Apple may have to pay Ireland 10 years of back taxes

“This week, in a regulatory filing, Apple said that if the EC comes back with an unfavorable ruling, the company could have to pay back the Irish government the disallowed state aid it received, covering a period of up to 10 years,” David Goldman reports for CNN.

“Apple said the amount could be ‘material,’ but it couldn’t yet estimate exactly how much it would have to pay,” Goldman reports. “Even if the EC rules against Ireland, Apple probably wouldn’t have to pay back taxes any time soon. The Irish government would almost certainly appeal the case, and it would likely be stuck in courts for years.”

“To soothe angry regulators, Ireland announced last year that it would end a key tax loophole for tech companies by 2020,” Goldman reports. “But some experts say the change is more of a public relations move than a step that will significantly increase the taxes those companies have to pay.”

Read more in the full article here.

MacDailyNews Take: The key word in the headline is “may.” That could just as easily be “may not.”

As we wrote yesterday: Apple has repeatedly and confidently stated that they didn’t do anything that was against the law. Therefore, unless the EC tries to change the law retroactively, if that’s even possible, or tries to collect taxes retroactively in some other fashion, Apple is in the clear. By U.S. law, companies have to warn investors of potential material events in the 10-Q.

Related articles:
Apple warns of potential ‘material’ financial damage from European tax probe – April 29, 2015
Ireland’s Prime Minister: Apple has nothing to fear from end of ‘Double Irish’ tax avoidance strategy – November 4, 2014
Apple says it may lose Irish tax break – October 31, 2014
Ireland to end tax lures that drew U.S. firms – October 14, 2014
EU tax probe spotlights Ireland’s allure for multinationals – October 13, 2014
EU watchdog to give reasons for inquiry into Ireland’s tax treatment of Apple – September 29, 2014
European Commission accuses Apple of prospering from illegal Irish tax deals – September 28, 2014
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

47 Comments

    1. Totally right. We are broke, you have money… give it to us. !! 🙁

      Maybe England will declare that we really did not win the Revolutionary War and we now owe them 200+ years of back taxes. Tea spillage and all.

      A joke??? Not if the EU decides that it can always change a law and then back date the effect to when ever it wants. It means that NO LAW is real, its just temporary . A very sad state of affairs.

      1. It may be their position that the ‘interpretation’ of a tax law was incorrect. This would not need a change in the law and would possibly make any ruling retroactive.

  1. The EU leaches and corrupt politicians keep looking at Apple’s bank account and try to come up with creative ways to steal it. Oh sorry, “retroactive tax it”.

    Gee I wish I could run a business like the EU and call up former customers and tell them they owe me more money because I raised my rates after the fact.

    1. The EU is against illegal state aid, e.g. one country doing a sweetheart tax deal to bring a company and associated jobs to their country over another. If you were getting benefits you were’t entitled to would you expect them the clawed back?

      1. Mike, you miss the point. Apple followed Irelands rules. It did not pay under the table to be able to do this. If Ireland has been breaking the EU’s rules for 10 years…. why is the EU just now pushing to get money on it?????

        Maybe it has not been illegal just not appreciated. Now by retroactively changing the ruling, the EU wants to collect fines for things that were legal in the past. ????? Nice money if you can get it. But it means that NO LAW ever passed is real, just convienant for now. We can change the law and go back and get fees for past transgressions on future laws…..

        Yeah right. 🙁

        1. I know Apple followed the rules, it was Ireland that now seems to have possibly broken them. As an AAPL shareholder I’m not exactly happy that Apple may have to pay a “material” amount back.

      2. The EU is essentially the “united states of Europe”. Just like in the US, some states have high taxes and others have low — or even no — taxes. What is the big deal? States compete for business all the time. Many give huge “no tax” deals and other subsidies to attract big businesses and even sports teams.

        Just because Ireland has low tax rates does not make the low tax rates illegal. Can you imagine New Jersey suing Florida because Florida has no income tax, and NJ — with a marginal income tax rate of 9% — is losing residents to Florida as soon as they can leave NJ? Can you imagine the US Court telling Florida their low income tax rates are illegal because they are lower than tax rates in (high tax) states? And can you imagine telling people the higher tax rates will be retroactively applied as of ten years ago? Crazy thought.

    2. I had a builder do that to me once. A year after completing the work and getting paid in advance he turned up wanting to inspect the build as he believed that he had done work that he hadn’t charged for. I wonder if he then when to work for the EU?

