11 ms·

Apple facing record bill for Irish tax

88 points by shazzy 10y ago

nxzero 10y ago
Interesting that the US is backing Apple's tax shelter scheme, which isn't to say that EC isn't grasping way beyond any reasonable measure of where it should go.
- r00fus 10y ago
  If you think of Apple as simply a bellweather, and assume that the government is coopted by regulatory capture [1], it makes a lot more sense - they're just doing their masters' bidding. Most US-based corporations who benefit from this scheme don't want their Double Irish with a Dutch Sandwich going away anytime soon [2]. [1] https://en.wikipedia.org/wiki/Regulatory_capture https://en.wikipedia.org/wiki/Regulatory_capture [2] http://www.investopedia.com/terms/d/double-irish-with-a-dutch-sandwich.asp http://www.investopedia.com/terms/d/double-irish-with-a-dutc...
- numbsafari 10y ago
  Harder for the US to get its hands on the money if the EC has already taken it, no?
- ChuckMcM 10y ago
  I think it is hilariously hypocritical coming from a tax authority that wants to collect taxes on income their citizens earned while working outside of their borders. Talk about trying to be a 'supra-national tax authority'. In some ways there is a fight going on with national governments telling corporations to start putting their hoarded cash to work in the various economies or else we'll take it and put it to work in the economies. In a number of dystopian futures there is an event in the past called the "corporate wars" and this kinda feels a bit like something you might call a corporate war. [1] "Do I Owe Taxes On My Foreign Income? U.S. citizens and resident aliens earning over a certain amount of income from foreign sources may have to pay income taxes on the foreign income." -- http://www.efile.com/foreign-earned-income-and-income-exclusion/ http://www.efile.com/foreign-earned-income-and-income-exclus...
- rtkwe 10y ago
  Not too surprising. One interpretation of the government's role is to get the best deals for the citizens and companies under it's control. Also if the US ever wants to get that money back into the US via repatriation or by imposing taxes on overseas profits it's hard to do when it's already in the EU coffers.
J0-nas 10y ago
I think it's quite amusing how Apple(+other companies) and their tax avoidance scheme earned them a fortune in "tax heavens" and now both the EU and the USA are trying their best to get some of the money back. Here is to hoping EU politicians fix the tax system and force companies to pay a meaningful tax in the countries where they sell their products. Personally, I'm not very optimistic considering J.C. Juncker is still one of the most influential EU politicians. https://en.wikipedia.org/wiki/Jean-Claude_Juncker#Controversies https://en.wikipedia.org/wiki/Jean-Claude_Juncker#Controvers...
- cloudjacker 10y ago
  funny thing to say since the US Treasury is criticizing the EU over this abuse of tax law The US and Ireland both signed off on the arrangement that apple and other companies use to avoid tax. Now, a government that didn't exist at the time, is using new case law it has created, to retroactively change the tax laws of the governments underneath it. Think of it as Europe's Marbury v Madison moment
  - icebraining 10y ago
    It's not the EU's fault if Ireland signed incompatible treaties.
  - rtkwe 10y ago
    > Now, a government that didn't exist at the time, is using new case law it has created, to retroactively change the tax laws of the governments underneath it. It's kind of tricky because though the EU as it is today is relatively new Ireland joined the European Economic Community which essentially became the EU. Also whenever that rule came into effect the special rules Ireland gave Apple should have been reevaluated and removed. They've always been against the state aid rule it's just not been tried until now. As for "changing the tax laws of governments underneath it" that's part of being in the EU you give up parts of your national sovereignty in a number of areas for the benefits of being in the open market.
    - rtkwe 10y ago
adwhit 10y ago
Amusing that Ireland are going to appeal a decision which results in their receiving billions of dollars. They accurately calculate that a few billion is scant compensation if the Masters of the Universe then choose to go elsewhere for their tax-avoiding needs.
- nacs 10y ago
  Not just the "Masters" but any other foreign company that incorporates in Ireland that have incorporated there and may do so in the future. Its a smart move for Ireland to appeal it.
  - adwhit 10y ago
    Perhaps I should have been more explicit - "Masters of the Universe" is a phrase used to refer to financial capital in general.
  - Oletros 10y ago
    No, the deals were offered to just some companies
- anonymousDan 10y ago
  Not really. Apple have been in Ireland since the eighties and are one of the biggest private sector employers in Cork. There are a lot of jobs on the line, it's not like they are some kind of brass plate company with no actual presence here.
  - adwhit 10y ago
    Obviously the tax-evadee can expect some reward from the tax-evader. Throwing a few thousand jobs Ireland's way is the least Apple could do.
  - revelation 10y ago
    The eighties are about when that Ireland tax heaven thing began.. Notice that these jobs were always mandatory part of the tax breaks. They'll likely disappear with the tax break, given that Ireland has since dramatically elevated it's living standard on the basis of low corporate tax (and special tax) and wages are no longer competitive for something like support jobs.
djrogers 10y ago
