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>If Apple (US) sells an iPhone to an American customer, they will pay US corporate income tax on the profits from that sale. Except they don't, really. They u

by gozur88 11y ago

>If Apple (US) sells an iPhone to an American customer, they will pay US corporate income tax on the profits from that sale. Except they don't, really. They use the same "double Irish" scheme in the US. Apple has offshore holding companies that own the IP for that iPhone. When a US customer buys an iPhone, much of the actual profit gets shifted to the offshore subsidiaries as an expense. That's how they ended up with $200bn offshore and only $10bn or so in the US.

HSO 11y ago
> That's how they ended up with $200bn offshore and only $10bn or so in the US. Wrong. They initiated a capital return program a few years ago and ran down their US cash holdings while taking on debt "against" part of their overseas holdings. Once you account for the debt issues, their net cash holdings are a lot lower (though still substantial). Please don't make wild accusations if you don't know what you are talking about.
- gozur88 11y ago
  It's not wrong. http://appleinsider.com/articles/15/07/22/as-apples-offshore-cash-pile-reaches-190b-us-congress-moves-closer-to-multinational-tax-reform http://appleinsider.com/articles/15/07/22/as-apples-offshore... They still can't repatriate that money without paying taxes. And as of two quarters ago they still have $200bn offshore and $10bn in the US. That offshore tax horde is still growing and it's still growing as a result of Double Irish flim-flam. Don't accuse other people of not knowing what they're talking about unless you know what you're talking about.
  - HSO 11y ago
    For the record, I said your assertion that Apple's cash position was due to Double Irish tax maneuvers on US income is wrong, and that net cash (once you account for debt issued to pay dividends) is significantly lower, both in absolute terms and in the disparity between overseas and onshore holdings. Before the initiation of the 140bn capital return program, relative balances were less skewed and more reflective of where profits were generated. I won't respond to you again in this thread because I can't deal with people who lack basic reading comprehension, logic, and fact-checking skills.
    - gozur88 11y ago
      You have a talent for seeing the trees and missing the forest. Apple isn't changing anything by borrowing against its foreign cash horde. That just gives it access to the money without having to pay taxes.
      - zepto 11y ago
        No. They are still liable for taxes on the cash horde. It is simply deferred.
        gozur88 11y ago
        That was the point.
        zepto 11y ago
        Well you misstated it then. You said they 'without having to pay taxes'. This is false. They do have to pay the taxes. And the cash hoard might technically be 'growing' but there is a corresponding liability that is growing too - so it's no longer Apple's money to do what they want with - it's owed to creditors. So the 'film-flam' as you call it avoids no taxes with regard to the cash-horde.
nodamage 11y ago
Please provide a source for your claim. Everything I've read indicates these tax arrangements are only effective for foreign profits.
- gozur88 11y ago
  Would it be too much to ask that people looked at the wiki page before they demanded sources? The page for Double Irish mentions Apple by name.
  - nodamage 11y ago
    Wow, thanks for your incredibly condescending reply. Let's look at the actual Wikipedia page for the Double Irish arrangement: "The offshore company continues to receive all of the profits from exploitation of the rights outside the US, but without paying US tax on the profits unless and until they are remitted to the US." https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement "However, tax experts say that strategies like the Double Irish help explain how Apple has managed to keep its international taxes to 3.2 percent of foreign profits last year, to 2.2 percent in 2010, and in the single digits for the last half-decade, according to the company’s corporate filings." http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html http://www.nytimes.com/2012/04/29/business/apples-tax-strate... "Under a typical “Double Irish” structure, a U.S. parent company (USCo) forms two Irish subsidiaries, IrishCo1 and IrishCo2. IrishCo1 is a first-tier Irish subsidiary organized under Irish law but managed and controlled in a low-tax jurisdiction (e.g., Bermuda or the British Virgin Islands). While U.S. rules determine tax residency of a corporation based on its place of incorporation, Irish law often determines tax residency based on the country where the company is managed and controlled. Accordingly, IrishCo1 will be treated for U.S. tax purposes as an Irish corporation, but for Irish tax purposes generally will be structured so as to be treated as a nonresident of Ireland resident in, for example, Bermuda. USCo will retain all US rights in the relevant IP and will license to IrishCo1 the rights to develop and exploit the IP outside the US. IrishCo1 will then sublicense these IP rights to IrishCo2, which in turn will use the IP to manufacture/produce IP products and then sell those products to customers outside the U.S." http://www.taxeswithoutbordersblog.com/2014/10/death-of-the-double-irish-dutch-sandwich-not-so-fast/ http://www.taxeswithoutbordersblog.com/2014/10/death-of-the-... You clearly do not understand how the double Irish arrangement actually works or what taxes it is supposed to reduce. Hint: if Apple could wipe out their US income tax obligations so easily using this arrangement, they probably wouldn't have bothered to pay that $14 billion in corporate income tax last year.

