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

[gnasher729]

"Legally evade" is an oxymoron.

If a company or person pays exactly the tax they owe under the law, they are not evading anything.

That's the difference between tax avoidance = legal, and tax evasion = illegal.

I disagree. If someone has stolen something and resells it, who is at fault? It's obviously the person who stole it. You could ask the person who it was resold to for it back (and they can reasonably ask for their money back, in exchange), but I wouldn't think you can force them to do so.

You can't become the owner of stolen goods. If you buy goods from a thief, and the legitimate owner finds you, you have to return the goods to them without any compensation. You may ask the thief for your money back, or even take the thief to court; good luck with that.

 

[Jambalaya]

I'm sick of the British, and the EU, blaming the Irish for all their problems. It borders on racism, and it's time for it to end.

Pretty much the whole of the EU is fed up with Ireland and Luxembourg whose tax laws enable these hugely profitable companies to dodge taxes. We (I am British) are not racist to towards the Irish, my government and the EU helped to bail the Irish out when their country was close to bankrupt in 2008.

Apple should pay Irish taxes on profits for kit sold in Ireland, British taxes on kit sold in the UK, French, German taxes etc etc

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Obviously I love Apple, but ALL companies should be required to pay taxes. And Apple isn't the only company doing this, so I'm glad the EU might toughen their policies. I wish the U.S. would close the loopholes that allow U.S. companies to pretend to be located in other nations.

The US government actually stood up to a number of large US pharmaceutical companies recently which where trying to rebase themselves abroad to avoid US taxes (you can google "tax inversions"). Well done I say.

The UK government has outlined a proposal to ensure tech companies pay the right amount of tax, it's been christened the "google tax" but everyone is at it inc facebook which books all its ad revenue offshore

 

[tatonka]

I disagree. If someone has stolen something and resells it, who is at fault? It's obviously the person who stole it. You could ask the person who it was resold to for it back (and they can reasonably ask for their money back, in exchange), but I wouldn't think you can force them to do so. Similarly, if there's a fault here somewhere, it's with Ireland. You can't blame Apple for buying what was being sold. Doing so seems like it would just produce a lot of mistrust all around in the market. Oh, don't buy products anymore, the government is going to undo your transactions and fine you for having the audacity to spend money. Also, the EU is going to fine your government which is going to result in a raising of your taxes.

Actually you have exactly that right. If a good was stolen it doesn't matter that you bought it or from whom. It still is owned by the person who it was stolen from and you will have to return it.

 

[linkgx1]

Apple just needs to change their name to Applegate. And the new spokeswoman will be Christina Applegate.

 

[2457282]

EU regulations exist in order to ensure a level marketplace. If Apple receives illegal state aid, it skews the competitive landscape. This is wrong for a multitude of reasons.

There is no retroactive law being applied here. If you receive illegal state aid, it may - under law which was applicable at the time - be recovered. In this case, it is limited to 10 years, or from 12 June 2003. Apple may have to pay this back:

The Commission wishes to remind Ireland that Article 108(3) of the Treaty on the Functioning of the European Union has suspensory effect, and would draw your attention to Article 14 of Council Regulation (EC) No 659/199935, which provides that all unlawful aid may be recovered from the recipient.​

http://ec.europa.eu/competition/state_aid/cases/253200/253200_1582634_87_2.pdf
​

I would recommend that you read the letter from the commision as well as the applicable regulations.

I understand the law as you have explained. I guess I am not clear if Apple did anything illegal. A company has the right to negotiate with another company for goods or with a state for tax breaks. There is nothing illegal with that. If Apple knowingly entered into a contract that was illegal due to EU regulations then I agree that should get punished, but if Apple simply negotiated well and it was Ireland that acted knowing they were violating the EU regulations then why should Apple have to pay? I don't know the details, but it sounded from this article that the EU found that Ireland did wrong, not Apple. But if I misunderstood and it found that Apple knowingly colluded in the violation then I have no issue with them paying.

