European Commission to rule Ireland’s tax arrangement with Apple illegal

“The European Commission will rule against Ireland’s tax dealings with Apple on Tuesday, two sources familiar with the decision told Reuters, one of whom said Dublin would be told to recoup over 1 billion euros in back taxes,” Reuters reports.

“The European Commission accused Ireland in 2014 of dodging international tax rules by letting Apple shelter profits worth tens of billions of dollars from tax collectors in return for maintaining jobs,” Reuters reports. “Apple and Ireland rejected the accusation and have both said they will appeal any adverse ruling.”

Reuters reports, “The source said the Commission will recommend a figure in back taxes that it expects to be collected but it will be up to Irish authorities to calculate exactly what is owed.”

Read more in the full article here.

“The European Commission, the bloc’s antitrust agency, opened a formal probe into Apple’s tax arrangements more than two years ago, accusing Ireland of striking deals with the U.S. tech company in 1991 and 2007 that amounted to state aid,” Natalia Drozdiak and Viktoria Dendrinou report for The Wall Street Journal. “The EU’s decision would come days after the U.S. Treasury Department published a white paper sharply critiquing the EU’s investigations into tax deals brokered between U.S. multinational companies and European countries.”

“The U.S. has accused the EU of unfairly targeting American companies in its investigations. American lawmakers have threatened to invoke an obscure section of the tax code that allows retaliatory double taxation,” Drozdiak and Dendrinou report. “Ireland previously has said it was confident its tax arrangements with Apple didn’t breach EU rules, and it would defend ‘all aspects’ of the case vigorously, in court if necessary.”

“At issue are the tax rulings, or so-called comfort letters, governments hand to multinationals to give clarity on how a specific tax will be calculated,” Drozdiak and Dendrinou report. “These would be illegal if they gave selective advantages to some companies.”

Read more in the full article here.

MacDailyNews Take: Farcical.

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, September 2014

SEE ALSO:
Ireland prepares for a fight with EU over Apple tax clawback – August 29, 2016
U.S. government warns EU: Do not hit Apple with a massive back tax bill – or else – August 25, 2016
European Commission denies anti-U.S. bias after U.S. Treasury intervention over Apple, Amazon tax probes – August 25, 2016

23 Comments

    1. MDN and fanboys:

      You quote Apple CFO like that makes any difference.

      Stop believing whatever corporations tell you. Stop worshiping businesses.

      Apple does not care about you. If you run out of money, get sick, lose your job, etc., they will not help you.

      None of you are involved in this. None of you have likely even read 1% of the evidentiary record in the case and you make conclusions that the “EU sucks”. “Damn the government!” “Apple is innocent!”

      I have some shocking news for you. Apple may not be innocent. We’ll see after all of the evidence is out.

      Bottom line: there are liabilities that attach to a company for things like this. You can’t just point the finger and blame Ireland. Apple should of known or ought to have known that what it was doing could be illegal. Directors and employees carry personal liabilities when it comes to issues with corporate taxes. And lawyers and accountants who create and advise on these schemes also carry liabilities.

      If Apple was paying lower taxes than other companies where it’s preferential treatment, two things come to mind:

      -That is illegal: tax rates cannot be changed like that.
      -Apple is hypocritical and selfish to think that they should get lower taxes over others.

      Taxes are a necessary part of living in out world. Apple is not special. They’re just another profit seeking business.

      1. The crux of the issue seems to be boiling down to whether Ireland offered Apple a unique deal or not — a deal that Ireland would not offer to other companies that are of a similar nature to Apple. (Comparing Apple to a single proprietor coffee shop is just silly. Even in most U.S. states big companies pay different tax rates than single proprietor ships — and have been doing so for many, many decades.)

        The question then becomes, “How would Apple know for absolute certain that Ireland was NOT offering a similar deal to Google (Alphabet), Microsoft, Amazon, Intel, or any other set of similar corporations?” Unless Apple said to the Irish government, “Prove to me I’m getting the best deal of any company.”, which no sane CFO, COO, or CEO would do. Then, Apple could reasonably expect that the deal was not unique to Apple.

        Therefore, it is very reasonable that Apple is not as complicit as you suggest.

        1. You are extremely naive if you think Apple didn’t know what it was doing amd the risk.

          They absolutely did. They have lawyers and accountants, experts in international law and tax. This is what these guys do. They know the rules and they develop schemes to get around them.

