results of its formal investigation into Apple's tax arrangements in Ireland, accusing the company of receiving illegal state aid from the country, reports The Wall Street Journal.

    In its findings, the regulatory body stated that deals between Apple and Ireland struck in 1991 and 2007 helped Irish authorities "confer a selective advantage upon Apple" that resulted in a lowering of its tax liability. The Commission also added that Apple's increase in sales for its business in Ireland appear to be inconsistent when related to comparable operating costs that would come with growth. Furthermore, the Commission notes that there was a reported increase in "sales income" by 415%, but states that most of the profit-generating work was done elsewhere.
    Apple's tax policies have been questioned on numerous occasions throughout the past few years, as the company is said to utilize multiple subsidiary companies located in the Irish city of Cork to move money around without significant tax penalties. This in due in part to an exemption in the region's law, which allows companies that are managed abroad but located in Ireland to be exempt from taxes. CEO Tim Cook defended the company's tax practices in 2013, calling for a tax reform and simplified corporate tax policies along with lower rates for repatriation.

    Apple and the Irish government will now have one month to respond to the findings published in the Commission's reports, as the case will likely take up to 18 months to reach a conclusion. In addition to its findings regarding Apple and Ireland, the European Commission also announced that it is investigating state aid cases involving coffee company Starbucks and car maker Fiat and their arrangements with the Netherlands and Luxembourg, respectively.

    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 Union Accuses Ireland of Giving Apple Illegal State Aid with Tax Deals
  2. Macboy Pro macrumors 6502a

    Feb 16, 2011
  3. Jambalaya macrumors 6502a

    Jun 21, 2013
    About time too. The EU should fine Ireland a multiple of taxes lost, in the same way European companies are subject to such fines in the US. It is time for this to end.


    To be honest it's not really Apple's fault. if you are a business and a country offers you a fantastic sweetheart deal what are you going to say ?

    Taxes should rise for Apple and by a lot. The US tax authorities are rightly very unhappy with the use of tax avoidance techniques by Apple, in particular sheltering their international profits abroad and paying very little tax on them either via deal likes the one with Ireland
  4. Jsameds macrumors 68040

    Apr 22, 2008
    No doubt Apple will get shot down in the press for this despite other companies doing the same thing, and also the fact Ireland is responsible.
  5. T'hain Esh Kelch macrumors 601

    T'hain Esh Kelch

    Aug 5, 2001
    I am having a hard time seeing how the EU can actually go through with this, if Apple follow the laws of Ireland?
  6. wilky76 macrumors regular


    Oct 9, 2013
  7. tevion5 macrumors 68000


    Jul 12, 2011
    Ireland relies on US tech companies for the a large amount of our GDP and jobs. If we didn't off these deals it would entice many of the companies away. The government makes these deals and you would think it fair to ask us Irish tax payers for FURTHER tax hikes to pay back the EU on damages? It's the only industry we really have.

    It's Bermuda making the bulk of the profit here. It's their tax laws are the problems. Get rid of the tax havens and that will make this things more tricky for the multinationals.
  8. whooleytoo macrumors 604


    Aug 2, 2002
    Cork, Ireland.
    Not good, for Apple or Ireland.

    To be honest though, it does piss me off that Ireland already has one of the lowest corporate tax rates in the world, but large companies are using every chink and flaw and limit in the law to get around even paying that. If the guy running a shop on the corner or the woman running a small software business is paying the full rate in a very difficult economic environment, so should Apple et al. If Apple gets a sweeter deal, so should everyone.
  9. vmachiel macrumors 68000

    Feb 15, 2011
    Because EU law supersedes national laws.
  10. whooleytoo macrumors 604


    Aug 2, 2002
    Cork, Ireland.
    Irish tax laws. They bend.
  11. MattJessop macrumors regular


    Apr 24, 2007
    Manchester, UK
    To be fair, the UK government has proposed a 'Google Tax' against things like this. And you tend to see more negative news regarding Starbucks or Amazon for tax avoidance in the UK, so it's not exclusively against Apple.

    The truth is that Apple is a big company, and that means press, both good and bad, will always get more attention.
  12. 2457282, Sep 30, 2014
    Last edited: Sep 30, 2014

    2457282 Suspended

    Dec 6, 2012
    I personally do not see that Apple did wrong. They got a good deal and leveraged it. If the EU deems what Ireland offered to be illegal, I guess they can void the deal. However, doing so retroactively would be wrong. It should only be going forward. Apple can then decide what to do for tax shelters moving forward, but paying back taxes seems to penalize Apple for the "illegal deal" made by Ireland.
  13. LostSoul80 macrumors 68020


    Jan 25, 2009
    Was about time, although the EU will probably end up doing nothing at all.
  14. whooleytoo macrumors 604


    Aug 2, 2002
    Cork, Ireland.
    It's true that other companies do likewise, I've heard rumours of other multinationals setting up token offices here in order to funnel revenue through the country. At least Apple over the years has done a huge amount of work here - PCB manufacture, assembly, hardware engineering, software engineering, QA, localisation, distribution, sales, support etc.

    On the flip side though, Apple was among the first to create/use tax avoidance techniques like the "Double Irish". If anyone gets in trouble first for this, it'll be them.
  15. Lictor macrumors 6502

    Sep 13, 2008
    It's not just Apple... Most of the major companies, like Amazon, I currently under scrutiny by the European Union...
  16. pik. macrumors 6502


    Feb 4, 2008
  17. H2SO4 macrumors 601

    Nov 4, 2008
    If you are a business you make sure you have done due diligence and aksed the right questions of the right people and have copies of the right documents so that you are absolved when the tax man catches you up.
    He will catch you up.
  18. bandrews macrumors 6502a

    Jul 18, 2008
    To be fair though, they do apparently employ around 4000 people in Cork - which is around 3% of the population. That would be a fair chunk to lose if they decided to relocate. Add in other major multinationals in Ireland for the same reason and you'd have quite an unemployment bubble bursting.

    When you look back to how knackered the Irish economy was after the banking crash, it would be wise to not rock the boat too hard, too quickly.

    This in no way defends the morally dubious practice of tax avoidance. While some methods may be legal any company with an iota of ethical conscience should pay their fair share.

    Apple's value is about three times the GDP of Ireland. I'm sure they can contribute a little more without upsetting too many shareholders.
  19. Kebabselector macrumors 68030


    May 25, 2007
    Birmingham, UK
  20. RobQuads macrumors regular

    Jul 11, 2010
    The key thing is this is not Apple fault this is Ireland. They wanted the business bad and the question is did they go to far.

    You can't punish apple for going the cheapest legal route (for them that is)
  21. Dagless macrumors Core


    Jan 18, 2005
    Fighting to stay in the EU
    Nothing to add, just an applaud.
  22. atomwork macrumors regular


    Jun 5, 2001
    Miami Beach
    I think this issue should have been discussed by the EU many years ago. It's one of those many loopholes that make it too easy for big business to funnel money across the globe. Not to say this is a negative, but every other little worker on earth has to declare their earnings correctly month by month.

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