Seems kinda crazy to retroactively assess taxes/fines on a company that was doing something completely legal in the country it was operating in. If you don't like the rules, change them - but to go backward in time and say what was clearly legal shouldn't have been is crazy. That'd be like re-scoring the 1890 World Series based on today's MLB rulebook.
- Marazan 10y ago
  It wasn't legal though, it was illegal state aid in contravention to the laws of the single market Ireland was signed up too.
  - cloudjacker 10y ago
    using case law that didn't even exist at the time You know its bad when the US Treasury department even disagrees with the EU commission
    - icebraining 10y ago
      Fiscal State Aid has been explicitly illegal since the 90s. Why would case law be needed?
    - hackuser 10y ago
      > You know its bad when the US Treasury department even disagrees with the EU commission The US Treasury may be biased in favor of their constituent, whose CEO recently claimed is the largest taxpayer in the country,[0] and other constituents in similar circumstances. [0] http://www.washingtonpost.com/sf/business/wp/2016/08/13/2016/08/13/tim-cook-the-interview-running-apple-is-sort-of-a-lonely-job/ http://www.washingtonpost.com/sf/business/wp/2016/08/13/2016...
      - mpweiher 10y ago
        Not just that. Once the income has been taxed outside the US, it can no longer be taxed by the US. And so far, the US Treasury considered this income as "not taxed", meaning it would have been taxed at the corporate US tax rate when and if moved to the US. Which is why Apple hasn't moved that money to the US, and has something like $190 billion sitting outside the US. So the treasury is being extremely disingenuous here, they just want to be the ones to tax this income.
cryptoz 10y ago
I still don't understand why companies avoid local taxes. It doesn't make any sense to me. Their fiduciary duty is to act in the best interests of their investors. Unless the investors all consider their best-case-scenario to live in a world of anarchy and lawlessness, it is obviously in everyone's best interest (financially and otherwise) to pay taxes as expected. Anything else is an affront to the structure of modern civilization. It is not in the best interest of Apple shareholders for the quality of life in the US/California/etc to deteriorate due to missing tax dollars. Long-term, stable societies are much more useful for making money than a few billion in secret stash tax havens.
- zyxley 10y ago
  https://en.wikipedia.org/wiki/Tragedy_of_the_commons https://en.wikipedia.org/wiki/Tragedy_of_the_commons
- s_m_t 10y ago
  You are assuming that the government is going to use those resources better than the company avoiding the taxes. Not everyone agrees with this. From this point of view everyone is acting rationally, they only might disagree about one specific assumption.
  - kartan 10y ago
    Maybe government is not as efficient providing citizens with firefighters, teachers, and other services. Maybe that companies are extremely efficient giving money to their shareholders. But I don't see your point.
    - aianus 10y ago
      Both of those things are paid by municipalities out of property taxes. They would not be affected in any way by Apple's corporate tax dodges.
      - tormeh 10y ago
rdtsc 10y ago
> US warning The investigation into Apple and similar probes into other US firms have been criticised by US authorities. Ha! I like it. US all of the sudden is defending Apple. Not because it loves Apple, but because it was hoping it would get its hands on those billions ... somehow. EU here is basically saying, "ok Uncle Sam, fish or cut bait, do something. If not get out of the way, we'll take that money". So Uncle Sam is a bit upset at that, he doesn't like to be handled that way. They will probably be various threats of sanctions from US and EU will buckle eventually. Maybe some scheme to divide the tax penalty between US and EU eventually. Ireland's position is understandable. It could lose those companies overnight basically if this goes through.
- justincormack 10y ago
  Ireland is still the lowest taxed place in Europe, although the UK is pretty good and Luxembourg was a good option (overall, exemptions matter too). As the money that flows into Ireland is profits form European sales, it will be taxed somewhere in the EU, at some rate.
- peteretep 10y ago
  I like the EU slowly becoming a friendly and peaceful counterpoint to the US. Two democratic superpowers of about the same size is better than one.
Oletros 10y ago
Here are the allegations http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52014XC1017(08)&from=EN http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELE...
matt_wulfeck 10y ago
Isn't it Ireland's prerogative if they want to collect taxes on corporations or not? It's bringing in excessive amounts of jobs (and payroll taxes) and investments to their country. This whole tax avoidance criticism just boggles my mind. There's a sale in China. One person pays money to another person in their country for a phone created in China that never left China. Yet somehow US citizens believe they are entitled to 30-40% of the money that exchanged hands there or it's "tax avoidance".
- Oletros 10y ago
  > Isn't it Ireland's prerogative if they want to collect taxes on corporations or not? What is not a member of the UE prerogative is giving unfair deals to just some companies. This is what the case is about.
deleted 10y ago
[deleted]
fffernan 10y ago
Apple (with backing of the US government) vs EU. My money is on Apple winning this battle. I'm sick of these lawsuits against Apple/MSFT. Europe is just jealous that US/Korea/Japan can create global tech brands that anyone cares about.
- singularity2001 10y ago
  Or people in the EU get angry that it's hard to compete against US monopolists 'tech brands' who pay 10000 times less tax percentually.

