The EU orders Apple to pay over 14 billion $ of unpaid taxes


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EU vs Apple & Ireland

Any opinions on this?

Apple claims it did everything by the law and will appeal. It also sent thinly veiled threats towards the EU claiming enforcing this ruling would mean a huge loss in terms of jobs.

Ireland defends its own deal with Apple claiming it will support their appeal. It says the company paid the taxes it was supposed to (even if that amounts to 50 euros for every million of profits generated in Europe in 2014 for example).

The EU claims Ireland gave Apple a "sweetheart deal" allowing it to gain an unfair market advantage and paying much less than it had to.

So... in your opinion, who's right and who's wrong here?


Apple is threatening to move jobs... but I'm curious what jobs exactly? The "headquarters" in Ireland doesn't have anyone. Are they going to cut sales jobs? Because that means Apple just isn't going to be selling in a very large market. Apple employs 22,000 people in Europe, a fraction of the 304,000 people in the US.

Liberty's Edge

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About 6000 factory workers in an Irish town from what I read in an article.


I don't know the full story yet, but the way I see, if Apple didn't get the deal through illegal means, they shouldn't be fined... But the tax deal should be unmade and replaced with a sensible one. Of course, any crimes resulting from this deal should still be punished.

That's just my initial impression without full knowlege of the facts, though.


it seems sketchy to me to retroactively declare something like this illegal. If it was so wrong, why did it take over a decade for the EU to start being concerned about this? I understand court cases take time, but it only seems like the EU started looking at this within the last couple of years.


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"Its damning report published today says the tech giant paid as little as 0.005 per cent tax by funnelling its non-US profits through its Irish headquarters with no staff or premises then on to its $178billion (£120bn) offshore fund."

Seize the $178 billion that is offshore, and jail the executives who engaged in tax evasion. Revoke Apple's corporate charter, and turn the company over to its workers. I think there is some precedent for the AppleII...

This stuff is so simple.

EDIT: Companies get deals like this that are "legal" because they bribe (lobby) politicians. Jail those politicians, and the people who bribed them as well.

'Broken Windows' policing for the corporate world!


Lemmy Z wrote:

I don't know the full story yet, but the way I see, if Apple didn't get the deal through illegal means, they shouldn't be fined... But the tax deal should be unmade and replaced with a sensible one. Of course, any crimes resulting from this deal should still be punished.

That's just my initial impression without full knowlege of the facts, though.

The article I linked above is actually quite detailed but to sum it up: Apple and the Irish government had a "sweetheart deal" (mostly secret) that allowed Apple to pay less taxes than its competitors in the EU. The EU commission being firmly pro market and pro capitalism investigated this agreement and deemed it ufair to Apple competitors.

As far as I can tell they also want to stomp on Apple and big corporations' tax avoidance pratices (something quite ironic considering how Jean Claude Junker is actually the ex prime minister of Luxembourg a country famed for the same pratices Ireland is applying).

Personally my opinion is Apple was using Ireland (with Ireland government full consent, mind you) as a sort of "Trojan horse".
What Apple wanted (and wants) was access to the larger EU market not to the irish market (which is tiny by comparison) while paying as little taxes as possible. Due to being an EU member Ireland provided that access while getting some benefits out of its position as "gatekeeper". Basically they skrewed the other EU countries over in exchange for some tax income and some jobs.

As for Apple threats unless they can buy (or have already bought) enough politicians in Bruxelles I don't think they can do much. Apple needs access to the european market much more than Europe needs Apple and its competition would be glad to take over.

All I know is this. I was ready to buy an Ipad pro for more than 1.500 $ (due to a 10% discount convincing me it was time). Now I've changed my mind and I will buy something else for a third of that amount.


SOME IRISH OPINIONS ON THIS

WHAT STIGLITZ SAID

SEEMS LIKE THE US WASN'T TOO HAPPY ABOUT THESE PRATICES TOO

Edit:

ANOTHER IRISH OPINION

A F.A.Q.


Irontruth wrote:
Apple is threatening to move jobs... but I'm curious what jobs exactly? The "headquarters" in Ireland doesn't have anyone. Are they going to cut sales jobs? Because that means Apple just isn't going to be selling in a very large market. Apple employs 22,000 people in Europe, a fraction of the 304,000 people in the US.

Apple has 4-6k in Ireland and in Apple's opinion Apple indirectly supports about 600k across the E.U. (mostly app developers).

