Apple CEO Cook blasts European Commission for ‘ignoring Ireland’s tax laws, upending the international tax system’

Tim Cook has penned an open letter to customers titled “A Message to the Apple Community in Europe.” Here it is verbatim:

Thirty-six years ago, long before introducing iPhone, iPod or even the Mac, Steve Jobs established Apple’s first operations in Europe. At the time, the company knew that in order to serve customers in Europe, it would need a base there. So, in October 1980, Apple opened a factory in Cork, Ireland with 60 employees.

At the time, Cork was suffering from high unemployment and extremely low economic investment. But Apple’s leaders saw a community rich with talent, and one they believed could accommodate growth if the company was fortunate enough to succeed.

We have operated continuously in Cork ever since, even through periods of uncertainty about our own business, and today we employ nearly 6,000 people across Ireland. The vast majority are still in Cork — including some of the very first employees — now performing a wide variety of functions as part of Apple’s global footprint. Countless multinational companies followed Apple by investing in Cork, and today the local economy is stronger than ever.

Apple CEO Tim Cook
Apple CEO Tim Cook
The success which has propelled Apple’s growth in Cork comes from innovative products that delight our customers. It has helped create and sustain more than 1.5 million jobs across Europe — jobs at Apple, jobs for hundreds of thousands of creative app developers who thrive on the App Store, and jobs with manufacturers and other suppliers. Countless small and medium-size companies depend on Apple, and we are proud to support them.

As responsible corporate citizens, we are also proud of our contributions to local economies across Europe, and to communities everywhere. As our business has grown over the years, we have become the largest taxpayer in Ireland, the largest taxpayer in the United States, and the largest taxpayer in the world.

Over the years, we received guidance from Irish tax authorities on how to comply correctly with Irish tax law — the same kind of guidance available to any company doing business there. In Ireland and in every country where we operate, Apple follows the law and we pay all the taxes we owe.

The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process. The opinion issued on August 30th alleges that Ireland gave Apple a special deal on our taxes. This claim has no basis in fact or in law. We never asked for, nor did we receive, any special deals. We now find ourselves in the unusual position of being ordered to retroactively pay additional taxes to a government that says we don’t owe them any more than we’ve already paid.

The Commission’s move is unprecedented and it has serious, wide-reaching implications. It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been. This would strike a devastating blow to the sovereignty of EU member states over their own tax matters, and to the principle of certainty of law in Europe. Ireland has said they plan to appeal the Commission’s ruling and Apple will do the same. We are confident that the Commission’s order will be reversed.

At its root, the Commission’s case is not about how much Apple pays in taxes. It is about which government collects the money.

Taxes for multinational companies are complex, yet a fundamental principle is recognized around the world: A company’s profits should be taxed in the country where the value is created. Apple, Ireland and the United States all agree on this principle.

In Apple’s case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States. European companies doing business in the U.S. are taxed according to the same principle. But the Commission is now calling to retroactively change those rules.

Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe. Using the Commission’s theory, every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed.

Apple has long supported international tax reform with the objectives of simplicity and clarity. We believe these changes should come about through the proper legislative process, in which proposals are discussed among the leaders and citizens of the affected countries. And as with any new laws, they should be applied going forward — not retroactively.

We are committed to Ireland and we plan to continue investing there, growing and serving our customers with the same level of passion and commitment. We firmly believe that the facts and the established legal principles upon which the EU was founded will ultimately prevail.

Tim Cook

MacDailyNews Take: The quasi-governmental political confederation — that’s already been hit with one very significant defection and has the existential threat of widespread desertions hanging over its collective head — grows more farcical and looks more desperate with each passing day.

Newsflash: Corporations don’t pay taxes, you do. “Corporate taxes” are simply passed along to the consumer. It’s how the government sneakily double-taxes its citizens. You’re taxed on your income and then again on what’s left via higher prices across the board.MacDailyNews Take, December 4, 2015

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

71 Comments

    1. You do not understand very simple concepts. My sympathies for whatever is the cause of your considerable mental incapacity, be it a genetic/birth defect, head trauma, or disease.