88 points by shazzy 10y ago

Interesting that the US is backing Apple's tax shelter scheme, which isn't to say that EC isn't grasping way beyond any reasonable measure of where it should go.

r00fus 10y ago
If you think of Apple as simply a bellweather, and assume that the government is coopted by regulatory capture [1], it makes a lot more sense - they're just doing their masters' bidding. Most US-based corporations who benefit from this scheme don't want their Double Irish with a Dutch Sandwich going away anytime soon [2]. [1] https://en.wikipedia.org/wiki/Regulatory_capture https://en.wikipedia.org/wiki/Regulatory_capture [2] http://www.investopedia.com/terms/d/double-irish-with-a-dutch-sandwich.asp http://www.investopedia.com/terms/d/double-irish-with-a-dutc...
numbsafari 10y ago
Harder for the US to get its hands on the money if the EC has already taken it, no?
ChuckMcM 10y ago
I think it is hilariously hypocritical coming from a tax authority that wants to collect taxes on income their citizens earned while working outside of their borders. Talk about trying to be a 'supra-national tax authority'. In some ways there is a fight going on with national governments telling corporations to start putting their hoarded cash to work in the various economies or else we'll take it and put it to work in the economies. In a number of dystopian futures there is an event in the past called the "corporate wars" and this kinda feels a bit like something you might call a corporate war. [1] "Do I Owe Taxes On My Foreign Income? U.S. citizens and resident aliens earning over a certain amount of income from foreign sources may have to pay income taxes on the foreign income." -- http://www.efile.com/foreign-earned-income-and-income-exclusion/ http://www.efile.com/foreign-earned-income-and-income-exclus...
rtkwe 10y ago
Not too surprising. One interpretation of the government's role is to get the best deals for the citizens and companies under it's control. Also if the US ever wants to get that money back into the US via repatriation or by imposing taxes on overseas profits it's hard to do when it's already in the EU coffers.

