Verdict is in, EU demands apple to pay 13 Bilion EUR (+Interest) in taxes owned to Ireland

[RagnarokDel]

18 hours ago, Uzukami said:

Whats the odds of Apple jumping ship to a larger EU country?

It's an EU thing,they have to pay.

[bigneo]

21 hours ago, ThinkWithPortals said:

Great. As an Irishman, my country could really use the money

To get extra week's dole for Christmas?

[patrickjp93]

14 hours ago, Nineshadow said:

In 2014, Apple paid $50 in tax to every million it made in profit for most of the world outside America. How is that fair? They are not the only ones doing it in Ireland, oh no, but they're probably the biggest player.

 

In 1991 they struck a deal with the Irish govt. which allowed them to split profits between their Irish branch and a phantom head office. They paid the normal tax rates for their profits on the Ireland branch, but the profits from the phantom head office were tax-free, because under the Irish law it was then considered a "stateless" company and, as such, didn't have to pay taxes.

It's Ireland's decision to make as a sovereign nation. If the tax policy is such that Apple can legally do that, it should. Ireland can either reform its tax system and collect more and risk Apple leaving, or it can leave the code the way it is. It's perfectly fair. It's just not warm, fuzzy, and equitable. The law is the law, and the EU should have 0 standing in how Ireland handles its own internal taxation.

 

No, the biggest is Google.

 

And the only one who should be penalized for that is Ireland, not Apple. Apple operated within the law and state powers. If the state was stupid, the state should bear the consequences.

13 hours ago, Trixanity said:

False. 

 

I'm not sure if it's the media you read that gives you that impression or just 'Murican exceptionalism feeding that theory.

 

Everyone abuses tax havens but some are more able to than others. If you just need a shell company to siphon money out of the EU, then you go to Luxembourg. For instance, there is a single relatively small building in Luxembourg that hosts over 5000 companies. That's not really possible if there was actually any employees there (and there aren't any, I can assure you no one really works there).

 

If you need a cheap call center or similar with actual employees, you open up in Ireland with beneficial tax deals to boot. 

 

If you need lots of skilled employees, you'll have a hard time getting them to move to Ireland, so you'd probably have to sacrifice some of those tax benefits by choosing a more suitable location on the continent - someone mentioned Netherlands which seems like a reasonable place.

 

But back to the idea of US companies only. European companies will have had existing offices for years and years (some even for a century) with lots of skilled employees making it impossible to move around, so only parts of the company can be split up to create those tax havens whereas a US company will arrive and only establish the minimum required presence to do business and in the case of a tech company like Facebook for instance (who only paid like $5000 in taxes if I recall) can really minimize everything and can pretty much pick and choose where to go, so they'll pretty much pack everything they can into a tax haven which is why they get fined (in this case).

 

That's an example of basically taking all they can and giving nothing back. No contribution. Sure, they create some jobs but in the end, they take much more than they give. Yes, they're trying to make a profit but making millions in profit while giving some pocket change back is a poor contribution to the community.

 

With that being said, EU companies still get fined but I doubt it's that high profile in global media. The media is more interested in very recognizable brands like Facebook, Google and Apple than shipping companies or pharmaceutical companies. Although it would be odd if more financial-focused media wouldn't have a story on it particularly if it's based within the EU.

The EU regulators fine maybe 1 european company for every 7 U.S. and prosecute 1 for every 10. If you don't believe me the open EU docket records confirm this.

 

It's not up to Facebook to give back. You earn your keep. If your state is stupid enough to allow a parasitic tax haven, the problem is the state, not the company taking advantage.

[Centurius]

20 hours ago, Misanthrope said:

Good for the EU. Too bad Ireland is Brexiting and thus can likely avoid the veredict and keep the tax heaven soon.

Different Ireland 

[Sakkura]

3 hours ago, patrickjp93 said:

It's Ireland's decision to make as a sovereign nation. If the tax policy is such that Apple can legally do that, it should. Ireland can either reform its tax system and collect more and risk Apple leaving, or it can leave the code the way it is. It's perfectly fair. It's just not warm, fuzzy, and equitable. The law is the law, and the EU should have 0 standing in how Ireland handles its own internal taxation.

Well there we have it, Patrick doesn't understand how the EU works.

 

The EU can only function if it has power, if it can actually do things. That means member states have to hand over some of their sovereignty. Even regular trade deals do this to a lesser extent, that's why TPP and TTIP have been so controversial.

 

In this case, the EU countries have collectively decided that member states are not allowed to subsidize individual companies (with a few special exceptions, not applicable here), so that there isn't an incentive for a race to the bottom that doesn't overall help anyone.

