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A Message to the Apple Community in Europe

• pulse7 10y ago
  There are some controversies in the Cook's letter: 1) "we employ nearly 6,000 people across Ireland" but they seem to create almost no value... because "profits should be taxed in the country where the value is created" and "nearly all of our research and development takes place in California"... 2) "the most profound and harmful effect of this ruling will be on investment and job creation in Europe" and "We are committed to Ireland and we plan to continue investing there"...
• leoc 10y ago
  True story: in the mid-2000s I was in the audience at an Apple recruiting talk for H1Bs at a European university (including one fairly-well-known then-Apple dev/manager). It didn't go very well: the audience was oblivious and largely uninterested, the Appleers were tetchy, I asked an impertinent question involving HyperCard. At one stage the rambling audience Q&A turned to a long discussion of the hypothetical possibility of Apple opening a European office at some point in the future. Now granted these were SW dev types rather than QAs or whatever, but ... I didn't quite have the heart to tell them about Cork. I'm not so sure about this bit, but IIRC at this time (and a long time afterwards) Apple wasn't investing much effort in the pretence that Cork was a serious operation, to the extent that the access road to the site wasn't in good repair and hadn't seen attention in ages, possibly since it was built. [EDIT: I am duly corrected on this, see https://news.ycombinator.com/item?id=12390072 https://news.ycombinator.com/item?id=12390072 below.]
  • jads 10y ago
    To say Apple's Cork presence is just a pretense is largely inaccurate. I've been to the Cork campus numerous times while I worked for the company for seven years (2005-2011). The campus was, and is, still a huge base of operations for Apple. The majority of their AppleCare international support is based there (both support personnel and management/exec), as are many other departments. There are, literally, hundreds of people there from all across Europe who have relocated to Cork. Beyond the main Holyhill campus, Apple has a large amount of office space within Cork's city centre. Additionally, Apple also has a pretty big assembly line there. Many of their products have also been (and still are) assembled there. For many of the PowerPC and earlier Intel machines, if the serial number started "CK", it was assembled in Cork (it's been a while since I've memorized Apple's serial number structure, but they used to be much easier to parse). However, the area of Cork that Apple's campus is located isn't very affluent and suffers like many inner-city boroughs in Ireland and Europe. Ultimately, the state of the roads isn't Apple's responsibility. You'd hope that a company like Apple could lean on the local government to improve it, but Apple wasn't the company it is today, back in the early 2000s. It was getting there, but it was still coming out of the near-bankrupcy 90s.
    • leoc 10y ago
      Thanks. I think my anecdote still illustrates how fully removed Cork was from any of the high-value development or R&D work that Apple seems to have been accounting to Ireland though.
      • jads 10y ago
        Definitely agree with you on the development / R&D. Cork is more a logistical base that's more about the day to day workings of the company, as opposed to coming up with the next big thing.
• somenomadicguy 10y ago
  After they pay their taxes, I imagine they will post some billboards like this: Dear EU, Please use some of the €13 Billion in taxes to keep art in schools. Love, Apple.
  • bertil 10y ago
    Apple is more than welcome to express interest in the education of people they plan to employ, to whom they plan to sell computers. They begged for clear and fair tax principles for years (up until this letter) and this is happening. It just so happens that if they contradict themselves, or lie, the EU will stop listening.
• okket 10y ago
  []
  • mcphage 10y ago
    No, that's an article about EU's ruling, this is Apple's response to that ruling.
    • deleted 10y ago
      [deleted]
• d_t_w 10y ago
  A message to Apple from anyone who doesn't have rocks in their head: You shift profits to avoid tax, don't play coy. The era of tax being optional for multinationals is drawing to a close. You make your profit, you pay for access to the market, no exceptions.
  • deleted 10y ago
    [deleted]
  • LoSboccacc 10y ago
    yeah right, when they pay the same taxes as I pay on my wage I'll eat a shoe.
    • Tepix 10y ago
      No need. In 2014 they paid 0.005% in Ireland.