Take the quoted indirect number with a grain of salt if you prefer to, since it's not an independent estimate and it's not clear how well or badly they might weather Apple downsizing formal operations in Europe.


Again, most of the jobs by Apple in Europe are sales. They sell about 30,000,000 smartphones in Europe every year. If they just leave, their competitors are going to gobble it up and make it hard to come back later.


I guess a good question would be how and if this affair will impact Apple business model.
Basically Apple has created a very loyal costumer community across the globe willing to pay more for Apple products because of brand identity (and being excellent products of course). What happens if people start to feel they have been fuelling a tax avoidance scam with their hard earned (and taxed) money? It's not like there's no competition ready take up the slack.


This sounds like an astronomical figure, but remember it's for over 10 years of tax avoidance and it's well less than half of last year's profits. Apple can pay this with no real damage to its viability.


thejeff wrote:
This sounds like an astronomical figure, but remember it's for over 10 years of tax avoidance and it's well less than half of last year's profits. Apple can pay this with no real damage to its viability.

That's true but they don't want to despite having 181 BILLION $ IN OFFSHORE FUNDS


Irontruth wrote:
Again, most of the jobs by Apple in Europe are sales.

I don't know that that's true of the jobs in Ireland.


hand each of 6000 workers a million dollars, keep the rest of the money.

Does not apply to CEOs.

the idea that we need to spend THAT much money per job is nuts.


Well, Ireland DID give them a good deal, and the employment works for Ireland.

Even in Taxes it works out. Lets reduce that 6000 number to 5000. And then let's give them an average of 50K with a 20% tax rate (actually that 20% only applies to those making around 42K who are married with kids, that limit is lower if not married or no kids, up to around 40%).

That brings in 10K per person.

That's 50 Million per year.

So over a ten year span that equals almost 500 million in taxes, but not directly from Apple itself.

In addition, they have people employed. Win/Win for everyone.

HOWEVER, this judgement throws a wrench into the pot. No one expected it to be that high, and it gets harder for the Irish politicians to say they will appeal and simply toss away 13 Billion (that's a LOT more than 500 million). That 13 Billion could go a LOOOONG waaay.

On the otherhand, much as I love Apple, I hope they get it stuck to them. Too many companies have gone off shore from the US because they want to avoid taxes in the US. Let them get stuck with the taxes elsewhere, and maybe, just maybe, they'll decide the US isn't so bad afterall (though 13 Billion for 10 years may actually not be that bad in regards to taxes overall to be honest).


GreyWolfLord wrote:

Well, Ireland DID give them a good deal, and the employment works for Ireland.

Even in Taxes it works out. Lets reduce that 6000 number to 5000. And then let's give them an average of 50K with a 20% tax rate (actually that 20% only applies to those making around 42K who are married with kids, that limit is lower if not married or no kids, up to around 40%).

That brings in 10K per person.

That's 50 Million per year.

So over a ten year span that equals almost 500 million in taxes, but not directly from Apple itself.

In addition, they have people employed. Win/Win for everyone.

HOWEVER, this judgement throws a wrench into the pot. No one expected it to be that high, and it gets harder for the Irish politicians to say they will appeal and simply toss away 13 Billion (that's a LOT more than 500 million). That 13 Billion could go a LOOOONG waaay.

On the otherhand, much as I love Apple, I hope they get it stuck to them. Too many companies have gone off shore from the US because they want to avoid taxes in the US. Let them get stuck with the taxes elsewhere, and maybe, just maybe, they'll decide the US isn't so bad afterall (though 13 Billion for 10 years may actually not be that bad in regards to taxes overall to be honest).

Well... nope. It's no win for all those other european countries in which Apple actually does business but doesn't pay taxes for example. It's no win for Apple's competitors who pay much more in taxes than Apple does. It's no win for that majority of Irish people actually paying taxes who seem rather unhappy about discovering this deal.

Strangely enough the Irish government and Apple both felt they needed to keep this agreement hidden for example. It took an official investigation to disclose its terms. Why hide it if they had nothing to be ashamed of?

As for bringing back offshore money to the US you are right, but I wanted to point something else out:

MOST OF WHAT MADE APPLE POSSIBLE IN THE FIRST PLACE WAS PAID FOR WITH US TAXPAYERS' MONEY

Silver Crusade

Can ya give caps lock a rest Dood?


