The inside story of Apple’s $14 billion EU tax grab

“In August the EU said Ireland had broken European law by giving Apple a sweetheart deal. It ordered the country to bill the iPhone maker a record 13 billion euros ($13.9 billion) in back taxes, plus interest, from 2003 to 2014,” Gaspard Sebag, Dara Doyle, and Alex Webb report for Bloomberg. “One example the Commission cites: In 2011, a unit called Apple Sales International recorded profits of about 16 billion euros from sales across Europe. But only 50 million euros were considered taxable in Ireland, leaving 15.95 billion euros of profit untaxed, the Commission says.”

“Though the EU says its goal is “’to ensure equal treatment of companies’ across Europe, Apple maintains that the Commission selectively targeted the company,” Sebag, Doyle, and Webb report. “With the ruling, the EU is ‘retroactively changing the rules and choosing to disregard decades of Irish law,’ and its investigators don’t understand the differences between European and U.S. tax systems, Apple said in a Dec. 8 statement.”

“Apple, which has some 6,000 workers in Ireland, says its Irish units paid the parent company a licensing fee to use the intellectual property in its products,” Sebag, Doyle, and Webb report. “The Irish companies didn’t own the IP, so they don’t owe tax on it in Ireland, Apple says, but the units will face a U.S. tax bill when they repatriate the profits. ‘This case has never been about how much tax Apple pays, it’s about where our tax is paid,’ the company said. ‘We pay tax on everything we earn.'”

Read more in the full article here.

MacDailyNews Take: Until this total political crap is properly settled:

Anyone who decides to set up a business in a European Union member country today is insane.MacDailyNews, August 30, 2016

SEE ALSO:
Ireland’s Finance Minister Noonan: Apple tax appeal may take four years, maybe more – September 23, 2016
Apple’s EU tax nemesis Margrethe Vestager takes aim at other U.S. companies’ offshore profits – September 19, 2016
The ‘Brexit-Apple’ connection: What in the world was Margrethe Vestager thinking? – September 12, 2016
EU ministers line up to take tax bites out of Apple – September 12, 2016
Former EU competition commissioner: Vestager claim that Apple owes back taxes an incorrect use of EU law – September 2, 2016
Irish government to fight EU on Apple tax – September 2, 2016
Treasury accuses EU of trying to steal U.S. tax revenues with Apple decision – September 1, 2016
Irish residents opposed to EU’s tax demand of Apple – September 1, 2016
Apple Inc. pushes back against EU tax grab – September 1, 2016
Apple may repatriate billions of dollars next year after new U.S. President takes office – September 1, 2016
U.S. tax code allows for dramatic retaliation against EU overreach in Apple case – September 1, 2016
Apple CEO Tim Cook on EU tax demand: ‘No one did anything wrong here and Ireland is being picked on… It is total political crap’ – September 1, 2016
U.S. Treasury: The European Commission’s retroactive tax demands on Apple are unfair – August 30, 2016
EU demands Apple pay massive $14.5 billion in taxes plus interest – August 30, 2016
U.S. government warns EU: Do not hit Apple with a massive back tax bill – or else – August 25, 2016<

22 Comments

  1. “With the ruling, the EU is ‘retroactively changing the rules and choosing to disregard decades of Irish law,’ Should read “With the ruling, the EU is ‘retroactively enforcing the rules and choosing to disregard decades of the Irish flouting the law,’ just because they got away with it for over a decade still doesn’t make it right. Yeah sure Apple thought they were onto a good thing and it probably looked too good to be true. It was.

    1. You should do more research before making such statements. Are Technica had a few articles several years ago explaining just how the international set of laws — including those in Ireland, The Netherlands, Bermuda, etc. — allow large corporations to move property rights around and thus taxable income around to avoid paying taxes at any given time. There were a few other articles out and about too explaining the same thing.

      The taxes become due when the corporation needs to actually spend those profits even under the most convoluted methods, but if you’re like Apple and can just sit on those profits for years and years, then the company can put off paying taxes on those profits.

      Apple is complying with the laws. The claim by the EU is that Ireland passed and implemented laws that specifically and improperly benefit Apple — something that may not be against Irish law but is against EU agreements and rules. Then the EU is not getting a share of those taxes that Ireland is not getting.

      The problem with that is the EU is claiming that Ireland did the same thing with Google and several others. (The EU either has or is considering action against several countries on similar grounds.) Just how can it be a case of improperly benefiting one company (Apple) if Ireland is doing the same thing with several other companies? The EU’s argument just does not hold up.