  • danielrhodes 10y ago
    Of course they did (the loophole is now closed), but the point here is that this scheme was entirely legal. The EC is now saying that even though it was legal, they owe the tax anyways. That is not how things should work in a system based on the rule of law and fairness. Imagine for a moment that your own government raised your personal tax rate and said that since they felt the previous tax rate was too low, you also owe taxes from the past.
    • adamors 10y ago
      "Member states cannot give tax benefits to selected companies - this is __illegal__ under EU state aid rules," the commissioner said. "The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years." http://www.rte.ie/news/2016/0830/812819-apple-tax-ireland/ http://www.rte.ie/news/2016/0830/812819-apple-tax-ireland/
      • 10y ago
• MollyR 10y ago
  I can't say I approve of corporate or tax inversion, and I'm not sure what to think of this article. I've read countless articles saying the opposite http://www.theverge.com/2016/5/5/11604704/apple-tax-evasion-cupertino-mayor-barry-chang-reform http://www.theverge.com/2016/5/5/11604704/apple-tax-evasion-...
• sudhirj 10y ago
  Is this really that simple? Is the EC actually trying to apply a retroactive law?
  • jmfayard 10y ago
    Treaty of Rome and its state aid rules => 1957 Ireland accession to the EU => 1973 I don't think http://curia.europa.eu/ http://curia.europa.eu/ will be very impressed by those arguments
  • snovv_crash 10y ago
    No, they're saying it has been illegal all along, even if Ireland pretended otherwise.
  • louhike 10y ago
    I'm not a lawyer, but as far as I know the European law is prioritary before its nations'laws (except constitution). Apple took advantage of Irish law. What is retroactive here is the payment of taxes, not the law.
  • kbart 10y ago
    "Is the EC actually trying to apply a retroactive law?" No. The whole agreement between Apple and Ireland was deemed illegal by EC[1], so now they must pay avoided taxes. You can't demand keeping stolen goods after being caught stealing. 1. http://europa.eu/rapid/press-release_IP-16-2923_en.htm http://europa.eu/rapid/press-release_IP-16-2923_en.htm
  • Someone 10y ago
    In a sense: yes. Apple made a deal with Ireland as to their taxation; the EU ruled it illegal, and judged that both parties must act like the agreement was never there. That means Apple is due taxes to Ireland. In a sense, Ireland is the guilty party. They entered the EU; that means they agreed with its rules. Later they made an agreement with Apple that is now ruled illegal in the EU. Yet, they will profit (in the short term) if this ruling will stand. Note that Apple's only published issue is with the retroactive part. Open question is whether Apple handled in good faith making that deal. I do not rule out judges would rule they did, because there are zillions of such deals, and because the EU doesn't mention anything about fining Apple (they 'just' have to pay the taxes they are due, with interest)
• alphadevx 10y ago
  "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." Wow, strong stuff.
• kaoD 10y ago
  A Message to the Apple Company in the US: sorry, we can see through your shabby PR piece. Pay.
  • Frank2312 10y ago
    Apple, Pay.
    • JustSomeNobody 10y ago
      I love a good comma[0]. [0] https://en.wikipedia.org/wiki/Eats,_Shoots_%26_Leaves https://en.wikipedia.org/wiki/Eats,_Shoots_%26_Leaves
    • themihai 10y ago
      Now "Apple Pay" has a new meaning :)
• cheriot 10y ago
  Well, at least they used a bit of those billions to hire a good PR team. I'm always surprised how often press releases are tone deaf.
• dilemma 10y ago
  As always, spoken like a paranoid narcissist with a persecution complex.
• madeofpalk 10y ago
  The most specific and IMHO damming allegation was how they avoided paying tax. From the EU press release: [Ireland] endorsed a split of the profits for tax purposes in Ireland: Under the agreed method, most profits were internally allocated away from Ireland to a "head office" within Apple Sales International. This "head office" was not based in any country and did not have any employees or own premises. [...] The remaining vast majority of profits were allocated to the "head office", where they remained untaxed [...] an effective tax rate of about 0.05% on its overall annual profits. So, at the advice of Ireland, Apple was able to attribute sales to 'Apple Sales International', which was not based in any country and thus was not subject to tax.
