“Apple will be accused of prospering from illegal tax deals with the Irish government for more than two decades when Brussels this week unveils details of a probe that could leave the iPhone maker with a record fine of as much as several billions of euros,” Tim Bradshaw, Alex Barker and Vanessa Houlder report for The Financial Times.
“Preliminary findings from the European Commission’s investigation into Apple’s tax affairs in Ireland, where it has had a rate of less than 2 per cent, claim the Silicon Valley company benefited from illicit state aid after striking backroom deals with Ireland’s authorities, according to people involved in the case,” Bradshaw, Barker and Houlder report. “Apple, which has operated in Ireland since 1980, maintains that its agreements with Ireland did not break any laws. ‘There’s never been any special deal, there’s never been anything that would be construed as state aid,’ Luca Maestri, Apple’s chief financial officer, told the Financial Times.”
“Based on its concerns, the commission has decided to open an in-depth investigation of arrangements between Apple and the Irish authorities dating back to 1991. It is part of a wider crackdown on what Joaquín Almunia, the EU’s competition commissioner, has called “aggressive” multinational tax avoidance,” Bradshaw, Barker and Houlder report. “‘We know that we didn’t do anything that was against the law and we are very confident that through the investigation it will be shown that there was no selective treatment in our favour at any point in time,’ Mr Maestri said… The company has invested $100m in its Irish operations in recent years, he noted, and is among Cork’s biggest employers.”
Read more in the full article here.
MacDailyNews Take: Hoping that Apple did something outside the realm of legality so that you can get your hands on even more billions to flush down the toilet isn’t the same as proving anything.
Related articles:
EU threatens expanded probe into Ireland’s tax practices regarding Apple, Googles, other companies – June 20, 2014
EU’s investigation of Apple’s taxes isn’t going to cause the company any problems – June 13, 2014
EU launches tax avoidance investigations on Apple, Starbucks, Fiat – June 11, 2014
Not in Taxes anymore: On site at Apple’s famous Irish ‘headquarters’ – November 2, 2013
Regan: U.S. tax code spurs loveless foreign corporate ‘marriages’ – May 13, 2014
Ireland to close Apple’s tax loophole, but leave bigger one open – October 15, 2013
G20 think tank OECD proposes blueprint for global crackdown on tax avoidance – July 19, 2013
Thomas Sowell on Apple, corporate taxes, and ‘the road to serfdom’ – May 28, 2013
Taxing Apple just taxes you – May 24, 2013
Don’t tax Apple, tax its shareholders – May 24, 2013
If Apple paid more tax, we might pay less or something – May 22, 2013
Apple CEO Tim Cook pounds another nail into the Keynesian coffin – May 22, 2013
Apple CEO Cook makes no apology for company’s tax strategy – May 22, 2013
I’m as big an Apple fan as you can find. I have issues with any company that goes out of their way to avoid paying taxes. This country gives so much to companies to succeed in the form of cheap energy, transportation, infrastructure, and much more that was built and paid for off the backs of working class Americans. I don’t know if Apple did anything illegal or inappropriate, but that garage where Apple started could only happen in the USA because of what I already stated. It’s the duty of these companies to pay fare taxes to pay back the millions of hard working people who contributed in one way or another to their success. Contrary to the saying, greed is not good.
Why? So governments can waste Apple’s money like the do with all of the producers’ money. No thanks. Apple can do far better things, far more efficiently, than the bloated EU mess or the dysfunctional U.S. federal bureaucracy.
Smaller government now, End the nanny state now!
Small business owner here. Either every month or by quarter businesses have to pay to state for ST-9 sales tax collected. In return, state gives ‘dealer discount’ guess for compensation for time and troubles. During economic downturn, state reduced discount not once but twice, because government can never do with less. Depending on sales and thus tax collected, have used dealers discount for purchasing office supplies or pay a utility bill. Now paltry discount makes ME want to go out on strike for that “livable wage” er “livable dealers discount”. Now that the GDP was reported at 4.6% and the economy is, ahem, humming, who wants to bet me, now that “Happy Days are Here Again” the dealers discount will be revised back to where it once was? hahahahahahahahahahahahahaha…. I crack myself up.
