Bloomberg:
Apple Inc. was ordered to repay a record 13 billion euros ($14.5 billion) plus interest after the European Commission said Ireland illegally slashed the iPhone maker’s tax bill.
The world’s richest company benefited from a “selective tax treatment” in Ireland that gave it a “significant advantage over other businesses,” the European Union regulator said Tuesday. It’s the largest tax penalty in a three-year crackdown on sweetheart fiscal deals granted by EU nations.
And:
Apple and the Irish government have both vowed to fight the decision, which also risks stoking a fight with the U.S. over taxation policies — with the U.S. having already complained that Europe is unfairly targeting American companies and threatening global tax reforms.
And:
“I disagree profoundly with the commission’s decision,” said Irish Finance Minister Michael Noonan. Ireland’s tax system is founded on the strict application of the law “without exception,” he said.
The commission left him with “no choice” but to move toward an appeal before the EU courts. “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,” he said.
This will certainly add pressure to the unity of the EU, still working through Brexit terms. If the European Commission ultimately prevails, I can’t help but think it would impact Apple’s operations in Ireland.
Shakedown because they can’t get their fiscal policy in order. Politicians no longer have any money for their pet social programs and thus find it harder to justify their electability. So they pick on the one company that doesn’t like to fight dirty.
If Apple doesn’t start to play hardball politics, this will happen again and again.
So, tax laws that pre-date the EU (and more importantly the unelected EU bureaucrats) are declared “illegal” by the EU? Neat!
This has nothing to do with a shakedown. The Irish are siding with Apple on this. The EU is trying to crack down on tax havens within the EU. Ireland opposes this because without being a tax haven, they will lose a lot of investment.
I don’t think it would impact Apple’s operations in Ireland that much. Even without a special treatment (if Apple indeed enjoys such a thing), Ireland will still be a place with lower taxes than many other EU countries.
From what we’ve read today, it seems that Apple in Europe paid only 0.005% of its EU profits as taxes in 2014…
1. This can’t be done without a special deal with Ireland
2. Such a special deal is clearly illegal under EU laws and it’s not a surprise or a new thing.
And by the way, this is a shocking amount… even if they end the story with legal tricks…
Shakedown by EU towards Apple via Irish Proxy.
Seems like the complaints are legitimate, “Apple set up their sales operations in Europe in such a way that customers were contractually buying products from Apple Sales International in Ireland rather than from the shops that physically sold the products to customers. In this way Apple recorded all sales, and the profits stemming from these sales, directly in Ireland,” and “Under the agreed method, most profits were internally allocated away from Ireland to a ‘head office’ within Apple Sales International. This ‘head office’ was not based in any country and did not have any employees or own premises. Its activities consisted solely of occasional board meetings. Only a fraction of the profits of Apple Sales International were allocated to its Irish branch and subject to tax in Ireland. The remaining vast majority of profits were allocated to the ‘head office’, where they remained untaxed.”
So it looks like a massive tax evasion scheme aided by the Irish government. Apple seemed content on doing business in countries outside of Ireland, but not interested in paying the taxes that are the cost of doing business in those countries. Which is super fantastic if you can get away with it, but sometimes the piper comes calling.
I see, so your saying Apple, or Ireland actually broke pre-existing laws?
Sounds like a damn technicality to me. One that nobody cared about before Apple made its $billions.
Naturally, the EU is going to say its collusion, and naturally, Ireland is going to oppose selling out its largest business owner, lest they want to loose all global corporate revenue.
There are $billions at stake on this. $Billions any socialist politician would love to squander for sympathy votes.
They only cared about Apple and Google and Amazon and Starbucks and Fiat Chrysler and McDonald’s. Yup, they’re totally just targeting Apple and their billions.
And tax law is all technicalities. Apple set up stateless companies as a head office to avoid paying taxes and got busted for it. You don’t accidentally set up entities like that. Basically, Apple got caught with their hand in the cookie jar and got too creative with their tax avoidance accounting. The EU (not to mention the US) have been cracking down on tax avoidance in tax havens for years. It’s a logical extension of what started as the greater Swiss banking transparency for tax purposes.
Somehow I don’t think Apple is going to shut down their Paris Apple store if they have to pay taxes on those profits.
https://www.bloomberg.com/view/articles/2016-08-30/apple-finds-out-it-took-the-tax-game-too-far