      Using the Commission’s theory, every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed. — Apple CEO Tim Cook, August 30, 2016

      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

      1. lol, your cute when your right.

        It’s pure BS and totalitarian to retroactively change the rules and hold “subjects” accountable.

        It is wise to petition and negotiate a change of rules and then apply those rules at that time forward. You can negotiate retroactive pay, but only for good will, and at the discretion of the payee. We all know, that can’t happen now. The EU just tried to bite the hand that fed it.

        1. The rules WERE NOT CHANGED. The EU is NOT GOING AFTER APPLE. Only after it was discovered that Apple (and a few other large multinational corporations) received special tax rates in violation of EU law did the EU proscecute. The matter was handled in the court of law, and the outcome is correct. Ireland is the party that violated the rules, they could pay the overdue tax bill on behalf of Apple. But Ireland will not, they are simply passing the overdue tax bill to Apple because Ireland is a shell tax shelter country with inadequate financial reserves to pave its own streets, let alone fund the increasing largesse of multinational corporations that have more money than they know what to do with….

          Sorry, Apple. Your hundreds of tax attorneys ignored EU law and took a sweetheart tax avoidance deal that was illegal.

          Here’s a concept: if libertarians hate unions so much, why do they live in the EU or the USA? Go live in China, where economic growth is stronger, near-slave labor is cheapest, and the Party will offer you anything you need. That’s where Cook does most of his business. Why not you?

          … could it be perhaps that older, established democratic nations have more extensive infrastructure, a better educated population, and superior business support, all of which requires higher levels of taxation to operate??? You gotta pay for what you use. Apple in this case DID NOT.

          1. Yeah, right. They ignored the laws of an entity that did not even exist at the time that they set up operations in Ireland.

            Go back to smoking that wacky tobacky.

          2. There is just SO much you are not getting right.

            First, there are NO EU “laws”. That is just a overly simplistic way that too many people are saying it.

            The EU is a union of various European countries that is held together by treaties and various agreements. The EU does not have a formal “government” like any nation state does. The EU has no “laws” like nation states do. The EU has commissions and such to attempt to rule on WAAT EACH OF THOSE COMMISSIONS think is the appropriate reading and interpretation of those treaties and international agreements.

            Therefore, Apple complied with actual TAX LAWS. Those TAX LAWS were put into place by the actual government of the nation state of Ireland.

            Think of it this way: The EU is nothing more than a more political and more closely knit version of NATO (without the U.S. or Canada). Do you think NATO could go into a country and *demand* that country send more troops and services to a given battle? Not on your life or anyone else’s.

            “… could it be perhaps that older, established democratic nations have more extensive infrastructure, a better educated population, and superior business support, all of which requires higher levels of taxation to operate” So how many of those EU commissioners hale from nation states that are older democracies/republics than the U.S.? It most certainly is not the EU itself as it’s not a nation state of ANY kind.

            If you don’t like the tax structure passed into law by the sovereign nation state of Ireland, move there and very actively campaign to get those laws changed. Once you do Apple can start paying that new level of tax.

            Ex Post Facto rulings are NEVER a good thing.

            You wouldn’t want the U.S. Government to pick some obscure part of U.S. tax law that is directly beneficial to you and has been for the past 20 years then change it so now you owe taxes for the past 20 years you never owed before — plus penalties and interest — would you?

    2. That’s the point- they DID pay their taxes. The European Commission is telling them to pay them a second time. Didn’t you read Tim’s response? Haven’t you been paying attention to other professionals’ observations about this?

          1. From the nature of his and others on here spouting the same let’s-ignore-the lessons-history, pro-government, state-can-do-no-wrong, illogical nonsense, I’d say their asses.

    3. I can’t believe I’m going to say this but f14t16 is 100% correct on this one. Apple paid the taxes that they owed, the EU is saying that they want additional tax money from the last 36 years, which would be like asking me to pay income tax from 1998 that was already paid because of a new tax law. New laws are applied going forward, they are not retroactive. This tax ruling is insane and based on a flawed principle, and a misunderstanding of apples deal with Ireland. And I wouldn’t be surprised if Google didn’t have something to do with this, since they managed to avoid getting whacked even though they deliberate hide moe y in Switzerland.

