U.S. Warns Apple Tax Probe in Europe Could Set 'Undesirable Precedent'

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Just weeks before the European Commission is expected to make a decision in its landmark Apple tax probe, the U.S. Treasury department has criticized the Brussels-based body for "threatening international agreements on tax reform," and warned that a decision against the iPhone maker could "set an undesirable precedent."

Apple's offices in Cork, Ireland

According to Financial Times, the U.S. Treasury said the European Commission is becoming a "supranational tax authority," going beyond acceptable enforcement of competition and state aid law. The U.S. has previously called out Brussels for setting unfair and "disturbing" precedents and singling out U.S. companies.

Brussels has accused Apple of sheltering tens of billions of dollars in Ireland, partly in exchange for creating jobs in the country, a deal that could be considered illegal state aid. Apple operates multiple subsidiaries in Ireland to pay significantly less tax outside of the U.S., where it earns up to two-thirds of its revenue.

Apple's $64.1 billion in profits generated from 2004 to 2012 could be subject to a higher 12.5% tax rate, compared to the sub-2% it has paid in Ireland, in which case it could owe more than $8 billion in back taxes. Apple insists that it is the largest taxpayer in the world and pays every cent of tax it owes under current laws.

A decision in the tax probe is expected in September or October, according to Ireland's finance minister Michael Noonan. Apple CEO Tim Cook said last month that the company would appeal any unfavorable ruling against the company.

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Article Link: U.S. Warns Apple Tax Probe in Europe Could Set 'Undesirable Precedent'
 

yaxomoxay

macrumors demi-god
Mar 3, 2010
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Some sweetheart deals can supposedly go against EU rules. This is how the investigation is going.

The EU has punished more European companies than American ones.
Yeah I understand that, but this seems slightly different. We're talking about the internal taxation of a country, not trade between nations. I am not sure that it's within the EU jurisdiction. Of course, I might be completely wrong, but that's my understanding.
Anyone on this forum with EU bureaucratic experience? ;)
 
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cube

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Yeah I understand that, but this seems slightly different. We're talking about the internal taxation of a country, not trade between nations. I am not sure that it's within the EU jurisdiction. Of course, I might be completely wrong, but that's my understanding.
Anyone on this forum with EU bureaucratic experience? ;)
The EU can order a country to claim back taxes if they determine a deal was against the rules.
 

emm386

macrumors 6502
Feb 5, 2016
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If you make billions abroad, you get taxed abroad. If you make billions at home, you get taxed at home.

In a reasonable manner - of course!

But a SUB-2% tax rate for one of the biggest, richest and most successful companies on the planet though is neither reasonable nor fair to your employees, who get taxed way beyond that.
 

yaxomoxay

macrumors demi-god
Mar 3, 2010
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The EU can order a country to claim back taxes if they determine a deal was against the rules.
My question is what rules in this case?
Ireland set-up a tax, a company opened there and paid such tax accordingly. Ok that the company is Apple, but the same applies to any other company. If Apple paid the due taxes that the soveirgn nation require then I don't see how that the EU can intervene and force Apple to pay a tax that does not exist.
 
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2457282

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Apple pays ireland taxes based on the laws on the books. Nothing wrong there. EU determines Ireland passed a tax law that is against the rule. Okay then, force Ireland to change their tax law. return to the beginning - Apple pays ireland taxes based on the laws on the books. This would all seem reasonable.

The only part that seems off to me is if EU says to apple that even though they paid per law, they are changing the law retroactively and now Apple owes back taxes and fines. That would be wrong IMO.
 
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cube

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Apple pays ireland taxes based on the laws on the books. Nothing wrong there. EU determines Ireland passed a tax law that is against the rule. Okay then, force Ireland to change their tax law. return to the beginning - Apple pays ireland taxes based on the laws on the books. This would all seem reasonable.

The only part that seems off to me is if EU says to apple that even though they paid per law, the are changing the law retroactively and now Apple owes back taxes and fines. That would be wrong IMO.
If the tax deal Ireland proposed is against EU rules, it is an erroneous application of the law, so Apple receives a tax adjustment. Normal.
 
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Mousse

macrumors 68020
Apr 7, 2008
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God forbid they pay taxes like the rest of us.
They pay less taxes because they can afford the world's best bean counters who can navigate the tax code and make use of every loophole and deduction.

Apple insists that it is the largest taxpayer in the world and pays every cent of tax it owes under current laws.
Loopholes. The millions spent on hiring world class accountants is a good investment.:p
 

Schranke

macrumors 6502a
Apr 3, 2010
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Can the EU force a European country on deciding how the taxes should be structured? Honest question.
The EU can not tell how the % on taxes should be in that country.

The problems comes when a country starts giving a discount ie substituting the company.
To my understanding this is what happened with apple in Ireland.

There is also a lot of other ways money can be moved around within eu making it easier to mask income and pay less taxes.
 

bbeagle

macrumors 68040
Oct 19, 2010
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But a SUB-2% tax rate for one of the biggest, richest and most successful companies on the planet though is neither reasonable nor fair to your employees, who get taxed way beyond that.
Agreed. But change the laws then.

Apple hasn't broken any laws. I agree that the laws should change and from that point onward Apple (and all the other companies that use this) should pay the higher taxes.
 

cube

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Agreed. But change the laws then.

Apple hasn't broken any laws. I agree that the laws should change and from that point onward Apple (and all the other companies that use this) should pay the higher taxes.
The EU is not saying that Apple broke the rules, but that Ireland did.
 

xDKP

macrumors 65832
Feb 27, 2011
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If you make billions abroad, you get taxed abroad. If you make billions at home, you get taxed at home.

In a reasonable manner - of course!

But a SUB-2% tax rate for one of the biggest, richest and most successful companies on the planet though is neither reasonable nor fair to your employees, who get taxed way beyond that.
How does Apple's corporate tax have ANYTHING to do with the employees personal income tax? Yeah, nothing and no parallel can be drawn without looking foolish

That said, if they obey the law and paw their share, it's in their right to minimise the tax payments, and quite frankly their duty to the share holders to optimise the tax (again within the law)...
 
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