J0-nas 10y ago

I think it's quite amusing how Apple(+other companies) and their tax avoidance scheme earned them a fortune in "tax heavens" and now both the EU and the USA are trying their best to get some of the money back. Here is to hoping EU politicians fix the tax system and force companies to pay a meaningful tax in the countries where they sell their products. Personally, I'm not very optimistic considering J.C. Juncker is still one of the most influential EU politicians. https://en.wikipedia.org/wiki/Jean-Claude_Juncker#Controversies https://en.wikipedia.org/wiki/Jean-Claude_Juncker#Controvers...

cloudjacker 10y ago
funny thing to say since the US Treasury is criticizing the EU over this abuse of tax law The US and Ireland both signed off on the arrangement that apple and other companies use to avoid tax. Now, a government that didn't exist at the time, is using new case law it has created, to retroactively change the tax laws of the governments underneath it. Think of it as Europe's Marbury v Madison moment
- icebraining 10y ago
  It's not the EU's fault if Ireland signed incompatible treaties.
- rtkwe 10y ago
  > Now, a government that didn't exist at the time, is using new case law it has created, to retroactively change the tax laws of the governments underneath it. It's kind of tricky because though the EU as it is today is relatively new Ireland joined the European Economic Community which essentially became the EU. Also whenever that rule came into effect the special rules Ireland gave Apple should have been reevaluated and removed. They've always been against the state aid rule it's just not been tried until now. As for "changing the tax laws of governments underneath it" that's part of being in the EU you give up parts of your national sovereignty in a number of areas for the benefits of being in the open market.
  - rtkwe 10y ago

adwhit 10y ago

Amusing that Ireland are going to appeal a decision which results in their receiving billions of dollars. They accurately calculate that a few billion is scant compensation if the Masters of the Universe then choose to go elsewhere for their tax-avoiding needs.

nacs 10y ago
Not just the "Masters" but any other foreign company that incorporates in Ireland that have incorporated there and may do so in the future. Its a smart move for Ireland to appeal it.
- adwhit 10y ago
  Perhaps I should have been more explicit - "Masters of the Universe" is a phrase used to refer to financial capital in general.
- Oletros 10y ago
  No, the deals were offered to just some companies
anonymousDan 10y ago
Not really. Apple have been in Ireland since the eighties and are one of the biggest private sector employers in Cork. There are a lot of jobs on the line, it's not like they are some kind of brass plate company with no actual presence here.
- adwhit 10y ago
  Obviously the tax-evadee can expect some reward from the tax-evader. Throwing a few thousand jobs Ireland's way is the least Apple could do.
- revelation 10y ago
  The eighties are about when that Ireland tax heaven thing began.. Notice that these jobs were always mandatory part of the tax breaks. They'll likely disappear with the tax break, given that Ireland has since dramatically elevated it's living standard on the basis of low corporate tax (and special tax) and wages are no longer competitive for something like support jobs.

djrogers 10y ago

Seems kinda crazy to retroactively assess taxes/fines on a company that was doing something completely legal in the country it was operating in. If you don't like the rules, change them - but to go backward in time and say what was clearly legal shouldn't have been is crazy. That'd be like re-scoring the 1890 World Series based on today's MLB rulebook.

Marazan 10y ago
It wasn't legal though, it was illegal state aid in contravention to the laws of the single market Ireland was signed up too.
- cloudjacker 10y ago
  using case law that didn't even exist at the time You know its bad when the US Treasury department even disagrees with the EU commission
  - icebraining 10y ago
    Fiscal State Aid has been explicitly illegal since the 90s. Why would case law be needed?
  - hackuser 10y ago
    > You know its bad when the US Treasury department even disagrees with the EU commission The US Treasury may be biased in favor of their constituent, whose CEO recently claimed is the largest taxpayer in the country,[0] and other constituents in similar circumstances. [0] http://www.washingtonpost.com/sf/business/wp/2016/08/13/2016/08/13/tim-cook-the-interview-running-apple-is-sort-of-a-lonely-job/ http://www.washingtonpost.com/sf/business/wp/2016/08/13/2016...
    - mpweiher 10y ago
      Not just that. Once the income has been taxed outside the US, it can no longer be taxed by the US. And so far, the US Treasury considered this income as "not taxed", meaning it would have been taxed at the corporate US tax rate when and if moved to the US. Which is why Apple hasn't moved that money to the US, and has something like $190 billion sitting outside the US. So the treasury is being extremely disingenuous here, they just want to be the ones to tax this income.