        1. I’ve read the ruling. The issue at hand is that the agreement between Ireland and Apple pre dates the EU, and doesn’t violate international any international statute. They are not hiding money, nor did they receive any special favors. Now if they came to an agreement post EU formation then the ruling would make sense. But since the agreement was signed in 1981 there’s no basis to go after tax money from 36 years ago, and previous agreements were grandfathered into the EU formation. You can’t go after money that wasn’t owed in the first place by retroactively changing a policy. If they want to collect money going forward, that’s fine, and Apple and Ireland have said as much. But since the Irish are appealing this too, since they would benefit from the 14.5 billion, means that there is something amiss. The original agreement between apple and the Irish government is easily attainable to read, and there is nothing in there that would justify this ruling. Also, Apple pays their taxes… People asserting that they don’t are incorrect. There are many companies that don’t pay taxes but Apple isn’t one of them. Their tax rate last quarter was 27% and is on average 26-28%.

          1. We will have to wait on the appeals to see what happens, but your retroactivity argument is not going to fly. The Apple-Ireland agreements do not predate the EU, which has existed in one form or another since 1951. The Republic joined in 1973 (as did Northern Ireland and the rest of the U.K.). From the beginning, there has been an unwavering policy that member states are not allowed to offer subsidies to state or private businesses in order to give them an advantage over competitors located in other member states.

            If the deal with Apple is finally held to have been an impermissible subsidy, the only reasonable remedy is to force reimbursement of the improper enrichment, back as far as the relevant limitations statutes allow. That is true even if Apple was entirely innocent. If you acquire stolen goods as an unwitting purchaser, you still have to return them to the lawful owner. Again, all this has yet to be determined; I hope Apple wins.

            1. Back then it was a trade agreement and not a government body, that’s the crux of it. Member nations from that period had no obligation to report national policy to Brussels since the assembly didn’t exist then. It operated similar to nafta until the 1990’s when it was incorporated as a governing body. That’s where my argument and more likely apples and Ireland’s lawyers will come from.

            2. Obviously, the enforcement mechanisms are much stronger under the EU than they were under the Common Market, but the underlying obligations have applied since each country joined the organization. The trade agreements all the way back to 1951 have always prohibited state subsidies that alter the level playing field that allows the free flow of goods, services, funds, and labor between each of the member states.

              I’m not saying that the Apple arrangement was such a subsidy (that’s for the courts), but if it was an impermissible subsidy it is not being prohibited ex post facto.

            3. You may well be correct, we have to see what the court says. But my reading was an ex post facto decision, however our attorney may disagree. I’ll have to go through it again and see which statutes apply to the republic and which do not prior to 1992.

      1. Haha, just because folks might disagree on most points doesn’t mean there’s never an opportunity for common ground.
        Folks tend to forget that, I think that’s part of the problem with politics today.

    1. wish critics would stick to the actual facts. Nothing is going into any politician’s pocket. If the European Commission wins the appeal, the money will be owed to the Republic of Ireland, which opposes the ruling and will be appealing it along with Apple.

      1. Well said TxUser. I’m sure bringing in that fact will confuse the issue for some but it’s the way it is, any money coming out of this goes back to Ireland. It’s not a EU money grab but believe me a lot of people will believe that.

        Thumbs up.

        1. You and others are operating under an assumption that the EU won’t try.

          Where does the EU get funds for it’s operating expenses? Membership fees? Can the EU levee fees/fines?

          I will join the assumption club and assume the EU does have some method of getting their hands on some of that money… otherwise, what’s the point of this whole charade?

          To make things “fair”? Fair for whom? Ireland clearly thinks things are fair enough already.

          So who really gains (and gains what) from all this?

          Non-elected (and consequently non-accountable) officials in EU commissions who (like all politicians/authoritarians) like to exert power… and want more. If these rulings are upheld (and I have little faith they will be overturned), these people are clearly going to get their hands on a lot more political power/authority… to do as they bloody well please. Because that is exactly what is going one here. The tax issue is just a smoke screen. Who will be able to tell them no? Who will hold them accountable… and how?