Rysky wrote:
Can ya give caps lock a rest Dood?

It's just for the links making them more visible and distinguish them more from normal text.


Rogar Valertis wrote:
Rysky wrote:
Can ya give caps lock a rest Dood?
It's just for the links making them more visible and distinguish them more from normal text.

I don't know about you and your system, but the blue text coloring my browser displays does that just fine for me.


Snowblind wrote:
Rogar Valertis wrote:
Rysky wrote:
Can ya give caps lock a rest Dood?
It's just for the links making them more visible and distinguish them more from normal text.
I don't know about you and your system, but the blue text coloring my browser displays does that just fine for me.

Duly noted. Back on topic please?

Silver Crusade

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At the heart of the matter is this: at present, governments around the world negotiate these "sweetheart deals" with big companies. Small companies and regular workers or sole traders haven't got a prayer of getting any such deal, but governments agree more favourable terms for big companies. Sometimes this is a better tax rate for the company, sometimes it's a government subsidy. The EU are making the point that these arrangements are unjust.

If Ireland's Corporation Tax rate is 12.5%, the EU is saying that all corporations in Ireland should pay that tax rate. Any other arrangement distorts competition, favouring the larger companies that the government has deliberately done special deals with. The government actions are tending to produce monopolistic effects, by granting significant financial advantage to the largest corporations.

This isn't so much about punishment for breaking law as it is about establishing international tax justice. Which is something that we all desperately need.


GreyWolfLord wrote:
On the otherhand, much as I love Apple, I hope they get it stuck to them. Too many companies have gone off shore from the US because they want to avoid taxes in the US. Let them get stuck with the taxes elsewhere, and maybe, just maybe, they'll decide the US isn't so bad afterall (though 13 Billion for 10 years may actually not be that bad in regards to taxes overall to be honest).

My understanding is that there's little chance of them coming out badly. If they pay an extra 14bn in taxes in the EU they get 14bn worth of tax credits in the US, so they can offset 100% of the present EU tax expense with US taxes they won't have to pay.

Or at least that's what they said on the radio while I was driving to work yesterday. I admit I'm a little skeptical of how that's supposed to work. I gather that the foreign income tax credit is designed to avoid a company paying tax on its income twice - so if you earn $100 and pay Ireland $12.50, your U.S. tax on the $100 gets reduced by $12.50 - but I also understand that the reason Apple keeps so much money overseas is to avoid paying U.S. tax on it once, so I'm not sure how they get $12.50 credit to their U.S. taxes on the $100 if they didn't actually pay any U.S. taxes on the $100.

Taxes aren't my strength, perhaps I'm wrong about some details.


Coriat wrote:

My understanding is that there's little chance of them coming out badly. If they pay an extra 14bn in taxes in the EU they get 14bn worth of tax credits in the US, so they can offset 100% of the present EU tax expense with US taxes they won't have to pay.

Or at least that's what they said on the radio while I was driving to work yesterday. I admit I'm a little skeptical of how that's supposed to work. I gather that the foreign income tax credit is designed to avoid a company paying tax on its income twice - so if you earn $100 and pay Ireland $12.50, your U.S. tax on the $100 gets reduced by $12.50 - but I also understand that the reason Apple keeps so much money overseas is to avoid paying U.S. tax on it once, so I'm not sure how they get $12.50 credit to their U.S. taxes on the $100 if they didn't actually pay any U.S. taxes on the $100.

Taxes aren't my strength, perhaps I'm wrong about some details.

As far as I understand Apple is using a loophole betwen US and Irish legislations. Basically the US determine tax liability based on residence while Ireland does the same based on where the enterprise is actually managed. Apple has Irish residence but it's managed from the States. Keeping this trick working is probably much more important for Apple and similarly oriented corporations than having to pay 13+ billions in due taxation.

This piece here explains it better


Coriat wrote:
Irontruth wrote:
Again, most of the jobs by Apple in Europe are sales.
I don't know that that's true of the jobs in Ireland.

Which is 6000. That's not a tiny amount of jobs, but in the scheme of things... really isn't that many. Ireland has an unemployment rate of 7.8%, which is about 170,000 people. Last year, the unemployment rate was 9.3%, and around 200,000 people. It would be approximately a 0.3% increase in unemployment.

On the flip side, the €14 billion is enough to cover the property tax of every single person in Ireland for the next 26 years.

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