Oh and to top it off, just got my letter from my health insurance provider that they are canceling my plan thanks to Obamacare…. ‘Thank Obama, kids…’ (married w/ children)… Thanks Obama!
“Small business owner here.”
My sincere congratulations, I didn’t think any were left.
Ignorant loser.
Whatever, Elizabeth “I’m an Indian” Warren. Governments the world over have grown out of control. You can have perfect road and infrastructure for 100x less than the wasteful governments take on and waste. Too many are now working, not carrying their weight. The welfare state will eventually implode. Look at how many trillions in U.S. debt Obama has added in just 6 years! Government is not your nanny.
Watch Fox much?
“off the backs.” Yeesh. Put up the soviet era propaganda posters why don’cha.
LEXDYSIC WORKERS UNTIE!
Apple is the largest taxpayer in the USA.
it’s tax rate is hard to calculate because it’s based on profits which vary. If you exclude foreign income taxes on USA profits is around 30 %
although Apple pays all USA taxes owed on USA profits, the USA government makes FUD claims against apple because it wants Apple’s FOREIGN profits as well. But so far they have not succeeded as Tim Cook has said ‘Apple follows all the tax rules’.
The current EU complaint (above) is for Apple income from the EU.
there is a dispute between the have not countries in the EU and Ireland where Apple pays taxes. Ireland says it’s all legal. Apple is following EU rules that allow companies to pick which country they register to pay taxes (crudely layman’s terms).
it seems like some cash strapped EU countries are trying to change the rules in mid stream to appease their voters
——
btw months ago I wrote that as Apple’s cash pile goes up we would be seeing predatory governments try to change the rules to try to grab it (I got a whole bunch of one star ratings then ! 🙂 ). To avoid taxes Amazon spends all its money so that it has no profits — I’m not saying apple should follow suit but it is interesting.
Yup. This is the EU deciding it needs more money, and the easiest way for it to grab millions more Euros is to declare tax strategies like Apple’s (and Microsoft’s, GM’s, etc.) “illegal” even though they have been used for decades.
Nothing more than a “legal” government shakedown.
What is greed? Is wanting to keep the money that you earned greed?
What is greedier that taking the money away from someone who earned it?
Is government greed good?
We have nothing but greedy governments. They loot from the producers to give to their cronies.
…and drone-bomb brown people with sticks to defend themselves.
Not sure where you’re going here, but do you mean you are against fighting ISIS and other terrorists, or that you want actual troops on the ground instead of drones?
I’m not sure that is how any of the Nordic countries work – you are just promoting a form of wild capitalism.
I presume you take no deductions or credits on your taxes so you can pay your fair share. Apple collectively pays more taxes over the last 10 years than almost any other company. Its taxes were used to bail out the likes of Citigroup, GE, GM and the list go on. Apple has created more global jobs in the last 10 years than any company. And many of those employees, contract employees and developers have also paid a lot of taxes. Why does everyone want to kill the goose that laid the golden egg and keeps on laying.
If they don’t like the way Apple pays taxes, change the law and make it apply to Google, MSFT, Samedung, etc.
Sorry, dude. It happens all the time. One example: the whole pharma industry. You don’t think they route bulk chemicals through tax havens, take a huge mark-up there for their troubles, then forward the now much more expensive bulk chemicals to other countries (with relatively higher tax rates on profits) for the production of finished goods? The corporate tax experts call it tax “avoidance” …which is perfectly legal (as distinct from tax “evasion”, which is illegal).
Economists have pointed out that the taxation of corporate profits amounts to “double taxation”, since corporate profits distributed as dividends to shareholders are also taxed. In theory, taxing the dividends ought to be enough, already. (Or taxing the corporation, but not the dividends. Anyway, you get the idea.)
Countries need to realize that they must compete with other countries for “business climate”, including taxation.