  • threeseed 10y ago
    This is known as the "Double Irish, Dutch Sandwich" tax strategy. And has been used by many multinationals e.g. Google, Facebook, Ikea, Coke for many years.
    • draw_down 10y ago
      Then shouldn't all of them be in trouble right now too?
      • MollyR 10y ago
        They probably will be next.
        • draw_down 10y ago
          Ah, "next". I gather that European tax law prosecution must differ from other kinds, because if me and five of my buddies did a crime we'd all be in trouble simultaneously.
          • MollyR 10y ago
            precedent has to be set somewhere.
• afarrell 10y ago
  Here is the European Commission's word on the issue: http://europa.eu/rapid/press-release_IP-16-2923_en.htm http://europa.eu/rapid/press-release_IP-16-2923_en.htm
• ronjouch 10y ago
  > "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." Nice logical fallacy here, positively reframing / dumbing down a company's obligation to pay taxes in ${countries_of_activity} as "we have become the largest taxpayer in Ireland". That's precisely what Apple is condemned for: for consolidating fiscal activity in a tax haven, Ireland, in order to pay ridiculously-small taxes for Euro zone Apple activity, rather than paying (bigger) taxes in each EU country. Also, Cook mentions "6,000 people across Ireland [...] performing a wide variety of functions as part of Apple’s global footprint.". I have no idea what that number represents, scaled to a multinational like Apple. I'd be curious to know what you think of this number.
  • gonvaled 10y ago
    And even more interesting: what have been the consequences, to employment and otherwise, of Apple avoiding to pay billions in taxes?
• morphle 10y ago
  We had a similar case in the Netherlands with Starbucks. The European Commission has the argument that if a company has a treaty with a countries tax office that results in them paying less tax than other companies without such a treaty would, then the EC regards that as a state subsidie of a company by that government. A European government is prohibited to subsidise companies in a free market (there are exemption under law), they declare this an illegal subsidie and the government must get the illegal subsidie back. As fare as I am aware, Apple is not being fined in this case, the Irish government is. Its up to the Irish government to continue this subsidy, they just will be fined again if they do. Apple seems to say here that they might withdraw from Ireland because of the uncertainties around their tax evasion strategies, not because they will actually be taxed more.
• khoury 10y ago
  Didn't even know "The Apple Community in Europe" was a thing.
  • pluma 10y ago
    Apple writing a rebuttal to the EC decision and addressing it to "the community" seems a lot like Twitter celebrities writing rebuttals addressed to their followers. Anyone else get the feeling this is Apple trying to mobilise its loyal fans against the EC?
    • JustSomeNobody 10y ago
      This ... is pretty much exactly what they're trying to do. It worked reasonably well for them against the FBI, so they're trying it here.
      • themihai 10y ago
        I think it has an adverse effect because Apple literally steals from EU citizens regardless being british, irish, spanish etc. How could can someone sympathise with their message which is not only insulting but also divisive ? I for sure will think twice before to get the new i-device.
      • pluma 10y ago
        If so, that's insane. Why would EU citizens side with Apple against the EC if the only benefit is that Apple has to pay less taxes? Against the FBI it worked because it actually had direct implications for their customers. But in this case there's no implications for their customers other than a vague threat that Apple will punish them (by punishing the EU market) if they have to pay more taxes -- that's not a rallying call, that's blackmail.
• arbuge 10y ago
  "Taxes for multinational companies are complex, yet a fundamental principle is recognized around the world: A company’s profits should be taxed in the country where the value is created. Apple, Ireland and the United States all agree on this principle. In Apple’s case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States." So is R&D the only part of the company they believe creates any value? Why operate in Ireland at all if so? Should just outsource it all... Of course they know better. The value is right there in the first paragraph: "Thirty-six years ago, long before introducing iPhone, iPod or even the Mac, Steve Jobs established Apple’s first operations in Europe. At the time, the company knew that in order to serve customers in Europe, it would need a base there."