 

So the EU absolutely has standing with regard to Ireland's handling of its own internal taxation (which isn't entirely internal anyway, since most of the taxable income in question is generated in the other EU member states).

[Centurius]

18 hours ago, patrickjp93 said:

If the U.S. pulled its tech business sales from the E.U. and simply expanded in Asia, it would be fine, and the Europeans would be sunk.

Yes the American tech sector will abandon the 500 million strong first and second world market that is the European Union

18 hours ago, patrickjp93 said:

How is it idiotic? The U.S. has every right to crack down on the BS its trade partners pull. The EU regulators are out of control power whores who don't base legal decisions purely on the letter of the law and don't even make them to benefit competition. We saw this in how they handled Intel's so-called anticompetitive actions and fined them (iirc) 1.4 billion and seek to collect that without giving a dime of if to AMD. Intel paid in the U.S. but is refusing to do so in the EU, and frankly I agree on principle.

 

Doubt it would happen, or doubt the effects would be so?

State aid was banned by all member states collectively and this ban was reinforced by further measures approved democratically, they're following the law. 

18 hours ago, patrickjp93 said:

How is it corrupt to offer lower tax rates than other countries?! It spurs business growth which IS job growth. All it proves is the EU wants money and is only willing to maliciously and improperly prosecute extremely large U.S. companies.

 

They aren't following the law to the letter. As long as Apple is paying the EU the correct amount of tax, the EU should have 0 standing in dealing with Irish tax law.

 

Intel was not proven to have broken the law and is refusing to pay the fine on principle.

Yes it would. The EU is cracking down only on US businesses, and in an entirely unreasonable way. And If we removed negotiated away the Chinese tariffs, the expanded business would eclipse the entire EU market. That is how economic leverage is developed.

 

Asia doesn't have much of a buoyant tech market. It's basically Huawei and no one else.

It is corrupt when only a few companies get these agreements while others are bound by the regular Irish tax law. Furthermore the member states agreed to avoid a race to the bottom. Again, perfectly following the letter of the law.

18 hours ago, patrickjp93 said:

It'll do no such thing. Subsidies are always a bad thing, but low tax rates require governments to be efficient and fiscally responsible AND serve the interests of their people by not hampering the economy. That race to the bottom on low tax rates is an incredibly good thing from a consumer and from a business perspective.

You would have a point if the tax rate was low for everyone, when a company gets to sign an agreement with the government to pay less than other companies it is subsidizing that company.

3 hours ago, patrickjp93 said:

It's Ireland's decision to make as a sovereign nation. If the tax policy is such that Apple can legally do that, it should. Ireland can either reform its tax system and collect more and risk Apple leaving, or it can leave the code the way it is. It's perfectly fair. It's just not warm, fuzzy, and equitable. The law is the law, and the EU should have 0 standing in how Ireland handles its own internal taxation.

 

No, the biggest is Google.

 

And the only one who should be penalized for that is Ireland, not Apple. Apple operated within the law and state powers. If the state was stupid, the state should bear the consequences.

The EU regulators fine maybe 1 european company for every 7 U.S. and prosecute 1 for every 10. If you don't believe me the open EU docket records confirm this.

 

It's not up to Facebook to give back. You earn your keep. If your state is stupid enough to allow a parasitic tax haven, the problem is the state, not the company taking advantage.

That's the thing, Ireland delegated responsibility on these matters to the European Union, the moment they just like everyone else agreed that State Aid was to be avoided and they gave the EU the tools to enforce the ban on it. Like you said, the law is the law and on this EU law supercedes that of member states. 

 

Yes, the European Union does in greater amount attack US companies but that might be because the US has more companies in general and is especially effective at finding loopholes to get easier taxation going.

[IrishFeangol]

I'm not a fan of our Government here, I'd happily lock the lot of them up.

That said I'm on the fence about who is in the wrong for two reasons.

• Ireland was made agree to use any additional revenue gains to reduce its national debt in 2016 and 2017, which essentially means if Apple pays up, the money will go straight to the EU exchequer. 
• Previous governments would have probably made that "deal" with no concern over EU law.

On a side note, it saddens me to see people criticizing the low tax rate, without it many people I know simply would not have a job or would have had to move overseas to work in their respective fields (and the town I live in wouldn't have Gigabit fiber ).

Edited September 5, 2016 by IrishFeangol
Could not edit it

[DutchTexan]

On August 30, 2016 at 7:53 AM, Notional said:

As much as I hate the EU as an incompetent political union, I do love how they can own the hell out of these conglomerates. Apple is screwing over everyone left and right. There's a reason they have such insane profits after all.

