Apple Must Repay $14.5 Billion in Back Taxes, EU Commission Rules
Aug 30, 2016 3:23 am PDT by Tim Hardwick
Apple must repay 13 billion euros ($14.5 billion) in back taxes dating back to 2003-2014, the European Commission has ruled (via BBC).

The Apple tax ruling was confirmed this morning, after the judgement was leaked to the media yesterday. In unequivocal wording, the EU commissioner Margrethe Vestager said Apple's tax benefits in Ireland are "illegal".
"The Commission has concluded that Ireland granted undue tax benefits of up to €13 billion to Apple. This is illegal under EU state aid rules, because it allowed Apple to pay substantially less tax than other businesses. Ireland must now recover the illegal aid."
Vestiges said this selective treatment allowed Apple to pay an effective corporate tax rate of 1 percent on its European profits in 2003 down to 0.005 percent in 2014. Therefore in 2014 Apple paid 0.005 percent tax on EU profits, which means that "For every million euros in profits, it (Apple) paid just €500 in taxes," said Vestager. "This is based on an in-depth investigation, it's based on the facts. I also think and hope that if it goes to the courts that it will be upheld by the European Court."

According to the EC's press release, the existing tax rulings endorsed a way to establish the taxable profits for two Irish incorporated companies of the Apple group (Apple Sales International and Apple Operations Europe), which did not correspond to economic reality:
"Almost all sales profits recorded by the two companies were internally attributed to a 'head office'. The Commission's assessment showed that these 'head offices' existed only on paper and could not have generated such profits. These profits allocated to the 'head offices" were not subject to tax in any country under specific provisions of the Irish tax law, which are no longer in force."
Ireland Finance Minister Noonan said the country "disagrees profoundly" with the back tax ruling by the European Commission. "The decision leaves me with no choice but to seek cabinet approval to appeal. 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.

Apple shares fell more than 2 percent in pre-market trading following the ruling, which comes after a three-year investigation into Apple's tax arrangements in Ireland, where it was initially thought to have paid around 2 percent or less in taxes compared to the country's headline 12.5 percent corporate tax rate.

Update: Apple has reacted to today's ruling with the following response:
"The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process. The Commission’s case is not about how much Apple pays in taxes, it’s about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe. Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned."
Apple CEO Tim Cook has also posted "A Message to the Apple Community in Europe" on the Apple website.

Note: Due to the political nature of the discussion regarding this topic, the discussion thread is located in our Politics, Religion, Social Issues forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.


Top Rated Comments

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27 months ago
Hahahaha. Absolute hypocrites. Big company with a supposed social conscience contributing nothing to society.
Rating: 59 Votes
27 months ago
0.005% - that is just disgusting.

What a morally bankrupt outfit.
Rating: 39 Votes
27 months ago
They'll appeal it down but.. Good! Stop dogging taxes. Goes for all companies.
Rating: 36 Votes
27 months ago
Good news.

Tax havens, non-resident companies, "licensing fees" are all tools used by companies and Governments to reduce their tax burden while the Average Joe has no chouce but to pay their dues.

It's good to see steps towards putting fairness back into tax payments.
Rating: 30 Votes
27 months ago

Following an in-depth state aid investigation launched in June 2014 ('http://europa.eu/rapid/press-release_IP-14-663_en.htm'), the European Commission has concluded that two tax rulings issued by Ireland to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991. The rulings endorsed a way to establish the taxable profits for two Irish incorporated companies of the Apple group (Apple Sales International and Apple Operations Europe), which did not correspond to economic reality: almost all sales profits recorded by the two companies were internally attributed to a "head office". The Commission's assessment showed that these "head offices" existed only on paper and could not have generated such profits. These profits allocated to the "head offices" were not subject to tax in any country under specific provisions of the Irish tax law, which are no longer in force. As a result of the allocation method endorsed in the tax rulings, Apple only paid an effective corporate tax rate that declined from 1% in 2003 to 0.005% in 2014 on the profits of Apple Sales International.

http://europa.eu/rapid/press-release_IP-16-2923_en.htm

I applaud this decision. I cannot see how paying 0.005 % in taxes is justified in any way.
Rating: 28 Votes
27 months ago
From this last week, when the stock options came in:




To this, this week:

Rating: 26 Votes
27 months ago
0.005% Corporate Tax paid, people. This is utterly disgraceful, a slap in the face to anyone who has ever paid taxes.

Just to put it in comparison. If Apple made 100,000 dollars a day, they paid only $5 in tax. So for every million dollars, they paid $50 in taxes. The largest corporation in the world, with billions in cash, with all manufacturing in cheaply China... and they are also the ones to pay the least. Imagine if you and I paid 0.005% in taxes. Except my taxes are closer to 40% these days.

Allow me to highlight that this is not a fine, but a repayment -- Apple is asked to pay back what it saved by having this favourable treatment from the Irish government. There is no fine.

Disgusting and obscene.

EDIT: Take a look at the EU Commission's infographic here http://ec.europa.eu/competition/publications/infographics/2016_07_en.pdf
Rating: 23 Votes
27 months ago
If I have to pay my fair share of tax, then so should everyone else. How is it fair otherwise?
Rating: 20 Votes
27 months ago

They'll appeal it down but.. Good! Stop dogging taxes. Goes for all companies.

This is a deal Ireland has made for Apple - not Apple making a massive tax fraud. EU is interfering with the individual country tax system (to be honest I'm not in the details) which sounds a lot like many of the reasons The UK voted out.

Nobody should cheat, but this sounds like it isn't on Apple (get presented with a good deal by a country and accepting it isn't a crime) but more like the country it self
Rating: 19 Votes
27 months ago
Their argument is that they would have paid taxes on it eventually when they brought it home after they negotiated a deal with the US government on a low corporate tax rate.

I'm not a tax expert, but when Tim Cook says that it sounds to me like someone burying their income in their backyard and saying they'll pay their taxes when the government comes down on the tax rate that everyone else is already paying.

The assumption that this money was ever going anywhere shouldn't play a role in how it's treated. Tim Cook said it's coming home when a corporate tax change occurs that has not occurred ever. So, it's basically just European corporate income.

And you could give a company the benefit of the doubt, but when their own CFO had to resign after being investigated by the SEC and Steve Jobs was found backdating stock options but wasn't found guilty of criminal activity because he "didn't know what he was doing". . . Steve Jobs is thought to have been the singular investor that nearly brought Apple to the brink by selling all his Apple shares at once in 1997 in order to oust Gil Amelio. Someone that clever knows what he's doing when he dates a stock option.
Rating: 14 Votes

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