  • toyg 10y ago
    Yup. The question is -- where do you create "value", only in R&D or also through the manufacturing and distribution chain? If only R&D created taxable value, there would be no need to tax anyone after the research stage. Of course that's not the case (and it's actually the opposite of what you want, as a society). This is a very weak argument; if that's all they have, they're going to lose any appeal.
• tdubhro1 10y ago
  European governments already collect 20% VAT (equivalent to sales tax) on all Apple's products sold in their countries. Their employees in Ireland pay about 40% income tax, and similar levels in other European countries. They pay VAT on all the utilities they consume in the countries they operate in. It seems insane that the EU is chasing them for corporation tax as well. I smell French communists in Brussels running amok.
  • riotdash 10y ago
    This is not a surprise. Europe is the most communist region in the world and that's why European economy just keeps on declining.
  • jmfayard 10y ago
    Wait, can we actually choose which taxes we pay? Like maybe I can pay income tax but not VAT? Sound great!
    • tdubhro1 10y ago
      Corporation tax is supposed to be a tax on the profits of a company levied by the government of the country that the company is domiciled in. Apple is not domiciled in the EU. It has to have subsidiaries to employ people in those countries, but I absolutely agree with their position that their profits should be taxed in the US, not in the EU. If the EU wants a bigger slice of the pie, it can impose tariffs. That's what countries did in the past, and that's what they are trying to do now, but they are just claiming it's a legitimate corporation tax, and whipping the austerity-weary locals into a frenzy by pushing stories into the media about all the "profits" the large multinationals make in Europe and claiming they don't pay any tax. This is just not true, nor is there any basis in history for this kind of taxation. If they want to, they should at least be up front and say they want to impose a tariff. I just can't believe the HN crowd, who supposedly are interested in startups and running their own companies, are being drowned out by the lefties on an "evil corp" soapbox.
      • jmfayard 10y ago
• PedroBatista 10y ago
  This "message" is almost as bad as dodging taxes through loopholes. It reads as the Apple Head of State trying to rally the troops, trying the "foreign aggression because they're so jealous" angle.
• Scirra_Tom 10y ago
  Yuck. Old black and white photos, emotional appeal to some sort of corporate heritage. Posturing as some sort of victim. Only thing missing is a tiny violin playing on that webpage. Apple's been paying virtually no tax for years because it's argued it's legal to do so. Now the EC deems it was illegal. GG WP - you lose. Time to pay up now. I'm sure due to the amounts involved that this potential event was in someone's "risks" column and hasn't come completely out of the blue for Apple.
  • DrJokepu 10y ago
    According to the letter Apple is the largest taxpayer in Ireland, in the United States and in the world, surely that statement is incompatible with the statement that "they've been paying virtually no tax for years". One of these statements must be false.
    • Slartie 10y ago
      Not at all - there's some clever wording at play here. Apple may well be the "largest" taxpayer in the world. But that doesn't require that they are the singular entity paying the largest total sum of taxes. It's pretty common to measure the size of corporations by market value - Apple is pretty much the "largest" corporation by that measurement, and since they do pay some taxes (a laughable amount, but it nevertheless wins them this checkmark) they technically are a taxpayer, too.
    • hamax 10y ago
      If I'm paying VAT, it doesn't mean I can stop paying income tax.
      • sjwright 10y ago
        It does... if said government passes a law that says individuals that fit certain criteria are exempt from income tax.
    • Infinitesimus 10y ago
      If tax is % of revenue (def simplified for corporations) - does it matter if they paid the most if they make the most money? I haven't confined that they have the largest revenues, but paying the most is a weak argument in the face of what the governing body decides as what is a "fair" amount to pay. Whether or not this decision is fair is another conversation altogether...
• kabes 10y ago
  Saying that "It (Apple) has helped create and sustain more than 1.5 million jobs across Europe" is a far stretch if the majority of that number are app developers for who it makes no difference where Apple is located.
• mgkimsal 10y ago
  Interesting and seemingly overdue. What effect might this have on Apple (and others) repatriating overseas monies back to the US now. If it's going to be taxed overseas anyway, the argument for holding large amounts outside the US seems to be reduced. Granted, there will still be other non-US tax havens, and I'm guessing the lower rates may still be a factor. But might this have any impact at all? Or will this just be seen as a small fine and companies will carry on as before?