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Well I believe one of the findings was that Apple negotiated these rates using jobs as leverage. Which wouldn't exactly make them completely "innocent." Did Ireland have to take the deal? No. But it sounds a bit conspiratory to me on both ends.

Apple using all LEGAL means to negotiate a better tax break including the promise of jobs is okay in the EU and other free market oriented countries. I have no issue with Apple dangling jobs as a way to get a better rate. The question is did Apple know that what was being offered was illegal by EU regulations or if it was just Ireland. Apple should only pay for their own crimes not for those of Ireland. If Apple knew, then pay, otherwise, it is a problem between Ireland and the EU to resolve I would think.

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Your explanation conveniently overlooks the glaring fact that Ireland didn't make an alleged illegal deal with Ireland. It takes two parties to make a deal. If it is deemed illegal then the profits made by tax manipulation are illegal. Rarely do offending parties get to keep the illegal gains. Do you think an exception should be made because it's Apple?

Bolded: fixed your quote since you seem to be implying Ireland acted alone.

If Apple KNOWINGLY entered into an illegal contract then I agree with you. But if they entered in good faith and it was IRELAND that acted alone in proposing/accepting a deal they knew was illegal, then punishing Apple seems unfair. Where is the punishment for IRELAND? Why wouldn't they have to pay? In the end I will agree with you if it is proved that Apple colluded. But at a minimum you must agree that Ireland did wrong and should be liable for something.

 

[Daalseth]

Not Just Apple

On the BBC business report they were talking about this and made two significant points.

First this isn't just Apple. they mentioned Fiat and "a large number of other international companies" that were notified of the investigation. They did however, go on to say that only Apple was likely to get hammered by the press over it. (It's comments like the latter that make me like the BBC.)

Secondly they mentioned that while they were notifying the companies involved, the investigation was actually into what the Government of Ireland may have done wrong. It was to see if Ireland violated EU rules about government subsidies to corporations.

I'm not sure if this will, in the end, harm Apple or the other companies. Now if it were the US I wouldn't bet on it. I can think of a couple of cases where US courts or the IRS declared particular dealings illegal and then fined the companies that used them in good faith. In others they have raised taxes retroactively. In others rather than going after the companies that did something wrong, they've gone after their customers and in some cases their customers customers whop knew nothing of the illegal behavior. I heard of several businesses that went bankrupt over this sort of BS.

I'd trust the EU long before I'd trust US courts, especially US Tax Courts.

 

[tmanto02]

TAX Gate

Congratulations

 

[tevion5]

You are right, Apple (and Starbucks and all the others) had absolutely nothing to do with this. In fact, they were forced by Ireland to take this route

I hope you are sarcastic?

If not, you realise it is unlikely Apple was like:

Apple: "Hey Ireland, I'll continue to pay the normal tax rate even though I don't have to, just to be nice. I love when I earn less money. Billions less, that is. Just for the lolz."

Ireland: "You want to stay here and give us loads of tax revenue? I won't stand for it! We're in serious recession and need money like a fish needs water but we can't stand to see you lose another penny. I'll arrange a tax dodge for you and I'll hear no more about it!"

 

[whooleytoo]

If Apple is forced to pay billions in unpaid / underpaid taxes - who gets it? Ireland, because it was they who undercharged? The EU, because it was they who brought the issue to a head? The US, because much of the revenue probably stemmed from there?

If Ireland were to receive a multi-billion windfall from this, it would be a little ironic!

 

[ArtOfWarfare]

You can't become the owner of stolen goods. If you buy goods from a thief, and the legitimate owner finds you, you have to return the goods to them without any compensation. You may ask the thief for your money back, or even take the thief to court; good luck with that.

Ah, I see, so I can't actually buy anything. I can't buy something from Walmart, because they may have stolen it and now I'm liable for it. Hell, I should go out and steal stuff and then resell it with this logic - nobody will consider me, the criminal, responsible. Of course, it's kind of useless to have money in this world that you're imagining because you can't legally buy anything with it, so there's no point in selling it.