Of course Apple will appeal, but I doubt anything will come of it. Microsoft tried and they were left no choice. It's not like Apple is going to pull their products from the EU anyways. They gambled, and ripped off the EU, and now it's time to pay up.

Actually no. They did not gamble at all. Apple made a deal and the EU did not recognize the deal.

 

This isn’t like VW and their 2.0L diesel engines...

 

[DutchTexan]

If you are young and not liberal, then you have no heart. If you are old and not conservative, then you have no brain.

[DutchTexan]

On August 31, 2016 at 6:04 AM, patrickjp93 said:

It's Ireland's decision to make as a sovereign nation. If the tax policy is such that Apple can legally do that, it should. Ireland can either reform its tax system and collect more and risk Apple leaving, or it can leave the code the way it is. It's perfectly fair. It's just not warm, fuzzy, and equitable. The law is the law, and the EU should have 0 standing in how Ireland handles its own internal taxation.

The fact of the matter is, Ireland agreed to the deal. The EU is neglecting Irish sovereignty. They are essentially saying screw your decision/agreement, we are going to reserve the right to tax who and what we want. This position is not in the best interest of Ireland. 

 

If the Germans and the Dutch were to pull out of the EU.. then the European Union dies. 

[DutchTexan]

19 minutes ago, IrishFeangol said:

I'm not a fan of our Government here, I'd happily lock the lot of them up.

That said I'm on the fence about who is in the wrong for two reasons.

• Ireland was made agree to use any additional revenue gains to reduce its national debt in 2016 and 2017, which essentially means if Apple pays up, the money will go straight to the EU exchequer. 
• Previous governments would have probably made that "deal" with no concern over EU law.

On a side note, it saddens me to see people criticizing the low tax rate, without it many people I know simply would not have a job or would have had to move overseas to work in their respective fields (and the town I live in wouldn't have Gigabit fiber ).

People need to grow up and see business for what it is.

 

Apple is one of many who did everything legally and ethically. The EU is the one behaving unethically. 

[Citadelen]

5 hours ago, DutchTexan said:

-snip-

I see business for what it is, and it disgusts me to no end.

I'm going to liken you telling people to "grow up" as admitting defeat and allowing ones self to be fucked over by business.

[Kubuksa]

lets go down the rabbit thole:

 

Ireland is just one link in the tax-evasion scheme Apple perfected so much it could be considered an art. Apple is the inventor of the "double Irish with a Dutch sandwich" which not only is a neat way to avoid taxes, but more importantly also gives Apple a great deal of independence. As a result, Apple has leverage over Individual countries because they can leave a country in a matter off days which in turn leads to countries like Ireland, the Netherlands and Luxembourg to make deals behind closed doors (the so called "tax rulings"). These deals are a delicate negotiation process: governments try to get as much as possible without scaring the multinational away to another country. In this perspective it is clear why Ireland doesn't want to receive the extra income: it is nice for the short term, but be assured Apple already has a plan B, C, and D on the table which assures Ireland won't receive a dime of Apple tax for the rest of it's existence.

 

Remember, these companies the money flow through have nothing to do with companies as we know them. In the Netherlands we call them "letter-box companies": subsidiaries with obscure names, no personnel and no office, just a registration in the chamber of commerce and a post office box.

 

And now for the fun stuff:

 

- An image explaining the double Irish with a Dutch sandwich.

- Almost entire silicon valley telling the Netherlands how they should tax them. A quote: "A discontinuation of the ruling practice without reasonable alternatives being available will harm the Netherlands investment climate, resulting in reduced foreign investments and a loss of jobs."

- A interesting video showing how the royalty-shifting works (video is in Dutch but with English subtitles). Although this is Starbucks, Apple uses the same technique. (I will try to find the name of the Apple letter-box company, I remember coming across it on the web somewhere.)

- A report regarding tax-evasion. spoiler: the largest exporter of foreign direct investment is the Netherlands.

 

I know this all is quite focused on the Netherlands, but because this form of tax evasion became quite controversial there are many interesting articles/documentaries available regarding the subject. I will try to research the Irish side of the story a bit more.

 

In conclusion: Ireland plays a very small part in the whole tax-evading scheme by apple and has little to no power at all over Apple.

[Sakkura]

18 hours ago, IrishFeangol said:

I'm not a fan of our Government here, I'd happily lock the lot of them up.

That said I'm on the fence about who is in the wrong for two reasons.

• Ireland was made agree to use any additional revenue gains to reduce its national debt in 2016 and 2017, which essentially means if Apple pays up, the money will go straight to the EU exchequer. 
• Previous governments would have probably made that "deal" with no concern over EU law.

