European Commission

By MacRumors Staff

'European Commission' Articles

Apple Says Spotify Only Pays 15% Fee on About 0.5% of Subscribers in Response to App Store Complaint

Monday June 24, 2019 9:51 am PDT by Joe Rossignol
Apple has filed a response to Spotify's anticompetitive complaint about the App Store in Europe, noting that Spotify pays Apple a 15 percent commission for only about 0.5 percent of its paying subscribers, according to CNET. That figure equates to around 680,000 users who subscribed to Spotify through its iOS app, via Apple's in-app purchase system, between 2014 and 2016. This is because Apple only collects a 30 percent commission for the first year of a subscription, at which point the fee drops to 15 percent. Apple's response comes three months after Spotify announced it had filed an antitrust complaint against Apple with the European Commission over unfair App Store practices. Spotify took particular issue with Apple charging a 30 percent "tax" on App Store purchases, calling it "discriminatory":Apple requires that certain apps pay a 30% fee for use of their in-app purchase system (IAP) – as is their prerogative. However, the reality is that the rules are not applied evenly across the board. Does Uber pay it? No. Deliveroo? No. Does Apple Music pay it? No. So Apple gives the advantage to its own services.Apple only charges a commission on in-app purchases tied to digital goods, which is why apps like Uber and Deliveroo are exempt. Apple also forbids Spotify and other developers from alerting users that they can sign up for a subscription or complete a purchase outside of its iOS app, and disallows Spotify from advertising deals to its customers in the app or by email, as these practices would circumvent Apple's in-app purchase
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European Regulators Awaiting Response From Apple After Spotify Called the App Store a Monopoly

Monday June 3, 2019 7:40 am PDT by Joe Rossignol
The European Commission is awaiting a response from Apple after Spotify accused the iPhone maker of anticompetitive business practices in relation to its App Store, said the European Union's antitrust chief Margrethe Vestager. "We are looking into that and we have been asking questions around in that market but of course also Apple themselves, for them to answer the allegations. And when they come back, we will know more," said Vestager, speaking on the sidelines of an economic conference, according to Reuters. In March, Spotify announced it had filed an antitrust complaint against Apple with the European Commission over unfair App Store practices. Apple responded two days later, labeling the complaint as "misleading rhetoric" and arguing that "Spotify wants all the benefits of a free app without being free." In a blog post, Spotify founder and CEO Daniel Ek took particular issue with Apple charging a 30 percent "tax" on App Store purchases. This results in Spotify charging existing subscribers $12.99 per month for its Premium plan via the App Store just to collect nearly the $9.99 per month it charges normally. Apple also forbids developers from alerting users that they can sign up for a subscription or complete a purchase outside of an app, which would bypass Apple's commission on in-app purchases tied to digital goods. Spotify later said "every monopolist will suggest they have done nothing wrong" and that Apple's response was "entirely in line" with its expectations. Apple has faced increasing scrutiny as of
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EU to Investigate Apple Over Spotify's Antitrust Complaint

Monday May 6, 2019 1:48 am PDT by Tim Hardwick
Apple is to be formally investigated by the European Commission after Spotify accused the company of using the App Store to deliberately disadvantage other app developers. According to a report by the Financial Times, EU competition commission has decided to launch a formal antitrust investigation into Apple's conduct "in the next few weeks" after surveying customers, rivals and others in the market. Spotify in March filed an antitrust complaint against Apple with the EU in which it argued that the iPhone maker enforced App Store rules that "purposely limit choice and stifle innovation at the expense of the user experience." Apple swiftly hit back at the accusation, labeling it as "misleading rhetoric" and arguing that "Spotify wants all the benefits of a free app without being free." Spotify's complaint focuses on Apple's policy of charging a 30 per cent fee on App Store purchases, which means Spotify has to charge existing subscribers $12.99 per month for its Premium plan via the App Store just to collect its standard $9.99 per month charge. Spotify CEO Daniel Ek claimed that the policy gives Apple an "unfair advantage," since Spotify is unable to fairly compete with Apple Music's standard $9.99 per month price within the App Store. Alternatively, if Spotify chooses not to collect payments via the App Store, Ek said that Apple "applies a series of technical and experience-limiting restrictions" on the company. Over time, this has also included "locking Spotify and other
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Spotify Files Complaint Against Apple With European Regulators Over 'Unfair' App Store Practices