Actually, the EU should look to punish _Ireland_ for allowing favorable tax treatment, not the companies — including pretty much all the big name American companies, including Google, Amazon, and scores of others — who availed themselves of these rules.
EVERY company and EVERY CEO’s duty is to minimize their company’s taxes legally. It is not attendant on company’s for any reason to voluntarily contribute more than the law allows. In Apple’s case it has more than made up for it in building infrastructure and hiring people who DO pay taxes in Ireland.
BTW in the States Apple is taxed some 30% like everyone else. It pays plenty in taxes already as do the many people who are employed here on their payroll, directly or indirectly.
No. A CEO’s duty is to maximize profits; not minimize taxes. But the two often go together.
I didn’t mean it as his SOLE duty. I was addressing the issue at hand. CEO’s are responsible for many things.
You’re so clever, you should work as a muppet.
I worked with The Muppets many years ago. I held and worked THE Kermit puppet in my hand while doing my best lame Kermit imitation. Does that work for you? 🙂
Ha ha…I remember you! You were the best! Balmers Left Nut gives a nod to your excellent reply it made him laugh 😉
Legally you are wrong. The Chancery Court of Delaware has ruled that companies do not have a duty to minimize taxes. There is also, despite internet rumors, no fiduciary duty to maximize shareholder value.
So everywhere else BESIDES Delaware CEO’s will act to reduce tax liabilities AND make a company profitable (with the exception of Amazon). I mean, why wouldn’t you if it’s legal, even in Delaware?
You don’t know much about the legal set-up of US corporations, do you? Delaware is THE court for corporate law since so many corporations are based there. Rulings in Delaware resonate across the entire country: courts in other states are likely to agree with this ruling.
I looked it up and everything I read relegated it to the State of Delaware. Sure, legal rulings can be far reaching. I don’t think anyone on this page is a legal expert concerning every aspect about corporations. We are painting with a rather broad simplistic and reasonable assumption brush here.
Ruling that CEO’s don’t have a duty to minimize taxes or maximize shareholder value flys in the face of actual corporate realities it seems to me. Even disingenuous.
I am sure it’s on the mind of every CEO and is a Board consideration if they STAY CEO, Delaware Chancery Court wishful ruling notwithstanding.
The idea that corporations exist to maximize shareholder value is fairly new and does not seem to be accepted by the legal profession, certainly the courts don’t seem to uphold it.
The Delaware court ruling, although not necessarily setting precedent, will strongly influence legal interpretations of other venues, particularly given Delaware’s bias towards corporations and their unique role in corporate law.
For an example to contradict you, might I point out the CEO who is most famous for not caring for shareholders was named Steve Jobs. And that attitude may be partly responsible for Apple’s success.
True, but Apple is more a special case and not the norm.
Probably not that much of a special case. If I remember one study correctly, it said that companies that showed obsequiousness to shareholders underperformed those that did not.
Every individual or entity that pays taxes dies that.
Including u if you are in US and use exemption.
If you dont you are not a patriot…..You are extreamly naive !
I’m unclear why you feel Apple should pay the US government taxes on earnings made outside the US.
Furthermore, the organization that Apple created back then was not only clearly legal it was also necessary to save the company. Had Apple gone out of business back then there would be no billions of euros that these hard-pressed governments are trying to lay claim to.
Apple follows the law, no more no less and as an investor I expect Apple to practice tax avoidance within the law, as a person I want my taxes as low as possible within the law.
Don’t like, then fix the problem, don’t blame people/companies that do their job.
Sorry, but a 35% tax is simply wrong and extremely stupid. Lower corporate taxes equal more jobs, which generate more income tax. When the people have decent jobs a lot of problems cease to exist.
And if the Feds had half a brain they’d let Apple and the others bring all that money home without penalty. It will be invested HERE.
What is the correct number then? It’s decades past the time that Americans need to wake up and realize that they have spent two generations spending more tax dollars than they collect. That means that FIRST spending has to decline & loopholes cut THEN accrued debts can be retired, and ONLY THEN can nominal tax rates be declined.
