Adverse Ruling Against Apple Expected in European Tax Probe

Apple-BondsThe European Commission is poised to hand down an adverse ruling against Apple next week following a three-year inquiry into the company's tax arrangements in Ireland, according to Financial Times.
Expectation of an adverse ruling gathered pace this week after the US Treasury issued a stinging attack on the commission’s investigation, saying the EU executive was becoming a “supranational tax authority” that threatened international agreements on tax reform.
The Brussels-based body, led by competition commissioner Margrethe Vestager, has been investigating whether Apple's alleged "sweetheart deal" with Ireland constitutes illegal state aid, which it determined based on its preliminary findings in 2014.

The commission has accused Apple of sheltering tens of billions of dollars by transferring revenue to multiple subsidiaries in Ireland, where it pays a significantly lower tax rate of around 2%, compared to the country's headline corporate tax rate of 12.5%.

An adverse ruling could result in Apple owing up to $21.2 billion in back taxes, although a previous study placed the figure around $8 billion, and some analysts believe the amount could be as low as $1 billion.

Apple is one of several large corporations accused of tax avoidance in Europe over the past three years, joining the likes of Starbucks, Fiat Chrysler, Amazon, Google, IKEA, and McDonald's. Starbucks in particular is currently appealing its case in Netherlands, where it was ordered to pay as much as 30 million euros in back taxes.

Apple CEO Tim Cook, who has insisted that his company fully complies with international tax law, said last month that it would appeal any unfavorable ruling in European courts. Apple has also said it is the largest taxpayer in the world.

Earlier this week, the U.S. Treasury department warned that an adverse ruling against Apple could "set an undesirable precedent." It also said the European Commission is becoming a "supranational tax authority," going beyond acceptable enforcement of competition and state aid law.

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42 months ago

The EU has to be very careful about applying taxes ex post facto. That would run counter to just about all accepted law, especially if they are targeting only a handful of companies.

They are not applying any law retroactively. If Apple has received illegal state aid from Ireland the company has to pay it back. Breaking the law needs to result in consequences.
Rating: 14 Votes
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42 months ago

I quite agree. It's also a bit disingenuous. The EU allowed one of its member states to strike this deal so Apple could avoid US taxes; now they turn around and say "Ireland, we want our piece too".

If they feel Ireland was wrong, they should allow Apple to go back and restate their prior-year finances according to whatever the EU seems to think is the proper reading of EU law. Or they should fine Ireland for the difference.

I'm not defending Apple here. But this seems a sleazy move by the EU to get in on the action. If anything, those Apple tax dodge savings should get repatriated to the US treasury, where they should have gone in the first place.
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Note it's the US Treasury, which ostensibly is the entity that Apple "ripped off", that is protesting the EU action.

You have no idea what you are talking about. This is nothing to do with the US treasury being ripped off. This has everything to do with France, Germany, UK, and many other European Countries Financial authority being ripped off.

Apple books sales of its iPhones, computers software etc that is sold in these countries in Ireland. They are not the only ones doing it Amazon, Starbucks etc. are all up to the same game and they are all going to have to pay eventually. Ireland facilitates this because this brings jobs to Ireland but it is a Tax fraud pure and simple.

Apple chose to set up a structure that is dishonest and illegal. There is a separate issue that you may be confusing with this in that they do not repatriate profits to the US but keep them overseas thereby avoiding US corporate tax.

Ireland is a tiny market for Apple in Europe. The majority of their sales are in the big economies like Germany, France the UK, italy etc. By booking 100 percent of the sales in Ireland they make zero or little profit in these countries by diverting it to Ireland and paying 2 percent tax.

Apple is just greedy if they paid the correct tax due in every European country they would not have as many Billions sheltered overseas and the concerned countries would get more tax to build the roads and the hospitals and the rest of the infrastructure that the apple employees need and use every day.
Rating: 10 Votes
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42 months ago

Tim Cook is going to have to give his longevity bonus back! Or maybe they'll be forced to go down to 8 gigs for the base model of iPhones!


Since Apple makes all its money in Ireland they could save some expenses by closing their money-losing branch office in California.
Rating: 8 Votes
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42 months ago

I quite agree. It's also a bit disingenuous. The EU allowed one of its member states to strike this deal so Apple could avoid US taxes; now they turn around and say "Ireland, we want our piece too".

This is simply not true. Under EU state aid rules, a member country has to notify state aid, even if legal, to the commission. You imply that Ireland has notified this particular form of state aid to the commission, and that the commission has approved it/declared it to be legal. That's simply not true. The commission has never approved Ireland illegal state aid to Apple.

I hope that the commission comes down hard on Ireland and Apple. These forms of illegal corporate handouts are utter disgraceful.
Rating: 7 Votes
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42 months ago
This would set a dangerous precedent. Apple and all other companies do what they can to legally avoid tax.

Could you argue it's against the spirit of the law? Probably. But that doesn't stand up. Who would pay more than they have to, if it's legal at the same time?

If there's a legal tax loophole to stop paying as much, you're damn right you'd take it. Every company does and every person does. It's within the letter of the law. Apple are being targeted because they're ludicrously rich, and that's a slice of Apple pie people are happy to dig into.

Want to stop this kind of thing? Then change the tax rules for everybody, to avoid these sort of loopholes. As the old mantra goes: don't hate the player, hate the game.
Rating: 5 Votes
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42 months ago
Typical multinational corporation hide and seek. Your caught.....pay up sweetheart. Can't really blame Apple....they all do it.
Rating: 4 Votes
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42 months ago

I tought after brexit, EU can't interfere any longer... hmm


Not sure what you think Brexit has to do with Ireland's tax affairs.
Rating: 3 Votes
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42 months ago

But I do have to wonder, if they found Apple to be benefitting from illegal state aid from Ireland, would that not be a problem for Ireland and not Apple?


No, it would be a problem for other EU countries and Apple’s competitors. The whole point of the Internal Market is that EU Member States relinquish a lot of their authority to regulate markets in favour of a supranational body. Ireland used public money to persuade Apple to come/stay and invest in Ireland. That is prima facie illegal.

Apple is not innocent in this. They should have refused to accept the deal and reported it to the European Commission, if they believed that competitors would benefit from it. Instead, they accepted it and that risk is on them.
Rating: 3 Votes
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42 months ago

The U.K. Is STILL FULLY IN THE EU. Have to capitalise it as people have got that confused several times. We are still under all rules and regulations for EU single market members. Doubt anything will start to change until next year now.


In addition to that, Ireland is not part of the UK, North Ireland is.
Rating: 3 Votes
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42 months ago
The EU has to be very careful about applying taxes ex post facto. That would run counter to just about all accepted law, especially if they are targeting only a handful of companies.
Rating: 3 Votes
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