Wednesday March 13, 2019 5:37 am PDT by Joe Rossignol
Spotify has filed a complaint against Apple with the European Commission, accusing the iPhone maker of enforcing App Store rules that "purposely limit choice and stifle innovation at the expense of the user experience" and "acting as both a player and referee to deliberately disadvantage other app developers." In a blog post, Spotify founder and CEO Daniel Ek took particular issue with Apple charging a 30 percent "tax" on App Store purchases. This results in Spotify charging existing subscribers $12.99 per month for its Premium plan via the App Store just to collect nearly the $9.99 per month it charges normally. Ek believes this gives Apple an "unfair advantage," since Spotify is unable to fairly compete with Apple Music's standard $9.99 per month price within the App Store. This is a big deal given there are over a billion active iOS devices. As an alternative, if Spotify chooses not to collect payments via the App Store, Ek notes that Apple "applies a series of technical and experience-limiting restrictions" on the company. Over time, this has also included "locking Spotify and other competitors out of Apple services such as Siri, HomePod, and Apple Watch." Ek stresses that this is "not a Spotify-versus-Apple issue" and simply about seeking "the same fair rules for companies young and old, large and small." Apps like Uber and Deliveroo, for example, are allowed to collect payments directly from customers since they offer "goods or services that will be consumed outside of the app," according to
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European Regulators Concerned Apple's Proposed Shazam Acquisition Could Hurt Competitors Like Spotify

Monday April 23, 2018 8:51 am PDT by Joe Rossignol
The European Commission today announced it has opened an in-depth investigation into Apple's proposed acquisition of Shazam. The regulators are concerned that the merger could reduce choice for users of streaming music services in Europe. In particular, they believe that Apple could gain access to sensitive data that could allow Apple to directly target its competitors' customers and encourage them to switch to Apple Music. While the European Commission did not name any specific services, Apple Music's biggest rival in Europe is Spotify, headquartered in Stockholm, Sweden. Other competitors include Deezer, Tidal, and Google Play Music. European Commission competition chief Margrethe Vestager:The way people listen to music has changed significantly in recent years, with more and more Europeans using music streaming services. Our investigation aims to ensure that music fans will continue to enjoy attractive music streaming offers and won't face less choice as a result of this proposed merger.In addition, the European Commission said it will investigate whether Apple Music's competitors would be harmed if Apple were to discontinue referrals from the Shazam app to them following the acquisition. Shazam's app currently integrates with multiple services, including Spotify and Deezer. The regulators have set a September 4, 2018 deadline to reach a decision, delaying an Apple-Shazam merger for at least 90 days. Apple announced its plans to acquire Shazam in December, describing the two companies as a "natural fit" with "exciting plans" ahead. In February, the
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European Regulators Set April 23 Deadline to Decide on Apple's Proposed Shazam Acquisition

Thursday March 15, 2018 4:41 am PDT by Joe Rossignol
The European Commission today announced it has set a provisional deadline of April 23 to decide on Apple's proposed acquisition of Shazam. Last month, the regulatory body said it would consider whether Apple's purchase of the popular music identification service may lead to a significant adverse effect on competition in Europe, after Austria, France, Iceland, Italy, Norway, Spain, and Sweden requested the deal be assessed under European Union merger law. The European Commission didn't specify how the deal could hurt competition, but Shazam does have partnerships with European companies like Spotify that could be affected by the acquisition. However, it's standard for major acquisitions to be subject to review, so the deal will likely be approved without any scrutiny. Apple announced its plans to acquire Shazam in December in a statement provided to MacRumors and other publications:We are thrilled that Shazam and its talented team will be joining Apple. Since the launch of the App Store, Shazam has consistently ranked as one of the most popular apps for iOS. Today, it's used by hundreds of millions of people around the world, across multiple platforms. Apple Music and Shazam are a natural fit, sharing a passion for music discovery and delivering great music experiences to our users. We have exciting plans in store, and we look forward to combining with Shazam upon approval of today's agreement.Shazam is a popular service that can identify the name and lyrics of songs, music videos, TV shows, and more. It has apps across iPhone, iPad, Apple Watch, Mac, and
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European Regulators to Review if Apple Acquiring Shazam Will Significantly Hurt Competition