Remember, Eisenhower (R) was the last president to care about fiscal state of the union. He paid off the debt of WW2, gave all the GIs an education if they wanted it, and had enough money to create the world’s largest highway system. How did he do it? He used a VERY highly progressive taxation system that incentivized all businesses to reinvest their profits into the business rather than electing their management tens of millions of dollars in compensation and obscene stock bonuses as we see today.
“I don’t know if Apple did anything illegal or inappropriate, but…”
Perhaps you should find out before opening your mouth.
You are completely ignorant of the facts. Apple pays U.S. taxes on all U.S. sales and profits made from U.S. sales. Apple also pays all taxes it owes in all international jurisdictions on sales made in those jurisdictions. Now if Apple can legally set up a corporate structure to minimize taxes, so be it. Just because Apple is a corporation doesn’t mean Apple should offer to pay more in taxes than it owes.
Do you take all of your tax deductions on your tax return? Or do you decline to take your deductions, instead offering to pay extra to the IRS?
Thought so.
“I don’t know if Apple did anything illegal or inappropriate”
Exactly. A person or corporation has a responsibility to pay every penny required by rules, regulations and laws, AND to not pay one penny more.
PS, last time I looked the government does sell energy, or provide transportation for Apple. You may want people and corps to pay more taxes. I prefer that our government spend more wisely, and get out of the mindset that it is a business.
So Apple doesn’t use American roads? American communications systems? American energy? American education systems? Apple doesn’t use American financial markets?
Apple relies on the American community as much, if not more, than any other similar population. It should pay for the services it uses WITHOUT being granted special loopholes that small business can never afford due to lack of money for lobbyists and lawyers. Apple is no longer the underdog, it is now the gorilla. Wake up an realize it.
And Apple pays all of its taxes owed to federal, state and local governments. Most American communications systems are privately owned (cellular networks, cable/internet services, etc.). American energy is often a private company but subject to significant government regulatory approvals. Apple also has invested heavily in alternative energy sources to make itself less dependent on public utility services.
Apple doesn’t “use” American education systems; the people Apple hires did (or from another country). That also included private educations systems. Apple participates in American financial markets, which are PRIVATE enterprises regulated by the government.
So what’s your point? Apple relies on the “American community” as you call it, but Apple also pays significantly in the form of taxes at about a 27% tax rate (if I recall the rate correctly).
And Apple uses lobbyists and lobbies Congress far less than virtually any other large company, to such a degree that Apple has been significantly criticized for NOT lobbying Congress more.
Perhaps you should wake up and learn what is really happening.
An excellent post.
More FUD. I find the timming of this very suspicious. First they tried bendgate and that failed. Now this. To me, this means iPhone sales in Europe are very, very good and they are trying to stem the tide. Are they upset that Apple is making it increasingly difficult for governments to spy on their own people?
Apple had profits in 1991? If so, not much in the overall scheme of things.
It is part of the latest FUD campaign which has ratcheted the tension between the best company in the world and the confederacy of lechers that seek a restoration of the past world order in which the oligarchy rakes in all the shekels, despicable men prosper and the good die young.
Confederacy of conspiring lechers that would be.
Is that you?
Just a clarification hannahjs (lest offense be taken):
The “Is that you” question had nothing to do with my expansion of your spot on “confederacy of lechers”coin…just a muse on the avatar..
It’s how I wish I looked, at any rate.
I’d thought of buying the hat. But I went with a tan Coolibar instead
I don’t recall the EU’s interested in Apple’s finances back in ’96 when people like me invested in a collapsed company and the return of Steve Jobs. …fsck ’em.
Who is John Galt?
OMG, nausea ensues.
To review the above analysis by our commenters:
1. Apple pays its share of US taxes.
2. EU blames Apple, not Ireland, not itself, nor a host of other companies and countries.
3. Many commenters would rather have Apple keep the money than give it to governments.
4. Apple executtives do their best to maximize profits. One of their methods is minimizing taxes.
5. The timing of this report is suspicious
5a. general FUD ?