          Anyone who does not see this for what it is, is either ignorant, naive, or looking to ingratiate themselves with the power elite. Quislings.

          1. The primary source of EU income is a 0.7% levy on the Gross National Product of each member state. Since Apple’s Irish income is already included in the Republic’s GNP, the amount of income taxes it may or may not pay does not affect Ireland’s payments to the EU. Additional sources of funding include a very small share of Value Added Tax collections within the Union and the bulk of duties collected on non-EU imports.

            This dispute may (probably does) represent an assertion of power by the European Commission staff, but neither the EU or any of its agencies or employees has any direct financial stake in increasing Apple’s taxes.

            The “point of this whole charade” is making sure that EU member countries do not engage in conduct that harms other members in violation of their mutual treaty obligations.

        1. Actually, I think it is also motivated by the need to coordinate the defense of Europe if the candidate who has threatened to withdraw American protection carries through on his promise. If NATO collapses and there is nothing to replace it, the Europeans might as well start polishing their Russian-language skills.

  1. What’s missing in this very selective so called reporting is the fact that the European Commission has stated that Ireland gave illegal tax benefits to Apple worth up to €13 billion. It’s on the other media outlets so you won’t miss it.

    If you go to the source (European Commission) you’ll find Commissioner a press release: “Margrethe Vestager, in charge of competition policy, said: “Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules. The Commission’s investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014.””

    It goes on, for those interested in finding out both sides of the story, and €13 billion is a lot of money a bit more than a dime. I sure hope Apple and Ireland fight it tooth and nail all the way with appeals, but it’s nice to see that someone isn’t intimidated by threats and for that perspective you’d have to go to MDN posting of Aug 29, 2016 that reads “U.S. government warns EU: Do not hit Apple with a massive back tax bill – or else.”

    Well the massive tax bill is there. Let’s see that “or else”.

    It’s sure to get ugly.

    1. Sorry Road, but I did read “Margrethe Vestager, in charge of competition policy, said: “Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules. And I found no verification that her assertion was anything more than conjecture. She’s going to have to defend that statement in the appeals. I don’t believe she can.

      IMHO this is just another waste of EU member’s money. The member states literally get nothing out of it and are likely to lose business interests as a result of it. Ireland would be the only country to benefit and they’ve repeatedly stated they don’t want the money. What a ridiculous state of affairs.

      1. Exactly, it’s potentially as much conjecture as what everyone else is saying so it will have to be decided through a court of law, hence the appeal process and it will drag on for years and years and years.

        Bureaucracy is a massive wasting quagmire, so you might as well have fun with it. MDN sure does, putting the post of Tim Cook’s reply before the post of the actual charge article. I mean talk about the cart before the horse. You certainly aren’t hearing both sides of the story, just an illustration on how the media manipulates the situation.

        Fortunately these days intelligent readers can do something about it. It sure enriches these delicate topics.

        Have an enriching day Derek. I’m sure this topic will be juicy for a bit, milk it for all it’s worth.

  2. As a UK citizen who voted to leave the EU, this farcical judgement by the EU has reinforced my belief that Brexit was indeed the right decision. The sooner the EU melts down and other countries leave, the better.

  3. EU why? Are this tax irregularities with out prudent search, trying to destroy or harm a great company as APPLE,
    Still no understand the social and economic benefits and visions of this great company,.
    Harm a company which thousands live hood depends on them, why is this so complicated, to understand, European Commission of what?
    Ridiculous tax laws with extreme irrationally and complex guidelines to confuse and harm foreigner industries?
    Where they want to go…simple when you put companies to this extremes ?
    Who wants to invest in Europe?
    For after all you get hit hard with all this complex taxation with out logic.
    All the Great companies outsiders going to do simple invest in other areas of the world…
    Stop thinking and act reconsider this brutal harassment to foreigners companies.
    Two laws in business work yes don’t work out….
    So……….think about it EC…..

  4. When will what used to be sovereign European nations grow back their balls, as the UK seem to have done recently, and reclaim their sovereignty and stop being neutered peons led around by unelected, corrupt, supranational politicians?