Basically, we're saying that every item that anyone owns is actually illegally obtained and that for all to be just, we should rid ourselves of all of our belongings and return it to the Earth.

 

[A MacBook lover]

This month continues to get worse for Apple.

You must be waiting hitting refresh just so you can post the most sensationalized comment first.

 

[brianvictor7]

They can whine about it all they want but when it comes to money, the attorneys at Apple will do what is technically legal. If governments don't like it, they need to change the laws instead of complaining.

 

[Reason077]

Apple should pay Irish taxes on profits for kit sold in Ireland, British taxes on kit sold in the UK, French, German taxes etc etc

This is an absurd idea. It would probably never work and would never be enforceable in practice.

Firstly, Apple already pays huge amounts in taxes on the products it sells in each country in the form of VAT or sales tax. This generates far more revenue for governments than taxes on profits (e.g. corporation tax) ever would. Sales taxes are simpler to implement, difficult to evade, and (arguably) fairer than other forms of taxation.

Secondly, to flip this around, suppose you started a company in Britain. You toil away for some years developing the product. You hire some bright young graduates from the government-sponsored UK education system. Perhaps you receive some government-sponsored innovation grants. Finally, the product is ready. There's a lot of demand from customers in the USA, so you set up a subsidiary to sell the product there. It's a big market, so perhaps 75% of your sales end up coming from the USA. Does that mean that 75% of your profit should be taxed in the USA? Of course not! All the effort that went in to developing that product happened in Britain, so it's entirely fair that is where the profits should end up.

Finally, this would be a bureaucratic nightmare to implement. It would make it more costly to do business in foreign countries, and would be a serious impediment to international commerce. Costs on imported products would rise, if they were available at all - many companies probably just wouldn't bother.

 

[Oletros]

but if Apple simply negotiated well and it was Ireland that acted knowing they were violating the EU regulations then why should Apple have to pay? I don't know the details, but it sounded from this article that the EU found that Ireland did wrong, not Apple. But if I misunderstood and it found that Apple knowingly colluded in the violation then I have no issue with them paying.

It doesn't mind if Apple did anything ilegal, if they received an ilegal aid they have to return it, as it has been mandated a lot of times in other situations like this.

 

[Nunyabinez]

Steve would have never allowed this. Oh.. Wait...

 

[phillipduran]

Really? I figured EU laws were below local laws... it seems quite odd to me that nations would choose to join if it meant giving up some of their own sovereignty.

Yes, there is no one that cares about your nation like the ones that live there. Give up your sovereignty to regional or global power and you're going to be on the losing side.

Nations and cultures are just too different to be under 1 umbrella.

 

[winston1236]

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.

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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

I agree wholeheartedly.

 

[ItWasNotMe]

... Apple already pays huge amounts in taxes on the products it sells in each country in the form of VAT or sales tax...

No it doesn't, its the customer that pays the VAT or sales tax.

At most, Apple just acts as agent in collecting the tax that the customer is paying to the government.

 

[Oletros]

Firstly, Apple already pays huge amounts in taxes on the products it sells in each country in the form of VAT or sales tax. This generates far more revenue for governments than taxes on profits (e.g. corporation tax) ever would. Sales taxes are simpler to implement, difficult to evade, and (arguably) fairer than other forms of taxation.

VAT is not paid by Apple it is paid by consumers

 

[Reason077]

VAT is not paid by Apple it is paid by consumers

No, it isn't. As a consumer, I don't recall having to add up the prices of products I purchase and then paying 20% of that as tax. That would be very complicated, wouldn't it?

In fact, I own a UK business and I can assure you that it is my business that pays VAT to HMRC.

 

[ItWasNotMe]

No, it isn't. As a consumer, I don't recall having to add up the prices of products I purchase and then paying 20% of that as tax. That would be very complicated, wouldn't it?

In fact, I own a UK business and I can assure you that it is my business that pays VAT to HMRC.

You confuse acting as unpaid tax collector with paying the tax.

 

[ptb42]

At most, Apple just acts as agent in collecting the tax that the customer is paying to the government.