5b. EU greed
6. Some comments note taxes bailed out some companies such as GM either thru subsidies or loans.
7. various comments on government inefficiency.
— to sum up as pertaining to Apple, I would say suspicious timing.
Whatever the tax laws and however the taxes are collected, the long term problem in the U.S. is that the tax revenue does not equal the spending outflow. This is not solely an Obama problem. It is not solely a Bush problem. It is not solely a Democrat problem, nor solely a Republican problem. Every one at the Congressional level and up has played a role in this long term problem. Reagan played a part in it. So did Carter. Even the good times of the mid-1990s under Clinton were somewhat of a smoke and mirrors trick using excess Social Security inflow to give the appearance of balance.
Similarly, the taxation issue is not solely a corporate taxation problem or an individual taxpayer problem. It is not as simple as “government greed” or “letting people keep the money that they earned.” Taxation is a necessary function to pay for the services rendered by the government. Everyone probably has a different opinion on how much should be spent by the government and how it should be spent. Personally, I feel that there have been trillions of dollars in excessive defense spending in the U.S. over the past fifteen years. But I still pay my taxes and I don’t gripe half as much as the people on this forum who seem to love that defense spending. Sometimes life sucks, huh? It could be worse…much worse.
If you want to see THE RETURN of excessive, ahem, ‘defense’ spending: Congress ‘human’ John Boehner just heralded in the beginning of the NEW Con-The-Suckers campaign brought to you by our Military Industrial Complex. What a rectum.
Kill the poor. Feed the rich. The psychopaths win. 😛
Everyone likes to point at defense spending as a huge money waster, but the fact is defense spending is a very small part of the U.S. budget and has been progressively being reduced. The vast bulk of the U.S. budget is spent on Social Security, Medicare, Medicaid, and other social entitlement programs. Until those programs are addressed and the fraud, waste, and mismanagement in those programs are handled, all that will happen is our government will continue to demand more money and bleed it out faster than it comes in.
I’m not saying we need to get rid of the entitlement programs or cut a bunch of people out of them, and besides the programs aren’t going anywhere. But the programs are horribly run and could probably benefit people just as much with far less expenditures if fraud, red tape, and other waste was cut out.
I ENTIRELY agree!
What we need is actual/factual fiscal responsibility.
What we do NOT need is:
1) More dire LibTard scum who believe in spending beyond budget limits, the cause of VAST social entitlement waste.
2) More dire Neo-Con-Job scum who believe in the nefarious insanity called ‘Starve The Beast’, the cause of VAST defense spending waste.
A couple relevant links:
http://sherisapp.hubpages.com/question/124549/why-do-the-liberals-insist-on-more-deficit-spending-when-the-nation-is-broke
http://en.wikipedia.org/wiki/Starve_the_beast
And of course I’d add:
Let We The People run the USA, NOT the self-destructive Corporate Oligarchy, who only want the $$$$$ and have no clue about longevity or sustainable goals. Biznizz is bozoid.
This would be incorrect. The US military makes up some 57% of total discretionary spending, and is the second largest part of the total budget, barely losing out to Social Security.
The military budget saw a 9% increase in the first decade of this century and, though declining slightly over the past couple of years, is still higher than at any time during the cold war. You know, when we faced a real armed threat or two.
The Apple ‘illegal Irish Tax Deals’ myth has been investigated and found to be bullshit HOW many times so far??? I’ve lost count.
That same old clue to #MyStupidGovernment:
You don’t tax foreign profits at the same high rate as intra-country profits, unless of course you want companies to keep those profits OUT of the country, which apparently you do. It’s all about incentives, you blithering idiots in Congress! I’m spitting on you Carl Levin. 😛
Excuse me, did ya momma used to give you apples for lunch? Apple is a no good tax dodging, dodgy coding, patent breaking corporate jackass of a company. How do you like them apples!
What a great set of references you’ve provided, proving that you know what you’re talking about. You should be a professor.
Hey stupid: You’re tossing your troll turds at someone who not only knows better, but says so and proves it. Didn’t your momma teach you not to play with your poo?