• duiker101 10y ago
  I read two things in this: - We bring work and employ a lot of people so we are good. - Be careful because if we don't get it our way we are going to go away and you are the one that will suffer.
  • xigency 10y ago
    Sounds like an abusive relationship.
    • PedroBatista 10y ago
      Sounds like every Apple product I ever owned.
      • JustSomeNobody 10y ago
        Sounds like you never owned one.
        • martin_a 10y ago
          Sounds like you owned one too much.
  • tribaal 10y ago
    Well, where would they go? All EU countries will be subject to the same law, and I doubt they would just stop selling their product on the european market (it would still make them money even when paying normal taxes). Paying customs tariffs would probably be worse than paying taxes in the EU, too.
    • xyzzy4 10y ago
      > Well, where would they go? Any country that would give them large amounts of tax credits. I'm sure some countries would be willing to negotiate. > I doubt they would just stop selling their product on the european market (it would still make them money even when paying normal taxes). They could sell to resellers who would sell in Europe, if it came to that.
• bobsmoot 10y ago
  brexit ain't looking too bad now
  • ff10 10y ago
    How so?
    • bobsmoot 10y ago
      I'm guessing if Ireland wasn't part of the EU then Apple probably wouldn't have to pony up 2bn. Ergo, the idea of a country leaving/not being part the overlord EU looks more like a good idea than a bad one. Given my absolute lack of political and economic experience, I could be horribly wrong. But I thought it would be fun to post my opinion nevertheless.
• BenoitP 10y ago
  > a devastating blow to the sovereignty of EU member states This is bad, bad PR. Maybe let the EU citizens be the judge of that? IMHO, it is a huge no-no for a company to make a political statement, especially in a troubled time like now (does Apple have any comments on Brexit, too?). I think this will deeply hurt the fanboyism.
  • legulere 10y ago
    Nothing says devastating blow to the sovereignty more than a multinational company pressuring a country to give them illegal tax benefits.
  • ck425 10y ago
    Or it might play well on rising nationalist anti-EU sentiments throughout Europe. The EU has a lot of battles to fight at the moment so Apple might be betting that they back off to an extent. That said I agree it will likely blow up in Apples faces. It strikes me as a line that would play well in the US (replace EU with US and re-read it) that they've not realised won't work over here.
    • emptyfile 10y ago
      Honestly since brexit I've been constantly amazed how little Brits and Americans understand continental Europe's opinion on the EU. On the continent euro-sceptics operate on the extreme political fringe, they never got into any parliament in numbers and are considered toxic as coalition partners. The EU won't blow apart, the EU is a fact of life and an economic necessity, Brexit was so shocking because it is indeed unbelievable that anyone would try to quit the EU.
  • collyw 10y ago
    I hope so, but knowing my Apple fanboy friends, they will be apologizing for Apple whatever they do.
  • zigzigzag 10y ago
    Lots of big companies commented on Brexit (before the vote). I agree it didn't do them much good in the public eye, but Apple didn't choose to dive into a political debate, it is being dragged into one. I see a bunch of comments from non-Irish people here saying how badly this letter is going down. But it's aimed at the Irish. Ireland has benefited to the tune of tens of thousands of jobs (perhaps way more) from just a handful of big tech firms, in a country with a population of just 4.5 million. It is one of the things that contributes to the falling Irish unemployment rate. If the EU starts trying to systematically move big, rich employers out of Ireland (and that's the purpose of these moves, to eliminate Ireland's "unfair" appeal), then there's a risk Irish sentiment will start to turn against the EU, just like it did in the UK over the issue of immigration. If the EU systematically attacks their primary competitive advantage in order to satisfy the high-tax French and high-debt Spanish, then what becomes of Ireland?
• deleted 10y ago
  [deleted]
• _pmf_ 10y ago
  What a disgusting, pathetic piece. If you get caught with your pants down, you should stop shitting instead of enumerating the benefits of natural fertilization.
