U.S. government warns EU: Do not hit Apple with a massive back tax bill – or else

“The United States has sent a message to the European Union: Stop your tax crackdown on American companies or be prepared to suffer the consequences,” Jethro Mullen reports for CNN. “Apple has already warned the investigation could force it to pay a decade’s worth of back taxes to Ireland — estimated by some analysts to be in the billions of dollars.”

“The U.S. Treasury Department on Wednesday accused the European Commission agency behind the probes of going beyond its remit and acting as ‘a supra-national tax authority,'” Mullen reports. “‘These investigations have major implications for the United States,’ said Robert Stack, the Treasury’s deputy assistant secretary for international tax affairs. He warned U.S. taxpayers ‘could wind up eventually footing the bill.’ That could happen, he said, if the companies are forced to pay extra tax to the EU and then claim that spending as a deduction on their U.S. taxes.”

“The Treasury published a white paper detailing its objections, including the fear that other countries could follow the EU example and seek large sums retroactively from both U.S. and EU companies,” Mullen reports. “It urged the EU to give up on its pursuit of the companies, saying it’s considering unspecified ‘”potential responses’ if Brussels doesn’t change course.”

Read more in the full article here.

MacDailyNews Take: There’s nothing like the world’s preeminent superpower playing hardball with some quasi-governmental political confederation that’s already been hit with one very significant defection and the existential threat of widespread desertions hanging over its collective head.

If the EU demands so-called “back taxes” from Apple, it’ll be based invisible legal grounds since the company simply followed the law when paying their taxes:

There was no special deal that we cut with Ireland. We simply followed the laws in the country over the 35 years that we have been in Ireland. If the question is, was there ever a ‘quid pro quo’ that we were trying to strike with the Irish government – that was never the case. We’ve always been very transparent with the Irish government that we wanted to be a good corporate citizen… If countries change the tax laws, we will abide by the new laws and we will pay taxes according to those laws. – Apple CFO Luca Maestri

As we wrote back in April: 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.

European Commission denies anti-U.S. bias after U.S. Treasury intervention over Apple, Amazon tax probes – August 25, 2016


    1. I would not mind fines and sanctions if there was real essence to the claims. However, from what we have here we can only say that Ireland decades ago has established the rules for their own country, and not exclusively for Apple, but for quite a number of companies.

      What Apple did what perfectly legal with the laws of Ireland, and if the EU has any issues with those laws, this only has do with Ireland, not with Apple.

    2. The EU can do what they want. And let’s call this what it is: Apple avoided paying taxes for years with an elaborate tax avoidance scheme, like many other companies have done.

      It’s time to cut the crap. I have no sympathy for Apple or the US taxpayer. Your government should go after Apple for its tax avoidance scheme.

      1. Typically, you fail to acknowledge Apple’s actions were 100% within the law. If you have an arguement, it’s with the Irish government, not Apple.

        Oh yeah, in case you didn’t realize it, Apple and us (US taxpayers) don’t give a royal turd about whether or not you have sympathy for any of use or Apple.

        Maybe you are the one who needs to “cut the crap.”

          1. If Apple received the equivalent of illegal state aid by tax regime laws in Ireland that were themselves contrary to EU law then they will have to pay back the money.

            It is not as if America does not do the same to everyone abroad – forcing its banking laws and sanctions on others and using fines of foreign companies as a form of protectionism.

          2. You certainly acted like you knew in your original post, dswe!

            Whether or not Apple should have paid more taxes is not actually the issue. I will stipulate that they probably should have, and would have were the tax laws different. The issue is legal – can a company be found retroactively liable for following the tax laws of a country for many years when a governing body decides that those tax laws should have been different? Think about that… What the EU commission is effectively saying is that Apple should have paid more taxes than they were legally obligated to pay at the time because…why? And why did the EU wait a decade (actually much longer than that) to go after Apple? The EU waited until Apple grew large and the potential payoff became greater and the European economies were doing poorly. Now they want to break the piggy bank and cash in.

            Change the laws going forward…fine. Apple and other corporations will adapt the the new laws and respond accordingly. But apply a retroactive tax penalty for following the tax laws as written and approved by the Irish government? Insane.