Tuesday February 6, 2018 8:30 am PST by Joe Rossignol
The European Commission today announced it has accepted requests from Austria, France, Iceland, Italy, Norway, Spain, and Sweden to assess Apple's proposed acquisition of Shazam. The agreement is still pending approval. The regulatory body will consider whether the transaction may lead to a significant adverse effect on competition in Europe:On the basis of the elements submitted by Austria and the countries joining the referral request, and without prejudice to the outcome of its full investigation, the Commission considers that the transaction may have a significant adverse effect on competition in the European Economic Area. The Commission has also concluded that it is the best placed authority to deal with the potential cross-border effects of the transaction.The European Commission didn't specify how the deal could hurt competition, but Shazam does have partnerships with European companies like Spotify that could be affected by the acquisition. However, it's standard for major acquisitions to be subject to review, so the deal may be approved of without scrutiny. Apple confirmed it plans to acquire Shazam in December in a statement provided to MacRumors and other publications:We are thrilled that Shazam and its talented team will be joining Apple. Since the launch of the App Store, Shazam has consistently ranked as one of the most popular apps for iOS. Today, it's used by hundreds of millions of people around the world, across multiple platforms. Apple Music and Shazam are a natural fit, sharing a passion for music discovery and delivering great music
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E.U. to Take Ireland to Court For Failing to Claim Apple Tax

Wednesday October 4, 2017 5:13 am PDT by Tim Hardwick
The European Commission said on Wednesday it will take Ireland to court for its failure to recover up to 13 billion euros ($15.3 billion) of tax due from Apple (via Reuters). Apple was ordered to pay the unpaid taxes in August 2016 after the Commission ruled that the company had received illegal state aid. The Commission argued that Irish revenue commissioners gave Apple unfair advantage between 1991 and 2007 by allowing the company to move income from the European market through two "non-resident" head office subsidiaries based in Ireland. Ireland vowed to appeal the ruling. “More than one year after the Commission adopted this decision, Ireland has still not recovered the money,” EU Competition Commissioner Margrethe Vestager said, adding that Dublin had not even sought a portion of the sum. “We of course understand that recovery in certain cases may be more complex than in others, and we are always ready to assist. But member states need to make sufficient progress to restore competition,” she added. The Commission said the deadline for Ireland to implement its decision had been Jan. 3 this year and that, until the aid was recovered, the company continued to benefit from an illegal advantage. Ireland's finance ministry said it had never accepted the Commission's analysis in the Apple state aid decision, but would collect the money due pending Dublin's own appeal of the ruling. "It is extremely regrettable that the Commission has taken this action, especially in relation to a case with such a large scale recovery amount," the ministry said in a statement.
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Mobile Roaming Charges Abolished in the EU

Thursday June 15, 2017 1:57 am PDT by Tim Hardwick
A new European Union law came into effect on Thursday that abolishes roaming charges for people using mobile phones abroad. The new rules mean that EU citizens traveling within the EU that call, text, and browse the internet on their mobile devices will be charged the same price they pay in their home country. Previously, roaming charges were added to the cost of calls, SMS messages, and web browsing whenever mobile users in the EU traveled to another country and connected to another cellular network. The practice of charging consumers extra while they were abroad gained widespread notoriety because users often ended up having to pay extortionate fees for relatively moderate data usage. "Each time a European citizen crossed an EU border, be it for holidays, work, studies or just for a day, they had to worry about using their mobile phones and a high phone bill from the roaming charges when they came home," said the European Commission in a statement. "The European Union is about bringing people together and making their lives easier. The end of roaming charges is a true European success story. Eliminating roaming charges is one of the greatest and most tangible successes of the EU," the statement added.The EU has been negotiating with mobile networks for nearly 10 years to come to an agreement regarding the legislation, following repeated warnings from networks that the law could mean higher tariffs at home. That outcome appears to have been avoided, however. "The EU has managed to find the right balance between the end of roaming charges and the need to keep
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European Commission Made 'Fundamental Errors' in Irish Tax Ruling, Says Apple

Tuesday February 21, 2017 1:46 am PST by Tim Hardwick
Apple has claimed that the European Commission made "fundamental errors" when it ruled last year that the company owed Ireland 13 billion euros ($13.7 billion) in unpaid taxes plus interest. Apple appealed the commission's decision in December, but on Monday the company published a piece in the Official Journal of the European Union detailing 14 pleas in law to support its action, according to The Irish Times. The European Commission argues that Irish revenue commissioners gave Apple unfair advantage between 1991 and 2007 by allowing the company to move income from the European market through two "non-resident" head office subsidiaries based in Ireland. Apple and the Irish government, which has also appealed the commission's decision, argue that the bulk of those profits are due in the U.S. "The Commission made fundamental errors by failing to recognize that the applicants' profit-driving activities, in particular the development and commercialization of the intellectual property (Apple IP), were controlled and managed in the United States," Apple said, according to the Official Journal. "The profits from those activities are attributable to the United States, not Ireland."Apple maintained that the commission had "failed to recognize that the Irish branches carried out only routine functions and were not involved in the development and commercialization of Apple IP, which drove profits". Cupertino also said that the commission failed to conduct a diligent and impartial investigation, and "exceeded its competence" as it relates to the Treaty on the Functioning
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Apple Set to Appeal EU Tax Ruling This Week