On a side note, it saddens me to see people criticizing the low tax rate, without it many people I know simply would not have a job or would have had to move overseas to work in their respective fields (and the town I live in wouldn't have Gigabit fiber ).

Reducing Ireland's national debt has NOTHING to do with the EU exchequer. Ireland gets 100% of the benefit of the money.

18 hours ago, DutchTexan said:

The fact of the matter is, Ireland agreed to the deal. The EU is neglecting Irish sovereignty. They are essentially saying screw your decision/agreement, we are going to reserve the right to tax who and what we want. This position is not in the best interest of Ireland. 

 

If the Germans and the Dutch were to pull out of the EU.. then the European Union dies. 

Ireland illegally agreed to the deal. Ireland has explicitly handed sovereignty over this policy area over to the EU, so the EU is not neglecting anything. Ireland, on the other hand, is neglecting to follow the law.

18 hours ago, DutchTexan said:

People need to grow up and see business for what it is.

 

Apple is one of many who did everything legally and ethically. The EU is the one behaving unethically. 

You need to grow up and understand how the EU works. They are enforcing the agreements made between EU countries. Ireland and Apple made an agreement that is obviously illegal, and now they childishly refuse to accept annulment of that illegal deal. That is what's unethical here.

[DutchTexan]

4 hours ago, Sakkura said:

 

It is never okay for a union to rule over a nations sovereignty. 

 

If it was so illegal, then why is no one in trouble? What happens if Apple repeals the decision and ends up honoring the agreement with Ireland?

 

Let me just ask you this question and I want you to genuinely think about it. If Germany, Holland, and France were to pull out of the EU, like the UK, because they no longer benefit, what would happen to your country? I want you to seriously think about this. You don’t actually have to answer. I am not intending to insult your country or way of life. I would just like to get an understanding of your point of view. 

 

I am glad I got out of that sinking ship. 

 

 

 

 

[Sakkura]

2 hours ago, DutchTexan said:

It is never okay for a union to rule over a nations sovereignty. 

 

If it was so illegal, then why is no one in trouble? What happens if Apple repeals the decision and ends up honoring the agreement with Ireland?

 

Let me just ask you this question and I want you to genuinely think about it. If Germany, Holland, and France were to pull out of the EU, like the UK, because they no longer benefit, what would happen to your country? I want you to seriously think about this. You don’t actually have to answer. I am not intending to insult your country or way of life. I would just like to get an understanding of your point of view. 

 

I am glad I got out of that sinking ship.

That's BS. Of course a union can take over a nation's sovereignty, when the nation actively asks it to. Which Ireland did.

 

Apple is in trouble, they have to pay all the taxes they illegally evaded. Not just future taxes, but for the past several years too. That's why the bill is so big. Apple is not a court or a parliament, they can't repeal anything. Do you mean appeal? They already did. But they're going to lose because they're wrong, dead wrong, and very obviously wrong.

 

What are you talking about? If the EU fell apart that way, it would be an economic disaster for Europe, and negatively affect the rest of the world too. But it's not going to happen. Because every member country does benefit. The UK decision to leave was not based on any rational assessment of pros and cons, unless you count subjective things like national pride.

[Trixanity]

2 hours ago, DutchTexan said:

It is never okay for a union to rule over a nations sovereignty. 

 

If it was so illegal, then why is no one in trouble? What happens if Apple repeals the decision and ends up honoring the agreement with Ireland?

 

Let me just ask you this question and I want you to genuinely think about it. If Germany, Holland, and France were to pull out of the EU, like the UK, because they no longer benefit, what would happen to your country? I want you to seriously think about this. You don’t actually have to answer. I am not intending to insult your country or way of life. I would just like to get an understanding of your point of view. 

 

I am glad I got out of that sinking ship. 

When you sign off on your sovereignty, then it's actually okay. That's the entire problem with the EU, isn't it? You either keep your sovereignty with all the benefits and drawbacks or you cede that to EU with another set of benefits and drawbacks. 

 

If Ireland willingly ceded sovereignty to the EU on taxation (which seems to be the case), then it's clear: EU law supersedes any Irish law or deals.

They could have tried for an exemption like other countries have in certain areas although it would probably have been shot down.

 

No one in trouble? Apple just got fined for 13 billion euros. Ireland will probably get a slap on the wrist. As for what happens, it's impossible to tell. Certainly loopholes will be closed if there is willingness to do so politically speaking which might actually not be the case (lobbyism and corruption).

 

Germany, Netherlands and France aren't gonna leave. They never would leave. Because of the implication Germany and France have significantly more power by being the controlling force in the EU. They have a vested interest in keeping the EU on the rails. It's of their own making too. 