This is actually true for all types of corporate taxes.

Corporations don't print money. It comes from their customers.

Taxes are just another cost of doing business, and adds to the cost of products -- raising the price for customers.

 

[Oletros]

No, it isn't. As a consumer, I don't recall having to add up the prices of products I purchase and then paying 20% of that as tax. That would be very complicated, wouldn't it?

As a consumer, you pay the VAT and you don't recall having to add up because it is normally included in the final price. But every bill has the gross price and the VAT

In fact, I own a UK business and I can assure you that it is my business that pays VAT to HMRC.

No, you don't pay VAT, you pass the difference between the VAT collected and the VAT paid as a consumer to the government. But the

And if you have a consumer it is better that you read the law:

Value added tax is

a general tax that applies, in principle, to all commercial activities involving the production and distribution of goods and the provision of services.
a consumption tax because it is borne ultimately by the final consumer. It is not a charge on businesses.

charged as a percentage of price, which means that the actual tax burden is visible at each stage in the production and distribution chain.

collected fractionally, via a system of partial payments whereby taxable persons (i.e., VAT-registered businesses) deduct from the VAT they have collected the amount of tax they have paid to other taxable persons on purchases for their business activities. This mechanism ensures that the tax is neutral regardless of how many transactions are involved.

paid to the revenue authorities by the seller of the goods, who is the "taxable person", but it is actually paid by the buyer to the seller as part of the price. It is thus an indirect tax.

http://ec.europa.eu/taxation_customs/taxation/vat/how_vat_works/index_en.htm

 

[KPOM]

No, it isn't. As a consumer, I don't recall having to add up the prices of products I purchase and then paying 20% of that as tax. That would be very complicated, wouldn't it?

In fact, I own a UK business and I can assure you that it is my business that pays VAT to HMRC.

Ultimately, the cost is borne by consumers, though. Arguably, that's true of most taxes (some are borne by shareholders and employees).

The goal of a VAT is similar to that of a sales tax. However, by collecting it at each stage of production, VAT is more difficult to evade or avoid. It is also more complicated to administer.

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The US government actually stood up to a number of large US pharmaceutical companies recently which where trying to rebase themselves abroad to avoid US taxes (you can google "tax inversions"). Well done I say.

The UK government has outlined a proposal to ensure tech companies pay the right amount of tax, it's been christened the "google tax" but everyone is at it inc facebook which books all its ad revenue offshore

No, what the US has done is essentially discourage foreign investment in the US. We can have a whole thread on inversions, but what companies were trying to do with inversions is find a way to bring money earned overseas back to the US without paying additional US taxes on it. A UK company can transfer money it earns in Hong Kong to a subsidiary in the US to expand operations without paying US taxes on it. A company domiciled in the US can't. That puts American companies at a disadvantage.

Inversions do not prevent companies from paying US taxes on money actually earned in the US. There is nothing illegal about them, either. The tax code has a specific provision allowing them if specific conditions are met. Those conditions were added in 2004 as part of a temporary reduction of the "repatriation tax."

 

[sransari]

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.

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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

When you file your taxes, do you claim dependents, take deductions (either the standard deduction or itemized), file a joint return, etc.? Do you contribute to your 401k, an HSA, a 501, etc.? If so, you are guilty of "tax avoidance." A business exists to make money. Part of making money = minimizing expenses. Tax = expense.

I'm pretty tired of the suggestion that somehow our country wouldn't be in such debt if conglomerates like apple "paid their fair share." What a load of crap. As if lack of income is the government's problem, rather than out-of-control spending on wars, waste, fraud, and abuse.

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No, it isn't. As a consumer, I don't recall having to add up the prices of products I purchase and then paying 20% of that as tax. That would be very complicated, wouldn't it?

In fact, I own a UK business and I can assure you that it is my business that pays VAT to HMRC.

Taxes are always paid by the consumer. Tax is a business expense that gets passed on to the consumer in order for a business to make a profit (fancy word for money). How can you own a business without understanding that Profit = Revenue - expense?