    1. Someday you will learn that collaboration brings multiplicative benefits.

      If you think small nations are so great, then you go ahead and field your one-man rugby squad against a full team. See how far you get, FT.

      United, people and colonies and nations become strong. In isolation, not so much. Small nations have inadequate leverage to enact beneficial trade deals for its citizens. Why do you think the USA ever became a world power? It combined the resources of 50 states to get where it is. Britain will wither faster thanks to it’s recent isolationist stance.

      1. Mike, I respect your views most of the time (see above) but I must disagree here.
        Britain has in no way taken an “isolationist stance”.
        We should have never joined the EU in the first place, our sovereignty has been trampled on over and over again negating whatever financial benefits have been gained.

        Only those left of centre see this vote as a raising of the drawbridge, normal people understand that we simply tired of our wishes being ignored by the Eurocrats.
        You don’t agree? Sorry.
        That’s what democracy is all about.

        Lastly, Britain is not a small nation. Why do you think we could keep our currency?

        Don’t worry. We’ll be fine.
        I think what has shocked you and others is that we didn’t all vote like sheep in lockstep with the left wing press. Believe me, I was shocked too.

        1. Thanks for the thoughtful response, Stan.

          History will record that happens when a former world power stops participating with its closest economic partners.

          Isolationism in 14th century China under the Ming dynasty stands as a symbol of strength to the people inside the wall, but stands as a testament to mass poverty and economic decline to all the trading nations who surged past China for the next 600 years. Only now is China waking up.

      2. “Someday you will learn that collaboration brings multiplicative benefits.”

        I have lived in a wealthy country that thrives on collaboration for decisions. It has it benefits but it has its share of problems that drive things at a snails pace. When “collaboration” becomes authoritative, it greatly hampers growth and kills creativity. That is the problem with the EU collaboration.

      1. Every time you come here you insult someone.
        EVERY. SINGLE. F’ING. TIME.

        “My sympathies for whatever is the cause of your considerable mental incapacity, be it a genetic/birth defect, head trauma, or disease.”
        That’s unbelievable. In an article about taxes. O_o

        I don’t care if you are in the right, routinely stooping to petty childish name calling makes you 100% wrong.

        True conservatism is dead, along with RR and Lady Thatcher.
        They’ve been replaced by hatemongers like you spewing bile and hostility wherever you go.
        Trump is going to lose, not because his ideas are faulty, but because he thinks and speaks exactly like you do.

    1. Exactly! The funny thing about this story if it was Samscum getting hit with the same situation, the same all or nothing fanboys would be applauding it. The reality is that a mere 62 people have over half of the world’s wealth and only a few more have most of the other half. That doesn’t leave a lot left for the rest of us poor, hard working slobs that have to shoulder supporting the world. It’s very sad that we have to pay through the nose for the luxury of having an underpaid and overtaxed job. Personally I’m sick and tired of having to make double the money to buy something after taxes. Apple and all the rest of these fat cats need to pay their fair share irregardless of the back room deals struck from their paid off buddies they helped elect.

    2. No they do not. Last quarter their tax rate was 27%, and on average it is 26-28%. This is the second time you have said the same false thing. There are companies that pay almost no tax, but Apple is not one of them.

      1. In fact, Apple pays the most income tax of any US company and likely the world. I would also venture to say that that Apple collects more VAT in Europe on its sales than virtually any other company and far more than the other vendors individually who have a much lower ASP. Likely, ifApple hadn’t created the iPhone which led to the clone offshoots much of that VAT would have never been created.

  5. No one listens to Tim Cook, so he should just keep quiet. It’s not going to help Apple shareholders. That money is as good as gone. Tim is constantly collecting big paychecks and he claims he’s going to donate lots of money to charity so it really shouldn’t matter to him at all if Apple has to pay that money.

    Apple’s overseas cash is worth zero amount of value to Wall Street and obviously shareholders can’t touch it. If it goes, it goes. It’s really like it doesn’t exist, anyway. Apple’s share price is going to take another big hit and I’m prepared for it.

    I’m just surprised that only Apple is going to owe back taxes and I thought there are other companies doing the same thing.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.