• NicoJuicy 10y ago
  I wonder how much this has to do with the Brexit :)
  • leoc 10y ago
    Not much, so far at least. This latest round of trouble over Apple in Ireland predates the Brexit vote. And of course the Republic of Ireland is not in the UK.
• chinathrow 10y ago
  Cry me a river, seriously.
• bencollier49 10y ago
  Interesting. Does this imply that the UK deal with Google to let them pay less tax is now de jure illegal as well?
  • themihai 10y ago
    Most likely that's illegal too. However I'm not sure if they will pursue given the circumstances(UK out in a year or so).
• OliverJones 10y ago
  Hmm. I'm not sure whether Ireland owes any money to bondholders. If they do, this EU ruling will make it harder for them to negotiate with those bondholders, who can say "collect your taxes and pay up." But, some bondholders are probably the same people who compel American companies with vast cash piles to stash them offshore. Is this an issue for Irish voters? Their government made a deal that cost them money. If it's OK with the voters, their government can fight the EU on this. Or, if the voters prefer, the Irish government can try to collect from Apple. After all the posturing is done, they'll probably settle quietly.
• ar0 10y ago
  I don't really get what Apple is trying to achieve with this letter. Looking at my (continental) European colleagues, it comes across as aggressive bullying by a U.S. company and clearly harms public opinion of Apple, which cannot be a good thing for a company that sells consumer products. Maybe it looks differently from the Irish perspective, but obviously Ireland is a tiny market compared to France / Germany / etc., which are all countries where U.S. companies' (legal!) tax maneuvers aren't looked kindly at and where such a letter can only do more harm than good. People don't like the European Commission, but they like "lecturing from the Americans" even less. In the end, this matter is a very complex legal question (1. were the Irish tax deals actually "deals" or just the day-to-day application of the Irish tax code?; 2. if they were "deals", were they illegal deals under EU rules against state support?). It is going to be answered by the European Court, which I guess (or at least hope) will not make its decision based on an "open letter" posted on the Internet.
  • eknkc 10y ago
    Yeah this is weird. I like Apple products and I hate weird ass government taxes. (I run a company in Turkey, don't ask about the clusterfuck of corporate taxes here) They managed to find ways to evade taxes. Which I can stomach. But writing such a letter and expecting sympathy? Yeah right. Good luck with that.
  • erelde 10y ago
    I'm sure at least in my country, France, people won't hear about that case, and those who do will only hear about Apple's letter and won't read any EC documents. Thus the "mass" will somehow side with criminals.
    • kaspiCZ 10y ago
      I would fear the same, but I believe this is all too good for the media to pass on. Imagine the headlines comparing how much an average person pays on taxes with Apple. The other camp will indeed slam EU for butting in (again). It will mostly depend on the news outlet's agenda.
  • ck425 10y ago
• deleted 10y ago
  [deleted]
• mattmanser 10y ago
  Assuming the main story has tripped some sort of flame war trigger? https://news.ycombinator.com/item?id=12388601 https://news.ycombinator.com/item?id=12388601 223 votes in 3 hours and it's half way down page 2? It's incredibly important news, shouldn't dang et al intervene and reinstate it?
  • mangeletti 10y ago
    I think the reason for this is that this is the "please don't take the 13 thousand million dollars I owe" response letter from Apple, which probably disgusts a lot of people.
    • snsr 10y ago
      It is absolutely relevant.
  • k-mcgrady 10y ago
    It's still on page 1 for me, item 21.
• Grue3 10y ago
  In the spirit of #WeAreAllLeoMessi [1], they should launch a Twitter campaign #WeAreAllApple [1] http://metro.co.uk/2016/07/09/barcelona-launch-cringeworthy-weareallleomessi-support-campaign-5996987/ http://metro.co.uk/2016/07/09/barcelona-launch-cringeworthy-...