      1. To this year the WTO found that the EU did not correct the fact that Airbus received Launch aid for several of their aircraft. So no the EU is not treating companies the same, cuddle EU companies and go after Non-EU countries.

    2. No, the International laws have long held that the taxes earned internationally are due and payable in the country in which the business earning them is established. Since Apple is incorporated (established) in the United States, it pays its income taxes on world wide revenues in the United States. A company such as Exxon Mobile which is incorporated in the UK would pay its Income Taxes in the UK. Some small portion of those taxes are payable in foreign countries, but it is minuscule under international tax laws.

  2. This is a long game, will be a lot of fun to watch. I did not find anything particularly new in the article. It’s at the appeal process and it will get to court faster than the release of a Guatanamotrumpo on the Bay Resort detainee.

  3. Several looming problems here:

    1. The EU will probably cease to exist way before this case Is settled.
    2. The € currency could well be in the trash even sooner, so would Apple inc. have to pay in Irish Pounds?

    1. Exaggerate, much?

      The EU is an attempt to pull member nations into a sort of US of Europe, when it comes to financial matters.

      In the US, many things are controlled federally. A rogue state can’t offer to shield a company from federal-level taxes if they set up in that state. In fact, even shipping to other states and not paying state tax is an area which is regularly challenged.

      If you have a presence in that other state you will have to charge state taxes.

      The point is that you have to think of the EU as a financial entity somewhat similar to the US and if it’s deemed a member state is unfairly disadvantaged, they will bring them back in line. Of course, Apple feels taken advantage of, but they got away with paying almost nothing in tax.

      The Euro isn’t going anywhere.

        1. So you have patriot feelings for the UNITED States of ‘Merica, a collective of 50 states that wouldn’t have existed and could never have achieved anything economically or militarily without banding together under federal leadership — but you think similar coordination is bad for other regions?

          Explain.

            1. “The EU does not” have elected representatives.
              Ahh…more Trump reality nonsense. Really? So we don’t elect MEPs every five years.
              When in doubt…Lie like an idiot, shout like a fishwife, rant like a demented fool. Trump, Farage and botvinnik.
              You scored a triple without engaging your low IQ.

            2. uh, “MEP’s” have no vote on the EU Council of Ministers, they’re a facade, smoke & mirrors for dumbfucks like you to “believe in.” They have no real power, the power is embedded in the European Union’s Council.

              “Although the European Parliament has legislative power that the Council and Commission do not possess, it does not formally possess legislative initiative, as most national parliaments of European Union member states do.”

      1. … the € is on borrowed time, that is a fact; why?

        1. One Interest rate for small and large European countries simply does not work. Proven.
        2. Inability to control your own exchange rate simply does not work in challenging times. Look at how many European countries were nearly bankrupt by their inability to control their own destiny. Proven.

        The UK had the foresight to see just how this half-way monetary and fiscal union would simply not work; Proven, with the flexibility they have demonstrated by not being constrained by European dictated nonsense.

  4. I am completely dumbfounded by this basic issue:
    What’s the point of having a common currency and saying you’re an “economic union” if you allow your various member states to have wildly, crazy variations in their tax laws? Shouldn’t that be a entry-requirement for membership, to unify the tax codes? And if you do allow “variations” in the tax code–which the EU obviously does—when does a variation become “cheating?” You would think that these issues would have been clearly spelled out 20, 30, years ago.

    And, oh by the way, Apple has had this “sweetheart deal” going since the 90s, but no one seemed to be paying attention until now, when Apple started earning the big $$$.

    1. Those variations in tax laws were specifically allowed in the treaties that established the EU. This commission is flouting those TREATIES by going around them by using consumer protection regulations as a pretext to force a country which has autonomy in its tax laws BY THOSE TREATIES to do as they please. In other words, they are trying to use a regulation to make a treaty null and void. That is contrary to the international rules of law.

  5. Well, I just set up a company in the Bahamas and rent myself out to it so I don’t have to pay taxes here. But I still want to use the roads, schools, health facilities, security, etc … the stupid little people should pay that for me.

    Only poor people pay tax. Martha said so.

    1. Apple is still paying taxes in Ireland. In 2012 they paid just under 50 million euro. That is about $52,281,000 in 2016 USD. I think that is enough to cover their use of the “roads, schools, health facilities, security, etc.” for one year.

  6. This is the tyranny you invite when a nation relinquishes its sovereignty to a cartel of bankers. The United States narrowly escaped this same tyranny when it rejected Hillary Clinton, an open borders, North American Union advocate.

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