Monday December 19, 2016 1:37 am PST by Tim Hardwick
Apple is set to appeal this week against the European Commission's ruling that it must pay up to 13 billion euros ($13.8 billion) to Ireland in back taxes (via Reuters). EU regulators concluded in August that Apple had received undue tax benefits from Ireland – where the company's European headquarters are located – which allowed it to pay substantially less than other companies. Apple CEO Tim Cook vowed to appeal the ruling at the time, calling the back tax calculation a "false number" and the EU's judgement "total political crap". The Irish government also rejected the conclusion and said it would fight to reverse it. On Monday, Apple's General Counsel Bruce Sewell told Reuters that the company's imminent legal challenge will be based on its belief that EU regulators willfully ignored tax experts to come to its conclusions. "The Irish put in an expert opinion from an incredibly well-respected Irish tax lawyer. The Commission not only didn't attack that - didn't argue with it, as far as we know - they probably didn't even read it. Because there is no reference (in the EU decision) whatsoever."Sewell also said Apple intends to challenge the EU's basis for its penalty judgement, and will argue that a "crazy notion of non-residency" was chosen on purpose to produce a punitive amount, when other legitimate tax law arguments could have been used that would "produce much lower numbers". As to why the EU had gone down its chosen route, Sewell said he believed regulators had singled out the company because of its success. "Apple is not an outlier in any sense that
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European Union Moves Forward With Plans to Eliminate Roaming Charges Next Year

Thursday December 8, 2016 8:25 am PST by Joe Rossignol
European Commission members met on Wednesday to discuss draft rules intended to eliminate roaming charges in the European Union as of June 15, 2017. (Image: TapSmart) The Commission said it is determined to put an end to roaming charges commonly billed by carriers when a customer calls, sends messages, or uses data on their mobile device while abroad in the European Union, outside of their primary country of residence, subject to proportionate checks for abusive usage. European regulators have proposed a "Roam like at Home" solution that would allow travelers to call, text, and browse the web on their mobile devices when abroad in the European Union for no extra charge than the price they pay at home. It is not intended to be used for permanent roaming. "Roam like at Home" is aimed at people who travel in the European Union for work or leisure. "They spend more time at home than they do abroad, and they make most of their calls, texts and use data in their home country," the Commission explained.Example: with his €70 per month contract, Tim living in Netherlands gets unlimited calls, texts and data for his smartphone. When he travels abroad on holidays, he will have unlimited calls and text. For data, he will get twice the equivalent of €70 worth of data at the wholesale roaming data price cap, i.e. 0.85 cent/MB according to the Commission wholesale proposal, meaning more than 16 GB in this case. While roaming, he will get twice the volume he has paid for.The latest draft further clarifies consumer rights, such as ensuring that customers abusing a carrier's
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Ireland to Formally Appeal $14 Billion Apple Tax Ruling This Week

Tuesday November 8, 2016 8:06 am PST by Joe Rossignol
Ireland's government will this week formally submit an appeal against the European Commission's ruling that it must collect 13 billion euros in unpaid back taxes from Apple, according to Ireland's finance minister Michael Noonan."The government fundamentally disagrees with the European Commission's analysis and the decision left no choice but to take an appeal to the European Courts and this will be submitted tomorrow," Noonan told a European Parliament committee in Brussels on Tuesday.Ireland agreed in September to join Apple in its fight against the European Commission, which in August said the iPhone maker received illegal state aid from the country. The ruling followed a three-year inquiry that found Apple paid between only 0.005% and 1% in taxes in Ireland between 2003 and 2014, compared to the country's headline 12.5% corporate tax rate. Ireland is looking to protect its tax regime that has benefited several multinational corporations, according to Reuters. Apple previously said it is "confident" the ruling "will be overturned" by European courts, but noted the process is "likely to take several years." Apple said it has "provisioned several billion dollars for the U.S. for payment," but it does not expect any near-term impact on its financial results. Apple insists it is "the largest taxpayer in the world" and "follows the law and pays all of the taxes" it owes in each country it operates. Apple CEO Tim Cook has described the tax accusations as "total political crap," and said the lower-end 0.005% tax rate calculated by the European Commission is a "false
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Apple Facing European Commission's Tax Ruling Without a Lobbying Presence in Brussels