          I have my own international tax expert and lawyer and I only run a “small” business. I’ve been exposed to numerous “tax haven” and “tax avoidance” structures all of which carried actual and potential, serious liabilities.

          Apple had a tax haven structure set up years ago. They do this stuff to avoid taxes. The CRA (Canada Revenue Agency) and the IRS have cracked down and evolved over the years. Tax avoidance schemes don’t work anymore.

          If you want to roll the dice, then it’s up to you. If you get audited, you will pay the price.

          I have no doubt that Apple took a calculated, informed risk. They may be ordered to pay back taxes. Anyone who thinks Apple didn’t know that being given preferential treatment for taxes when they have tax experts and it’s written in the law that this can’t be done… is a hopeless, delusional fanboy.

          1. I get your point, dswe, and I respect your experience. Apple may have gone too far. But it may also simply be a matter of differing interpretations between Ireland and the EU over the rules. Time will tell.

            You are welcome to your opinions. But I am a long time Apple advocate who seriously despises the “delusional fanboy” label that you and others throw around. You expect people to respect your input, but you casually disparage the opinions of a large group of people? Hmmm.

      2. “Taxes are a necessary part of living in out (sic) world.”

        They appear to be a lot more necessary to you socialist clowns who love to take from those who do and give to those who don’t (of which I’m sure you are one).

        1. I am a Conservative. I absolutely despise taxes but I also despise living in a world of chaos and greed. Government is enivitable because people are shortsighted, greedy, and irrational.

          People will not voluntarily help support a society. People continue to kill each other out of rage, spite, love… People can be emotionless and dangerous.

          The cycle is constant. Without government there’s no roads. No border protection. No schools…

          We’re not ready for little to no taxes. So let’s cut the crap.

          1. this is how EU officials spend tax money:

            2016 the Sun
            “But EU officials are using our money to fund their jollies and exorbitant expense claims.”

            Tens of thousands of Eurocrats received an inflation busting pay rise worth £75 million just before Christmas – with the promise of a New Year pay hike.

            Commission President Jean Claude Juncker’s basic salary is a whopping £235,000 bumped up by a special residence allowace of £35,267 to “compensate” the former Luxembourg PM for having to live in Brussels.”

            The Telegraph:
            “The Commission also ran up a bill of more than €300,000 (£263,511) for lavish cocktail parties, including an event in Amsterdam costing €75,000, which was described as “a night filled with wonder like no other”.

            “It spent thousands hiring top orchestras to play at the exclusive parties, while guest speakers at its events were presented with expensive gifts including cufflinks, fountain pens and Tiffany jewellery.”

            “Commission’s President, Jose Manuel Barroso, ran up a bill of €28,000 (£24,500) during a four-night stay at the New York Peninsula Hotel in September 2009.
            Mr Barroso stayed at the five-star hotel, where suites cost €780 a night, with an entourage of eight assistants while attending the UN Climate Change Summit. ”

            “The EU foreign minister is the world’s highest paid female politician, earning £230,000 a year…. Baroness Ashton infuriated British government ministers last month when she demanded an extra £23.5 million to run her diplomatic service, which would take her total budget to £427 million”

            ——-

            “We’re not ready for little to no taxes”

            I AM READY FOR LITTLE OR NO TAXES
            I BELIEVE THAT WE CAN HAVE TWICE THE SERVICES FOR HALF THE TAXES OR LESS IF POLITICIANS WEREN’T CORRUPT AND INCOMPETENT.

            1. Governments are wasteful. No question. But that doesn’t mean they’re not necessary. As the people they serve, we need to continue to demand more from our governments and give them less.

              But this is not a case of protesting the merits and worth of a government. This is a case of greedy corporate tax avoidance.

            2. I can agree with “But that doesn’t mean they’re not necessary. As the people they serve, we need to continue to demand more from our governments and give them less.”

            3. “I AM READY FOR LITTLE OR NO TAXES”

              should be “little TO no taxes”
              absolutely no taxes would obviously be impossible.

              note that the American Revolution occurred when the British imposed in today’s standards tiny taxes , there was NO income tax until a 100 years later in the Civil War and rate was MAX at 5% for rich people. It was supposed to be a temporary war measure and lasted 10 years. Income tax was reimposed in 1913 and from then the ballooning of municipal property taxes, state taxes, sales taxes, gas taxes, tolls , taxes on dividends (from corporate profits that have been taxed on shares you bought with your after tax income) , import duties etc etc it has become GIGANTIC.

