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

[294307]

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.

No, that's not how it works nor is that actually what might happen.

The European Commission (EC) has no authority to create legislation; they only have the power to propose legislation which must be approved by the Council of the European Union and the European Parliament. What is happening here is the EC is investigating whether or not the Republic of Ireland, as a member of the EU (and therefore subject to European law), violated rules governing the exercise of state aid. Offering companies exclusive tax breaks under a special scheme can be illegal state aid depending on the circumstances. The rules are designed to prevent member states from distorting the market which can be harmful to the economy and to other companies. If the European Commission finds a member state in breach of state aid rules, EU law grants power to the European Commission to direct a member state in breach of state aid rules to recover the money it gave out (or the tax it waived). In the case of Apple, if the Republic of Ireland are found to be in breach of state aid rules, the EC can require the Irish government to recover the tax that Apple did not pay under the reduced tax rate that was illegal in the first place.

So hopefully you understand by now that no new laws are being created. If you have received state aid that was given to you unlawfully, then you have to pay it back. In the case of Apple, that would be the tax it should have paid. The laws governing state aid were in place well before the Republic of Ireland agreed with Apple that it can generate profits in the country at a reduced tax rate. So there is nothing "retrospective" that could not already have been known to both parties at the time the agreement was formed.

Maybe if the United States modernised its tax rules, perhaps we wouldn't be having this conversation. The reason many companies do not repatriate their cash back into the United States is because of the ridiculously high corporate tax rate. Would you accept up to a 35% cut to bring your income back home? No, you might opt to keep your money at a bank overseas. I'm not saying it's right what Apple are doing - they should pay more tax in the Republic of Ireland and bring a portion of their cash pile back to their home country, but comments from the U.S. Treasury pointing to the European Commission for attempting to address this problem and sending a message to other companies operating in the EU is not helpful. It can easily be misinterpreted as interfering in a matter of EU jurisdiction.

 

[Millah]

God forbid they pay taxes like the rest of us.

They pay billions in taxes every year.

Would you pay MORE taxes than you were legally required to do? Then why should Apple? It's called minimizing your taxes, something ANY good accountant does for clients, businesses or individuals alike.

 

[macgabe]

The US threatens to destroy the greatest company it has ever created with onerous double taxation (which incidentally, even with delayed repatriation, is by far the biggest contributor to US public services). So quick, blame Brussels for enforcing a measly 10% tax on local products and services. Lol. hypocrisy has no bounds.

 

[Mousse]

Dear EU,
This is how we will deal with it: "Accountants, if you help tax avoid, we will fine you the full amount"
Love,
The U.K.

Fine someone for being TOO good at his job? He's not breaking the letter of the law, just bruising its spirit a bit. It's not the bean counter's fault he knows how to exploit loopholes in the tax code. Eliminate the loopholes.

Sometimes I have the impression that the UK believes they belong more with the US than with Europe.

Of course Daddy Britain is gonna side with its rebellious offspring, rather than countries who have been foes (off and on) for the better part of 3000 years.

 

[Bubba Satori]

Apple should just buy Europe.

 

[neutralguy]

Now we know why there was a fundraiser by Tim Cook!

 

[thermodynamic]

Dear EU,
This is how we deal with it.
Love,
The U.K. #Brexit

Any word since on how Britain is restructuring itself? Are the fans of "#Brexit" still enthused? Do they have a part in restructuring? Do any average civilians have a part in their government? Being a Monarchy as opposed to democracy or republic, they probably don't so wouldn't the Queen get to dictate terms?
[doublepost=1472075257][/doublepost]

Now we know why there was a fundraiser by Tim Cook!

Because his company is too broke to pay its share for the benefits it receives in return?

 

[rick3000]

There is a lot of misunderstanding of this particular issue. Apple is the largest taxpayer on the planet, and they have paid taxes owed on the money they have in Ireland. The reason the EU is upset is because according to Irish law Apple paid their tax money to Ireland, and the EU wants Apple to pay that tax to the EU instead of Ireland. They are really just caught in a bureaucratic fight brought about because everyone wants Apple to pay them because Apple pays so much tax. It doesn't really have anything to do with whether Apple is evading taxes, just who they are paying them too.