It's a ridiculous idea that they would and I see no sign of them actually leaving. Even with a rise in nationalism and right-wing party voters, there is still a majority in favor of the EU particularly among the elite. Oh and they do benefit. Very much so. And so did the UK but clearly there is a large disconnect between the elite and the working class, and obviously the working class is the majority of the two, so a disgruntled working class got the better of them when they boldly made it a referendum. Stupid mistake by Cameron and I'm sure he regrets it.

 

If they were to exit the EU, the EU would collapse. I don't see any other outcome. While it's not impossible for it to continue to exist (theoretically speaking), it would be a crippled union both politically and economically. 

 

What would happen? Even experts would have a hard time predicting that. There were sovereign nations before the EU and they would probably transition to that again over a long period of time. A recession is guaranteed. It would be like Brexit on a larger scale and probably with bigger immediate consequences (adjusted for each EU member state according to various factors such as economic and political power) but long term, they'd recover but would be worse off I imagine. I'd worry the most about a lot of the newer member states. They joined for the economic benefits and have probably in some ways benefited the most. It's all about how dependent a member state is on the EU; for some it would be devastating, others not so much. There is no doubt a lot of smaller member states, while ceding sovereignty and lacking political power internally, gain a lot externally which would be lost in a EU collapse.

 

As for what would happen to Denmark specifically? Probably forming a Nordic union that would be knit closer than the EU resulting in the rise of a new smaller economic powerhouse. Would be the best way to lessen the blow of a EU collapse but would require some serious negotiations due to the increasing disparity between the Nordic countries.

 

The EU is not sinking even though a lot of people would favor that. The consequences would not just be felt within the EU. It would be felt everywhere. There is no willingness to let it collapse. I think a lot of external influencers such as the US, Russia and China would prefer the status quo however. Why? Because they don't want the EU to collapse but they don't want the EU to grow stronger either. The EU could turn into a superpower albeit at the cost of national sovereignty and identity. I'm certain a lot of players both inside and out are glad that national interests are still so strong within the EU so that it doesn't grow to the point where it becomes a looming threat to US hegemony for example. As strong as the EU is perceived within member states and by extension how suppressive it is of said member states, it's incredibly weak in foreign affairs when push comes to shove.

[Kimmers]

So from what I'm reading, Apple used Ireland's tax code legally to evade taxes. EU is now mad and demands Apple to pay up even though it acted under Irish law?

 

What am I missing here

[rich2b181]

With this and the supposed envailing of the Iphone 7 in the upcoming Apple Event, it looks like Apple will become too distant from Alphabet as it cements itself in 2nd place. However, it opens up a great opportunity to invest in Apple shares.

[Sakkura]

2 hours ago, Kimmers said:

So from what I'm reading, Apple used Ireland's tax code legally to evade taxes. EU is now mad and demands Apple to pay up even though it acted under Irish law?

 

What am I missing here

They didn't use it legally, since Ireland and Apple illegally circumvented EU legislation in a policy area Ireland explicitly gave EU jurisdiction over.

[Kimmers]

4 hours ago, Sakkura said:

They didn't use it legally, since Ireland and Apple illegally circumvented EU legislation in a policy area Ireland explicitly gave EU jurisdiction over.

so the EU determines Ireland's tax codes? Are these universal throughout the EU or does each nation have their own taxes?

[Sakkura]

4 hours ago, Kimmers said:

so the EU determines Ireland's tax codes? Are these universal throughout the EU or does each nation have their own taxes?

Not entirely. The EU has legislation that puts certain limits on what the member states can do. In this case, it's illegal to discriminate between companies by providing special government aid.

 

Which seems like a fair idea in general. It's only big corporations that have the leverage to negotiate deals like this, and why should they receive huge tax breaks or other advantages that smaller businesses have no chance of obtaining? Why should the corporate tax rate for Apple be 0.005% when it's 12.5% for the local pub?

[IrishFeangol]

On 04/09/2016 at 1:41 PM, Sakkura said:

Reducing Ireland's national debt has NOTHING to do with the EU exchequer. Ireland gets 100% of the benefit of the money.

Ireland illegally agreed to the deal. Ireland has explicitly handed sovereignty over this policy area over to the EU, so the EU is not neglecting anything. Ireland, on the other hand, is neglecting to follow the law.

 

You are correct about it having nothing to do with the EU exchequer, I wasn't aware that they had stated that the tax would not need to be used against debt.

If the deal actually happened then it was illegal, I still have my doubts and am waiting for a report to be published in the coming days before the formal appeal. From what I understand currently, Apple took advantage of a loophole in the tax laws, that any international company could have used.