              Much of the corporate taxes are also passed on to YOU the consumer as higher product costs and if you have Pension Funds, 401s, Mutual funds you own SHARES so more corporate tax basically means taking money from YOUR savings. (one of the reasons people look at their savings plans and see almost no gains).

              in the northwest where I live they have giant carbon taxes, and my town wants to tax the rain that falls on my roof at a per square foot rate (seriously to supposedly pay for sewer upgrades for ‘rain flow’ , costs which were supposed to be covered by my humungous property tax… not to mention I LIVE a block from the OCEAN where the water is going to flow… )

        2. You throw around labels like you knew what they meant. Nobody is saying to raise taxes, they want the tax rate to be fair for everyone. What Ireland enabled was money laundering that results in Apple paying essentially zero taxes on lots of sales in mainland EU.

          Funny how the same people who demand flat tax rates are the first to step up and defend the immoral crony capitalism that Apple and other multinationals are famous for doing. It’s got to stop.

          http://www.bloomberg.com/news/articles/2016-08-30/apple-s-14-5-billion-eu-tax-ruling-what-you-need-to-know

      3. While your basic premise has merit, your blanket rationale does not. Preferential tax treatment occurs all of the freaking time. In this particular case, it appears to be an issue of whether this preferential treatment violated the EU statutes. Ireland says no, the EU apparently is leaning towards yes.

        Laws are subject to interpretation, and corporations (and their lawyers and financial folks) are paid to push those interpretations as far as they can in order to reduce taxes. Wealthy individuals have the same benefit in terms of well-informed and influential representation. The rest of us just check a few boxes and pay.

        Regardless, the EU waited many years to start an investigation and I firmly believe that their ability to impose a retroactive penalty should be limited by that inaction.

        Taxation and fees should be simplified and exceptions should be extremely limited to the point of being nonexistent. We waste so many resources in the effort to collect and redistribute resources.

  1. Hmmmm, what does this say about the European Union??

    it says that you cannot deal with any one country, since 10 years down line, the “Union” may rule that even though you followed the law, you are in violation of the law and owe them lots of money. No deals anywhere in Europe are actual deals unless the “European Union” approves it, and then its subject to change.

    Perhaps that is why the Union is falling apart. ???

  2. Allegedly Ireland was short changing itself in order to attract business and employment. The EU wants a level playing among all countries in the EU. Any money collected it seems goes into Ireland’s coffers and not into general EU coffers. Anybody a real authority on this and can clarify?

    1. Botty,

      You know (or at least you should know) that the legal structure within the U.S. is a stronger and more rigid structure of the federal government over the individual states than the EU has over any of its member countries. Within the U.S. that issue has been cleared up many times — and as far back as the Whiskey Rebellion (over 220 years ago).

      Bringing Clinton or Merkel into this is just silly.

  3. …The full ruling is in. The Guardian has extensive coverage. Here is a page with a list of articles on the subject:

    EU orders Apple to pay up to €13bn in Irish taxes – business live

    Here’s the main article:

    Apple ordered to pay up to €13bn after EU rules Ireland broke state aid laws
    European commission says country afforded Apple illegal help with tax breaks but Dublin vows to appeal against the ruling

    What’s next:

    Ireland’s finance minister, Michael Noonan, said Dublin would appeal against the ruling.

    He said: “The decision leaves me with no choice but to seek cabinet approval to appeal. This is necessary to defend the integrity of our tax system, to provide tax certainty to business and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation.”

    A cabinet meeting will be held in Dublin on Wednesday to discuss the fallout from the ruling. At the heart of the Fine Gael-led administration’s objections is that it would cause Ireland “reputational damage” in the eyes of other mainly US multinationals thinking of establishing their European base in the Republic.

    Fine Gael, the main opposition party Fianna Fáil, and a host of independent deputies serving as ministers in the coalition government support the low-tax regime for multinationals because it has created hundreds of thousands of jobs.

  4. Under Tim’s watch! Shocking! I trust this 14.5 billion euros includes appropriate penalties, interest etc.; if not, they should be added to the bill.

    Oh well, maybe they apply to the Clinton Foundation for help. Oh! Wait! She’s not the Secretary of State any longer.

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