Monday September 26, 2016 5:21 am PDT by Mitchel Broussard
Following the European Commission's ruling that Apple must pay 13 billion euros ($14.5 billion) in back taxes because of its "undue tax benefits" in Ireland, The Wall Street Journal reported over the weekend that Apple is facing the EC "without the army of lobbyists and public relations campaigners typical in such fights." The company's lack of a lobbying presence in Europe isn't new, however, as it spent less than €900,000 lobbying European institutions in 2015. According to public filings, in total Apple "doesn't employ any full-time lobbyists" in Brussels, and only five people work part-time. In contrast, Google spent "at least" €4.25 million in 2015, and employs more than ten people in lobbying positions in the European capital. Apple's retail location in Brussels Sources familiar with the matter stated that Apple's "lack of a presence in the EU capital" led to it being unsuccessful in gathering information over the past few years about the impending tax evasion ruling from the European Commission. Still, a source close to the commission's competition office theorized that a heavier lobbying presence might not have been all that helpful for Apple in the end, since the lobbying tactics of a company like Google have not gotten it out of "many antitrust investigations" over the past few years. Google’s experience with the commission’s many antitrust investigations over the years may suggest a bigger Apple lobbying presence in Brussels wouldn’t have had a meaningful impact on the regulator’s decision. People familiar with the directorate say there is
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Ireland Agrees to Appeal European Commission's Apple Tax Ruling

Friday September 2, 2016 5:58 am PDT by Joe Rossignol
Ireland's coalition government has agreed to appeal the European Commission's ruling that it must collect 13 billion euros in back taxes from Apple, according to Reuters. A motion will come before the country's Parliament on Wednesday seeking an endorsement of that decision, a government spokesperson said. It was always expected that both Apple and Ireland would appeal any adverse decision, as insisted by the country's finance minister Michael Noonan, but Ireland's cabinet members became divided on the matter following the ruling. After meeting on Friday, however, the cabinet has seemingly come together and agreed to join Apple's fight against the European Commission. Earlier this week, the European Commission ruled that Apple received illegal state aid from Ireland, following a three-year inquiry into the company's tax arrangements in the country. The investigation's results showed that Apple allegedly paid between 0.005% and 1% in taxes in Ireland between 2003 and 2014, compared to the the country's headline 12.5% corporate tax rate. Apple CEO Tim Cook called the findings "total political crap" and described the lower end 0.005% tax rate as a "false number." In an open letter, Cook said Apple is confident the decision "will be reversed," but the appeal process could take several years in European courts. Apple has previously said it fully complies with international tax law and is the largest taxpayer in the world. Cook also said that Apple has "provisioned several billion dollars for the U.S. for payment," and he forecasted that it could repatriate that
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Tim Cook Calls Apple's Irish Tax Avoidance Accusations 'Total Political Crap'

Thursday September 1, 2016 5:45 am PDT by Mitchel Broussard
Apple CEO Tim Cook today spoke with Paschal Sheehy, the host of Irish radio show Morning Ireland, providing more commentary on the situation with the European Commission and its decision to make Apple pay 13 billion euros in back taxes from a period between 2003 and 2014. Cook's stance falls in line with his open letter on the situation from earlier in the week, first providing backstory about Apple's history in Ireland and then remaining hopeful that the ruling will ultimately be overturned. His wording -- calling the ruling "political crap" -- also echoes an interview from late last year surrounding a similar tax evasion topic. The radio show marks the first interview Cook has made since the European Commission's ruling earlier in the week. He calls the decision "wrongheaded," and specifically refers to the 0.005 percent tax rate claim as a "false number." In its ruling, the EC stated that Apple paid only a 0.005 percent tax on its European profits, but Cook affirmed that Apple is "subject to the statutory rate in Ireland of 12.5 percent," and that the company "paid $400m in taxes in 2014." When asked directly how he feels when Apple is painted as gaining an "illegal" advantage over tax benefits, Cook mentioned his frustrations over the ruling, and compared it to the company's reaction to the FBI drama earlier in the year, saying Apple never chooses the "easy thing" over the "right thing." In this vein, responding to the question of whether Apple has anything to apologize for or if it did anything wrong, Cook said succinctly "no, we haven't done anything
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Apple Expects Appeal of Irish Tax Ruling to Take 'Several Years' With No Impact on Near-Term Financial Results