• flexie 10y ago
  What a load of corporate BS. How does it make first place on HN? "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." Please. They got caught not paying any tax in Europe. Ireland's tax laws are not ignored (EU simple asks Ireland to tax Apple according to usual Irish rules) and there is in effect no agreed upon international tax system anymore (if there ever were). "The opinion issued on August 30th alleges that Ireland gave Apple a special deal on our taxes. This claim has no basis in fact or in law. We never asked for, nor did we receive, any special deals." This is irrelevant. There was an understanding that Apple could channel all European profits through Ireland and that the Irish government wouldn't tax them on it. "We now find ourselves in the unusual position of being ordered to retroactively pay additional taxes to a government that says we don't owe them any more than we've already paid." First of all, it isn't retroactively. The obligation not to receive subsidies was there all the time. Second, it isn't at all unusual. Numerous companies in Europe have had to pay back subsidies, including tax subsidies, to governments that didn't want them back. "The Commission’s move is unprecedented and it has serious, wide-reaching implications." If by wide-reaching implications they mean that corporations can't hide behind phony company structures and will have to pay tax, then yes. "It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been. This would strike a devastating blow to the sovereignty of EU member states over their own tax matters, and to the principle of certainty of law in Europe." The EU commission is proposing no such thing. It is merely calling a spade a spade. Ireland joined the EU openly, and signed the EU treaty that bans state aid. "At its root, the Commission’s case is not about how much Apple pays in taxes. It is about which government collects the money." As in no government, apparently. "Taxes for multinational companies are complex, yet a fundamental principle is recognized around the world: A company’s profits should be taxed in the country where the value is created. Apple, Ireland and the United States all agree on this principle." Yes, it's complex, and much more complex than a company having to be taxed where the value is created. There is no such agreed upon fundamental principle, not even with United States, and even if there were, I would argue that most of the value is created where the products are either produced or sold, not where the R&D department happened to be located or where a company had placed its IPR.
  • 10y ago
• perseusprime11 10y ago
  It's time to bring the money back and create jobs in U.S. Apple cannot expect the U.S to cover it's ass from EU. Tim's answer 'well the taxes are high here, so we cannot bring the money back' is not valid because guess what - my taxes are high too and I end up paying them.
  • thesimon 10y ago
    >and create jobs in U.S. So instead of selling the products from Europe to Europe, create jobs in the US and sell them from there?
    • perseusprime11 10y ago
      When you bring the money back, you can find creative ways to invest that will grow jobs.
  • ff10 10y ago
    Apple is de facto a multinational corporation. Heck, it seems it's a supranational corporation even. In that context, what does "bring the money back" mean?
    • perseusprime11 10y ago
      Aren't the core of it's operations incorporated in U.S?
• Turbots 10y ago
  They make it look like they're the good guys... ITS NORMAL THAT YOU PAY PEOPLE WHO WORK THEIR BUTTS OFF FOR YOU! ITS NORMAL THAT YOU PAY TAXES TO THE COUNTRY YOU OPERATE IN, since that country provides many services to you and your employees.
• d3ckard 10y ago
  This actually the worst piece of public opinion I have ever read from Tim Cook. It hurts their brand, it exemplifies American ego when it comes to dealing with other countries (please, don't tell me that you not paying taxes is some kind of sovereignty crisis for f*'s sake) and worst of all, it's poorly targeted. It's Europe - on average we do not like big corporations and we laugh on 'liberties', which are in fact money extortion by big players. I do not know who in Apple PR greenlighted this, but he/she might not survive the consequences.
  • laumars 10y ago
    Indeed. I was angered by the letter for precisely those reasons as well.
• bertil 10y ago
  I lost a very large amount of respect for Tim Cook reading that message. The statement: > A company’s profits should be taxed in the country where the value is created. Apple, Ireland and the United States all agree on this principle. is patently false given the Double Dutch Irish Sandwich structure of Apple tax reporting. This is not a coy avoidance the truth, this is a blatant lie. No response, short of a link to an album of photos from the large and gleaming worldwide R&D centre that Apple presumably operates in Curaçao is acceptable.
  • jahnu 10y ago
    Nah.. everyone knows very little value is created in California or Shenzhen. It's all done in a few small offices in Ireland, dontchaknow.