On and do try posting as a real person, like I do, as opposed to being an anonymous coward.
Only children mention ‘playing poo’ in their replies. I’ll leave you alone so you can finish watching Sesame Street DVD collection in the comfort of your highchair.
Fsck little fly.
*SWAT*
I take it you agree with me then!
Hang on a minute. Apple have broken patents before haven’t they? Apple HAVE cheated the tax payer. Apple did a fine job of iOS 8.0 AND 8.0.1 they just wanted to get iOS 8.0.2 so quickly!
And a stamp of my foot just to make sure:
*TRAMPLE*
I love trampling trolls.
Yup, you definitely agree!!
To explain this, we might note that the European Union has the oddest governmental structure that anyone can imagine.
It has a “legislative branch,” the European Parliament, composed of 751 members selected in direct elections with a negligible turnout. Not surprising, because it has negligible legislative powers—it cannot consider a budget or legislation except at the initiative of the executive and anything important requires ratification by the member states. Similarly, the “judicial branch,” the Court of Justice, defers to the executive on almost everything.
That leaves the “executive branch,” the European Commission, appointed by an arcane indirect system reminiscent of nothing in particular. This differs from democratic government—in that the members are not directly elected by the people, and therefore have no responsibility to the public, and from most forms of authoritarian government—in that they are not selected directly by the folks that run any other aspect of European society, and therefore have no responsibility to an elite (such as an aristocracy, oligarchy, or ruling party). Essentially, the Commission and its employees are only responsible to themselves. This lack of outside accountability isn’t a bug, but a deliberate feature of the system. The Commission members take an oath to be independent of all outside influences.
So, Europe is not ruled like America by bureaucrats somewhat limited by political accountability, but by bureaucrats that are limited only by the treaties that are SUPPOSED to keep them from interfering with the sovereignty of the member states. In theory, all members are equal, but in practice Germany, France, the UK, and perhaps a few others are a lot more equal. The less-equal states are virtually unprotected from the Commission’s otherwise unbridled power. Ireland was riding high at one point, but the Great Recession dropped them back into the company of the have-not countries in Southern and Eastern Europe. Apparently somebody in the more-equal states wants to recapture the taxes paid (or waived) by the less-equal states and is using the Commission as its means for doing so.
I think this goes much deeper than taxes. I follow a lot of Apple news and to my knowledge this action came out of nowhere. Why didn’t they rule on the many other multinational corporations using these same tax schemes? I think the real reason behind this is because they are trying to smear Apple’s name in order to dissuade Europeans from gettiing the new iPhone. And, in my opinion, one of the reasons to do this is because it is very difficult to spy on people who have iphones. There was a report awhile ago that claimed NSA “security” code was written into the core of Android. In addition, it is very easy to remotely infiltrate an Android device. So, im
assuming their thinking is, if they smear Apple’s good name the uninformed European will shy away from the iPhone and purchase an Android device instead. Will the average European be wise enough to see this tax ploy as a smear campaign?
This might work, that is if judge McKoh presides.
Smear campaign.
Those tax deals weren’t illegal before, or else something would have been done something in the last thirty years. They just now say they are illegal so they reap money.
And that money would be used so that before this decade is out we would land a man on the moon.
Bullshit narrative already denied by Tim Worstall himself!
http://www.forbes.com/sites/timworstall/2014/09/29/the-european-commission-is-not-about-to-fine-apple-nor-even-to-accuse-the-company-of-anything/?partner=yahootix
Thank you.
Illegal or not the EU rules that allow any company to declare sales in countries that agree sweetheart tax deals is wrong.
Sales in UK or Germany should have profits subject to Corporate Tax rates of those countries and not declared in Ireland or Luxemburg which offer low rates to attract a small percentage of huge sums spent elsewhere in Europe. How else do these countries prosper in difficult times than on the backs of the bigger economies. No wonder Ireland refused help from the Euro bail-out fund when Germany tied it to a reform of thier Corporate Tax policy.