Tuesday August 30, 2016 6:34 am PDT by Joe Rossignol
Following the European Commission's ruling that Apple received illegal state aid from Ireland, and must pay $14.5 billion in back taxes to the country, the company has published a new FAQ that addresses potential concerns investors may have about the decision and the effect on its bottom line. Apple started out by confirming the decision is not final and that it plans to appeal. The company is "confident" the ruling "will be overturned" by courts in the European Union, but it notes the process is "likely to take several years." In the meantime, Apple does not expect any near-term impact on its financial results.How does this decision impact Apple’s near-term financial results? Will you take a tax charge? Does this alter your previous guidance? We do not expect any near-term impact on our financial results nor a restatement of previous results from this decision. We have previously accrued U.S. taxes related to the income in question. The tax rate guidance for Apple’s fourth fiscal quarter that we provided on July 26, 2016 does not change as a result of this decision.Apple added that it does not currently expect the decision to have an impact on its tax rate or cash balance going forward, but the company anticipates it will place an unspecified amount of cash in an escrow account. Apple expects the amount will be reported as restricted cash on its balance sheet. The European Commission's ruling followed a three-year inquiry into Apple's tax arrangements in Ireland, where it paid between 0.005% and 1% in taxes from 2003 through 2014, compared to the country's
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Tim Cook Pens Open Letter on Tax Evasion Claims, Says Apple is Confident Decision 'Will be Reversed'

Tuesday August 30, 2016 5:25 am PDT by Mitchel Broussard
Tim Cook has posted an open letter on Apple's website in response to the European Commission's ruling that Apple must pay 13 billion euros ($14.5 billion) in back taxes dating from 2003 through 2014. Cook's letter begins by discussing Apple's long history in Ireland, which dates back to a small facility that housed 60 employees in 1980. That statistic has now expanded to 6,000 employees across Ireland in total, benefiting both the company and local economies. As it's grown, Cook says that Apple has become "the largest taxpayer in the world," and that "Apple follows the law and we pay all the taxes we owe." Directly confronting the European Commission's ruling, Cook claims that the EC has "launched an effort to rewrite Apple's history in Europe." As responsible corporate citizens, we are also proud of our contributions to local economies across Europe, and to communities everywhere. As our business has grown over the years, we have become the largest taxpayer in Ireland, the largest taxpayer in the United States, and the largest taxpayer in the world. Over the years, we received guidance from Irish tax authorities on how to comply correctly with Irish tax law — the same kind of guidance available to any company doing business there. In Ireland and in every country where we operate, Apple follows the law and we pay all the taxes we owe. The Apple CEO points out that the claim -- stating Ireland gave Apple a "special deal" on its taxes -- is completely false and "has no basis in fact or in law." Cook thinks the commission's ruling also has the potential to set a
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Apple Must Repay $14.5 Billion in Back Taxes, EU Commission Rules

Tuesday August 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
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European Commission Rules Apple Received Illegal State Aid From Ireland, Owes Billions in Back Taxes

Monday August 29, 2016 10:53 am PDT by Joe Rossignol
The European Commission on Tuesday will rule that Apple received illegal state aid from Ireland, according to a 130-page judgment known by Financial Times.Competition commissioner Margrethe Vestager circulated the final ruling to her counterparts in the EU’s executive branch only on Monday morning, deploying a fast-track procedure in a bid to minimize leaks. The usual notice period is two weeks.The ruling follows a three-year investigation into Apple's tax arrangements in Ireland, where it has reportedly paid around 2% or less in taxes compared to the country's headline 12.5% corporate tax rate. The commission's ruling asks Dublin to raise a new tax assessment on Apple, which could have to restate its accounts as a result of the ruling, according to the report. One area of focus is Apple's tax arrangements for its intellectual property assets, which is "a hotly disputed area likely to lead to a large claim for back taxes." The ruling means Apple could owe several billions of euros in back taxes. JPMorgan estimated the company could be forced to pay up to 19 billion euros ($21.2 billion) in back taxes, although a previous study placed the figure around $8 billion, and some analysts believe the amount could be a comparatively lower $1 billion. Europe's competition commissioner Margrethe Vestager will provide an actual estimate of Apple's potential tax bill when the European Commission's findings are publicly released on Tuesday, according to the report. Apple declined to comment on the matter, reiterating that the company fully complies with international tax
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