by gozur88 11y ago

HSO 11y ago

> That's how they ended up with $200bn offshore and only $10bn or so in the US. Wrong. They initiated a capital return program a few years ago and ran down their US cash holdings while taking on debt "against" part of their overseas holdings. Once you account for the debt issues, their net cash holdings are a lot lower (though still substantial). Please don't make wild accusations if you don't know what you are talking about.

gozur88 11y ago
It's not wrong. http://appleinsider.com/articles/15/07/22/as-apples-offshore-cash-pile-reaches-190b-us-congress-moves-closer-to-multinational-tax-reform http://appleinsider.com/articles/15/07/22/as-apples-offshore... They still can't repatriate that money without paying taxes. And as of two quarters ago they still have $200bn offshore and $10bn in the US. That offshore tax horde is still growing and it's still growing as a result of Double Irish flim-flam. Don't accuse other people of not knowing what they're talking about unless you know what you're talking about.
- HSO 11y ago
  For the record, I said your assertion that Apple's cash position was due to Double Irish tax maneuvers on US income is wrong, and that net cash (once you account for debt issued to pay dividends) is significantly lower, both in absolute terms and in the disparity between overseas and onshore holdings. Before the initiation of the 140bn capital return program, relative balances were less skewed and more reflective of where profits were generated. I won't respond to you again in this thread because I can't deal with people who lack basic reading comprehension, logic, and fact-checking skills.
  - gozur88 11y ago
    You have a talent for seeing the trees and missing the forest. Apple isn't changing anything by borrowing against its foreign cash horde. That just gives it access to the money without having to pay taxes.
    - zepto 11y ago
      No. They are still liable for taxes on the cash horde. It is simply deferred.
      - gozur88 11y ago
        That was the point.
        zepto 11y ago
        Well you misstated it then. You said they 'without having to pay taxes'. This is false. They do have to pay the taxes. And the cash hoard might technically be 'growing' but there is a corresponding liability that is growing too - so it's no longer Apple's money to do what they want with - it's owed to creditors. So the 'film-flam' as you call it avoids no taxes with regard to the cash-horde.

nodamage 11y ago

Please provide a source for your claim. Everything I've read indicates these tax arrangements are only effective for foreign profits.

gozur88 11y ago
Would it be too much to ask that people looked at the wiki page before they demanded sources? The page for Double Irish mentions Apple by name.
- nodamage 11y ago
  Wow, thanks for your incredibly condescending reply. Let's look at the actual Wikipedia page for the Double Irish arrangement: "The offshore company continues to receive all of the profits from exploitation of the rights outside the US, but without paying US tax on the profits unless and until they are remitted to the US." https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement "However, tax experts say that strategies like the Double Irish help explain how Apple has managed to keep its international taxes to 3.2 percent of foreign profits last year, to 2.2 percent in 2010, and in the single digits for the last half-decade, according to the company’s corporate filings." http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html http://www.nytimes.com/2012/04/29/business/apples-tax-strate... "Under a typical “Double Irish” structure, a U.S. parent company (USCo) forms two Irish subsidiaries, IrishCo1 and IrishCo2. IrishCo1 is a first-tier Irish subsidiary organized under Irish law but managed and controlled in a low-tax jurisdiction (e.g., Bermuda or the British Virgin Islands). While U.S. rules determine tax residency of a corporation based on its place of incorporation, Irish law often determines tax residency based on the country where the company is managed and controlled. Accordingly, IrishCo1 will be treated for U.S. tax purposes as an Irish corporation, but for Irish tax purposes generally will be structured so as to be treated as a nonresident of Ireland resident in, for example, Bermuda. USCo will retain all US rights in the relevant IP and will license to IrishCo1 the rights to develop and exploit the IP outside the US. IrishCo1 will then sublicense these IP rights to IrishCo2, which in turn will use the IP to manufacture/produce IP products and then sell those products to customers outside the U.S." http://www.taxeswithoutbordersblog.com/2014/10/death-of-the-double-irish-dutch-sandwich-not-so-fast/ http://www.taxeswithoutbordersblog.com/2014/10/death-of-the-... You clearly do not understand how the double Irish arrangement actually works or what taxes it is supposed to reduce. Hint: if Apple could wipe out their US income tax obligations so easily using this arrangement, they probably wouldn't have bothered to pay that $14 billion in corporate income tax last year.