  2. Right so Ireland illegally offered them tax relief to cement them in their country over its competitor States thus potentially to the very great disadvantage of those other countries AND in so doing they are some years later going to receive a tax bonus as well for their misdeeds. Who says crime doesn’t pay. I will be interested to see if Ireland gets a massive fine from the EC to at least partly account for some of the windfall otherwise it might be worth other EC members trying the same trick. Otherwise this is state aid with double the benefit.

    1. Right so Ireland illegally offered them tax relief

      The problem is that the EU has not acted on this for 10 years. So for 10 years they really did not care or it was not really illegal. But now that Apple has money and the EU wants it, its time to RETROACTIVELY change the law. (which is not really legal in itself) and then demand taxes. Will the EU be so aggressive with the other EU countries that do the same as Ireland? Don’t think so cause there is not much money there.

      So, I think the EU is looking for ways to get free money. And doing illegal things is the way it wants to go cause that is the fastest way.

  3. Apple played by the rules.

    Even if they manage to rei terpret them now and decide that Apple is compleled to pay, Apple will fight this tooth and nail, becuse they played it stby the book. 😉

  4. Even if Ireland broke EU laws by giving Apple a tax break, why does Apple owe Ireland back taxes? Unless they had a deal with Ireland that they would pay it. Or does the EU actually collect taxes from companies themselves? Too complicated for me.

  5. Given that Greek debt could cause the EU financial system to collapse, Tim Cook should offer the EU a deal.

    The EU “forgives” Apple for any taxes they may have failed to pay.

    And in return, Apple buys Greece.

    1. They never should have held the 2004 Olympics. Big big mistake. Not to mention loose retirement benefits.

      A friend of the family, a retiring taxi driver in Athens, committed suicide recently. I wonder if any of the turmoil had any influence.

      The problem with making promises is if you have to break them.

      If Apple were to “have to pay” back taxes, technically now is a good time, better than any other. Still it’s wrong, but just putting it out there.

      1. Don’t forget that after Greece was allowed into the EU, it was found that they had deliberately rigged their application with deceitful statements, some of which involved cooking their budget books. I’ve already used up my two posts of URLs on this page. But you can read about this at Wikipedia using the keywords “Greek Financial Audit 2004.”

        You’d think that if the EU is into retroactive punishment, they’d toss out Greece. Obviously, if a client is discovered to have lied on any loan application, the loan contract is void.

  6. One possible appeal is against the use of Ex Post Facto law, or ‘after the fact’ law. There is nothing right now that indicates ANY wrong doing by Apple with regards to Ireland, where Apple is based overseas. If Ireland is forced by the EU to change their taxation laws, Apple can claim they owe nothing-at-all in back taxes specifically because the law has just been changed and CANNOT apply to the past by way of Irish law.

    http://en.wikipedia.org/wiki/Ex_post_facto_law

    The imposition of retroactive criminal sanctions is prohibited by Article 15.5.1° of the constitution of Ireland. Retroactive changes of the civil law have also been found to violate the constitution when they would have resulted in the loss in a right to damages before the courts, the Irish Supreme Court having found that such a right is a constitutionally protected property right.

    As for European Union law, they are bound by the European Convention on Human Rights, Article 7 regarding retroactivity:

    http://en.wikipedia.org/wiki/European_Convention_on_Human_Rights

    Article 7 prohibits the retroactive criminalisation of acts and omissions. No person may be punished for an act that was not a criminal offence at the time of its commission. The article states that a criminal offence is one under either national or international law, which would permit a party to prosecute someone for a crime which was not illegal under domestic law at the time, so long as it was prohibited by international law. The Article also prohibits a heavier penalty being imposed than was applicable at the time when the criminal act was committed.

    Did Ireland break an existing EU law? There is the first question. How that would apply to those affected by Ireland breaking that law is the second. Ireland would have to be proved to have knowingly broken EU law in order for there to be danger of making Ex Post Facto law void.

    Or so I surmise. 😉

    1. So if a law is re-interpreted, would either of those Articles apply since the law itself is not changed as written? The first would not apply due to no actual changes to the law and the second may not apply since the law was ‘wrongly’ interpreted to allow the offence which in new light was actually illegal during that period.

        1. I’m figuring it’s more having applied the wrong tax rate from a schedule of rates due to misinterpreting the written law than re-interpreting a number which I too don’t see as really possible.

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