cryptoz 10y ago

I still don't understand why companies avoid local taxes. It doesn't make any sense to me. Their fiduciary duty is to act in the best interests of their investors. Unless the investors all consider their best-case-scenario to live in a world of anarchy and lawlessness, it is obviously in everyone's best interest (financially and otherwise) to pay taxes as expected. Anything else is an affront to the structure of modern civilization. It is not in the best interest of Apple shareholders for the quality of life in the US/California/etc to deteriorate due to missing tax dollars. Long-term, stable societies are much more useful for making money than a few billion in secret stash tax havens.

zyxley 10y ago
https://en.wikipedia.org/wiki/Tragedy_of_the_commons https://en.wikipedia.org/wiki/Tragedy_of_the_commons
s_m_t 10y ago
You are assuming that the government is going to use those resources better than the company avoiding the taxes. Not everyone agrees with this. From this point of view everyone is acting rationally, they only might disagree about one specific assumption.
- kartan 10y ago
  Maybe government is not as efficient providing citizens with firefighters, teachers, and other services. Maybe that companies are extremely efficient giving money to their shareholders. But I don't see your point.
  - aianus 10y ago
    Both of those things are paid by municipalities out of property taxes. They would not be affected in any way by Apple's corporate tax dodges.
    - tormeh 10y ago

rdtsc 10y ago

> US warning The investigation into Apple and similar probes into other US firms have been criticised by US authorities. Ha! I like it. US all of the sudden is defending Apple. Not because it loves Apple, but because it was hoping it would get its hands on those billions ... somehow. EU here is basically saying, "ok Uncle Sam, fish or cut bait, do something. If not get out of the way, we'll take that money". So Uncle Sam is a bit upset at that, he doesn't like to be handled that way. They will probably be various threats of sanctions from US and EU will buckle eventually. Maybe some scheme to divide the tax penalty between US and EU eventually. Ireland's position is understandable. It could lose those companies overnight basically if this goes through.

justincormack 10y ago
Ireland is still the lowest taxed place in Europe, although the UK is pretty good and Luxembourg was a good option (overall, exemptions matter too). As the money that flows into Ireland is profits form European sales, it will be taxed somewhere in the EU, at some rate.
peteretep 10y ago
I like the EU slowly becoming a friendly and peaceful counterpoint to the US. Two democratic superpowers of about the same size is better than one.

Oletros 10y ago

Here are the allegations http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52014XC1017(08)&from=EN http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELE...

matt_wulfeck 10y ago

Isn't it Ireland's prerogative if they want to collect taxes on corporations or not? It's bringing in excessive amounts of jobs (and payroll taxes) and investments to their country. This whole tax avoidance criticism just boggles my mind. There's a sale in China. One person pays money to another person in their country for a phone created in China that never left China. Yet somehow US citizens believe they are entitled to 30-40% of the money that exchanged hands there or it's "tax avoidance".

Oletros 10y ago
> Isn't it Ireland's prerogative if they want to collect taxes on corporations or not? What is not a member of the UE prerogative is giving unfair deals to just some companies. This is what the case is about.

deleted 10y ago

[deleted]

fffernan 10y ago

Apple (with backing of the US government) vs EU. My money is on Apple winning this battle. I'm sick of these lawsuits against Apple/MSFT. Europe is just jealous that US/Korea/Japan can create global tech brands that anyone cares about.

singularity2001 10y ago
Or people in the EU get angry that it's hard to compete against US monopolists 'tech brands' who pay 10000 times less tax percentually.