The separate issue issue of the US double taxing foreign earnings at 40% is completely different. All I will say is that no other country does this, and even if the US double taxed at a sub-10% rate, companies would be willing to pay to get that money back to the US. Bringing the over $2 Trillion that companies have overseas back to the US would be the biggest economic boom for the US in several decades. And the US could get a cut which no other country could pull off. But as it stands, despite bipartisan support, this isn't going to happen and companies will continue to reinvest their money everywhere other than US to avoid cutting their cash pile in half. Would you willingly pay 40% tax, if the alternative was using 100% of it somewhere else?

 

[0388631]

The EU, like any government or quasi government is money hungry.

 

[rdlink]

The EU has rules. Deal with it.

Yes, and they are extremely capricious and fluid, depending on the political moment.
[doublepost=1472077923][/doublepost]

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.

Once again, it's pretty simple: There is no fair or unfair in the tax code. It's legal or illegal. Period. End of story.

 

[cube]

The EU, like any government or quasi government is money hungry.

This is not about the EU wanting money for its institutions, but about protecting and developing its member nations.

 

[alexgowers]

The moment a comoany can pay less tax than a one man company it's tax fraud and should be deemed illegal. Loopholes aren't fair. The man in the street should be able to compete fairly with big corps. Apple should be paying the current rate in every territory it operates. The same should apply to all tax dodgers, Google, Amazon etc all need to pay or get the **** out. I really don't get how these companies have been allowed to get away with it. It benefits no one to have such large organisations that make competition impossible. It's ****ing everyone including you as they steal money from small businesses and the public tax system.

 

[cube]

This is similar to when the EU orders countries to recover illegal state aid.

 

[alexgowers]

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.

The difference is apple should have been paying 12.5 but how a special deal for 2%. That should never have been agreed or allowed that's why it's illegal.

 

[294307]

This is similar to when the EU orders countries to recover illegal state aid.

It is not similar. It is one and the same. The European Commission is investigating whether Apple received illegal state aid from the Republic of Ireland. If they are found to have done so, then yes the European Commission can direct the Republic of Ireland to recover the tax from Apple that it would have paid had they not been taxed according to the lower rate agreed between the Irish government and Apple.

 

[0388631]

This is not about the EU wanting money for its institutions, but about protecting and developing its member nations.

Yes, because the lesser nations have prospered under the EU thus far.

 

[2457282]

No, that's not how it works nor is that actually what might happen.

The European Commission (EC) has no authority to create legislation; they only have the power to propose legislation which must be approved by the Council of the European Union and the European Parliament. What is happening here is the EC is investigating whether or not the Republic of Ireland, as a member of the EU (and therefore subject to European law), violated rules governing the exercise of state aid. Offering companies exclusive tax breaks under a special scheme can be illegal state aid depending on the circumstances. The rules are designed to prevent member states from distorting the market which can be harmful to the economy and to other companies. If the European Commission finds a member state in breach of state aid rules, EU law grants power to the European Commission to direct a member state in breach of state aid rules to recover the money it gave out (or the tax it waived). In the case of Apple, if the Republic of Ireland are found to be in breach of state aid rules, the EC can require the Irish government to recover the tax that Apple did not pay under the reduced tax rate that was illegal in the first place.

So hopefully you understand by now that no new laws are being created. If you have received state aid that was given to you unlawfully, then you have to pay it back. In the case of Apple, that would be the tax it should have paid. The laws governing state aid were in place well before the Republic of Ireland agreed with Apple that it can generate profits in the country at a reduced tax rate. So there is nothing "retrospective" that could not already have been known to both parties at the time the agreement was formed.