  1. They really can only change things going forward. Sends a chilling effect on companies doing business overseas that the tax liability rug can be pulled out from under them even though they acted completely within U.S. and foreign laws and regulations.

  2. How dare EU think it can supplant the US Federal Government from extolling Apple of their hard earned cash through ridiculous taxation. That’s the job of DC!

    1. From Factcheck (admittedly 2 years ago):
      Q: Is it true that George W. Bush took more vacation days than Barack Obama?

      A: Yes. Before his two-week trip to Martha’s Vineyard in August, Obama’s count was 125 full or partial days and Bush’s total at the same point in his presidency was 407.

      There is more recent analysis. From Jan 2016:
      Last December, CBS News reported that the number of vacation days President Obama has taken since the beginning of his presidency stood at 161 days. If you add the 28 days of vacation he has taken this year his total comes to 189 days. If you add his current vacation in Martha’s Vineyard to the mix that still puts him at under 200 days so far. His predecessor, two-term President George W. Bush, took 879 days of vacation, including 77 trips to his Texas ranch.
      So even if Obama took every day off the rest of his term in office that would only add an additional 153 days to his total – still placing him at less than half the vacation days of his predecessor.

      However, Factcheck makes the very real point that there is no such thing as a true non-working vacation for a president. They are always on call and are briefed daily on both national and international issues. As Nancy Reagan said, presidents don’t get vacations, all they get is a change of scenery. That’s something the numbnuts on here love to ignore.

      1. I think his point is that no matter what Obama, does, says or how he acts, he’s going to hate on him. That’s tribalism for you. The other guy is always wrong, no matter what. It’s a stupid way to operate, but most humans are guilty of it.

  3. Dont recall the US government holding back on European banks for rules breaches at UBS, Credit Swisse nor screwing billions out of BP for a drilling rig accident – on a rig being run by Haliburton FFS.

      1. Exactly, and their services were what went wrong. Whatever happened to the BP claim against Haliburton for failure to deliver said services which ended up with in spectacular failure ?

  4. “the company simply followed the law when paying their taxes”

    Nobody can say if they followed the law until the appropriate courts and/or governmental authorities make pronouncement on it, as is their right under their national laws.

    1. So the next time I come to a full stop at a stop sign, I’ll be sure to request a pronouncement from the local traffic court to see if I followed the law.

  5. There goes the global bully again terrified of a level playing field. It’s pretty well impossible for them to keep their big mouth shut and wait until the results. What consequences could they possibly mean? Seriously they only have one approach, that of war.
    So what are they gonna drop a nuke on an unarmed civilian population without warning? Been there done that, sure to do it again.
    Maybe circumvent the white flag, or the Geneva convention so that they can do whatever they decide to do. It’s so deja vu.
    How about replacing a democratically elected government with one of their own, oh wait that’s 9-11, the first 9-11.

    How about building a wall around that pathetic nation to keep their citizens in. Everyone would line up to pay for that.

    One thing you can pretty well be guaranteed is to respect the decision of a foreign entity, unless of course it goes their way, which it will. It’s an investigation nimrods, not a sentencing.

    Just the global bully getting ready for the post election war, just in time for Christmas.

  6. Funny thing, Apple would have to pay Ireland billions in back-tax. However, Ireland is fighting for Apple and saying that Apple have paid their tax in full to Ireland and do NOT owe anything.

    My take on how the system worked is. Apple based its worldwide operations in Ireland to avail of the 12.5% corporation Tax on its profits. However, Apple paid a shelf company, which was based outside Ireland in a very low/no tax environment, a “Royalty” for (I think) the use of the Apple name. This was in the billions and was a “business cost” which reduced the tax liability to be paid in Ireland. And this royalty payment is the billions that Apple wants to move back to the US.

    This loop-hole has now been closed, but should it have been legal?

    1. But it may not be Apples’ money. Also, the US is not been altruistic here by telling the EU to back off. If Apple has to pay Ireland $5 billion then that is $5 billion the US won’t get from Apple when the US goes after off shore profits.

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