Maybe if the United States modernised its tax rules, perhaps we wouldn't be having this conversation. The reason many companies do not repatriate their cash back into the United States is because of the ridiculously high corporate tax rate. Would you accept a 35% cut to bring your income back home? No, you might opt to keep your money at a bank overseas. I'm not saying it's right what Apple are doing - they should pay more tax in the Republic of Ireland and bring a portion of their cash pile back to their home country, but comments from the U.S. Treasury pointing to the European Commission for attempting to address this problem and sending a message to other companies operating in the EU is not helpful. It can easily be misinterpreted as interfering in a matter of EU jurisdiction.

If as you say it is determined that Ireland passed a tax law in violation of EU rules then why doesn't Ireland pay the penalty. As a individual I pay taxes according to the tax laws in my country. If the law was wrong why is it my problem and why do I need to pay anything. If the IRS messes up that on them. If Ireland did wrong that's on them. Believe me that I would sue everyone from the president on down if they came back years later and said that a credit I took was invalidated and now I had to pay. NOT NO, BUT HELL NO.

 

[thermodynamic]

They pay billions in taxes every year.

Would you pay MORE taxes than you were legally required to do? Then why should Apple? It's called minimizing your taxes, something ANY good accountant does for clients, businesses or individuals alike.

Pay what's legally required. Not more. We know that. And yet Americans seem to adore news articles reading how companies get refunds on money the companies might not have paid into to begin with:

http://www.factcheck.org/2012/04/warren-ge-pays-no-taxes/

Possible reasonable solution found here:
http://www.newsmax.com/Finance/StreetTalk/Fortune-tax-corporate-GE/2015/04/14/id/638367/

 

[2457282]

The difference is apple should have been paying 12.5 but how a special deal for 2%. That should never have been agreed or allowed that's why it's illegal.

Okay, if they find it was illegal, the question is who did the wrong. Clearly it was the state that created the illegal tax law. So the state should be held accountable. Apple did not do anything illegal in taking advantage of a tax law that was passed by parliament. So why should they be punished? All I am saying is that if they invalidate the law for whatever reason then apple must comply with whatever new law is put in place. But to retroactively tell a company or individual that you now have to pay back taxes even though the wrong was done by the state - well, hell no.

 

[Cineplex]

Time to close the loop holes. If I can't keep my money in Ireland and not pay taxes if I earned it there.....neither should Apple. Citizens should have the same rights as companies. To hell with Apple and its crafty tax evasion. It's not like they are doing anything positive for the world with it.

 

[macs4nw]

Dear EU,
This is how we deal with it.
Love,
The U.K. #Brexit

Indeed. Too much loss of autonomy gives countries pause to reconsider whether being part of the EU is worth it.

 

[KALLT]

There is a lot of misunderstanding of this particular issue. Apple is the largest taxpayer on the planet

Evidently, that is not true. Also, citation needed.

The reason the EU is upset is because according to Irish law Apple paid their tax money to Ireland, and the EU wants Apple to pay that tax to the EU instead of Ireland.

No, the EU wants the Irish Republic to collect the money they should have collected. None of it is going to the EU, it is all tax money that goes right to the Irish State. EU state-aid law does not have pecuniary penalties for violations, they only order the State to rectify the situation as if it never happened.

They are really just caught in a bureaucratic fight brought about because everyone wants Apple to pay them because Apple pays so much tax. It doesn't really have anything to do with whether Apple is evading taxes, just who they are paying them too.

It has everything to do with Apple. The EU is concerned about the sweetheart deal between the Irish State and Apple. It is the conduct of both parties that is at issue. Ultimately, this is about protecting the integrity of the Internal Market and preventing undue influence by Member States using public money. This principle has been enshrined in the law for a very long time, since the Treaty of Rome in the 60s (even before the Republic and the UK joined the EU).

There is a lot of misunderstanding of this particular issue.

And then you thought, just add more nonsense to it?

 

[512ke]

Beware, American companies. Do not make tax deals with EU member nations.

 

[stroked]

All tax dollars from US companies need to go to the US, including those they earn from abroad.

The US might be on the losing end of that, Honda Toyota Samsung etc.

 

[maxsix]

Hussein's regime comes out to shelter Apple. Not that long after Timmy hopped in bed with Hillary. Very revealing.