    • bertil 10y ago
      Irony aside, I have argued in the past, and I will argue that some innovations from Google/Amazon/Facebook/Apple (GAFA) are not exclusively done in Silicon Valley (or Shenzhen, when it comes to hardware). I have seen a team of engineers, all trained for free by a French university, have a meeting, in French, with senior executive of a French group (from the same university) about a software tool they wanted to implement; the suggestion that came out was based on algorithms developed by engineers and scientists working within a joint program between a large state-owned industrial group and French universities. I would add that said alumni all were generously paid during their study, but that would identify the university. Not the program, or the algorithm, though. And that’s the rub: it happens all the time. Added value to GAFA: billions. Money that the French government put into the program: dozens of million directly; billions if you include maintaining generations of engineers up to date. Money that the French government is going to get from that: zilch. And all the engineers, senior of not, are very proud to have benefited from those program. This is their identity, literally: they introduce themselves using the common formula First name, Last name, University, Graduation year. To have those executive remain silent internally is sickening.
    • Yetanfou 10y ago
      A large part of the specific 'value' of Apple is actually created by the community of Apple users. It is the users who endorse their products to others, it is them who are willing to pay higher prices for Apple-branded products compared to otherwise similar products from other suppliers, it is the users who have - partly in response to Apple marketing, partly due to the large commitment (financially and otherwise) they have towards Apple products - created a virtual community of Apple-aficionados where showing up with anything but Apple will lead to questions, where 'nobody ever got XXXed for choosing Apple'. If these users decide that the Apple has lost its sheen, once they refrain from buying mobile phone cases with holes cut in them to show the branding, Apple will quickly find out they are essentially no different from companies like HP or Dell. Their profits will start resembling those of the rest of the industry, their stock price will sink to something resembling their P/E ratio and they will have to compete on a more level playing field. This is why this letter somewhat puzzles me. They were caught using a tax avoidance scheme, clear and simple. They try to talk their way out if this but fail to show anything that would legitimize their actions. This does not sit well with European Apple users and as such it has the potential to damage Apple's reputation - and with that its value - in this market. They stand to lose more than they gained by avoiding those taxes in the first place.
• deleted 10y ago
  [deleted]
• sz4kerto 10y ago
  This is getting interesting. One of the world's biggest companies is playing the emotions of the citizens of a country, and essentially telling them to distance themselves from the EU. "This would strike a devastating blow to the sovereignty of EU member states over their own tax matters" Maybe this doesn't look _that_ serious to non-EU citizens but given what's happening in Europe in general (nationalist parties on the rise, etc.), I'd be very careful with this approach.
  • maligree 10y ago
    Exactly, that sentence is _such_ a play on current sentiments.
  • eeeeeeeeeeeee 10y ago
    I was thinking the same thing. This letter by Apple appeals to the same feelings that were used to make Brexit happen.
    • zigzigzag 10y ago
      It's not an appeal to feelings, it's a statement of fact. The EU was never meant to control member state's tax policies. That's exactly what they are now trying to do. Regardless of whether you feel they're justified or not, Apple's point is sound: it is a loss of sovereignty.
  • rubber_duck 10y ago
    I mean they have very valid point, this entire situation is exactly why Brexit is not unreasonable to me - I still think it's a net loss for everyone but EU is slowly removing sovereignty of member states and centralizing power. So many EU funded programs throwing money around here, if you're entrepreneurial you will have a better time extracting money from EU funds than trying to create actual products. I see a lot of crying about VCs and rich dads burning cash in US, we have government funds going trough corrupt politicians doing that around here.
  • dtornabene 10y ago
    Its incredibly shameful. Thanks for pointing it out, had missed it first time through.
• jacknews 10y ago
  Oh dear this is pretty mendacious: " A company’s profits should be taxed in the country where the value is created. ... In Apple’s case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States." No, I don't think the agreed principle is at all to tax research and development - it is to apply taxes at the point where the transactions take place. In this case, in Europe. And Europe is called the European UNION for a reason; the states have to abide by rules that are designed to protect and enhance the European collective-bargaining position, just as workers in a labor union. Even so, some states try to use lax corporate legislation as a competitive edge. Now they've been caught out. I'm no fan of retroactive taxation, but there it is - if the tax rules are deemed illegal, then the beneficiaries of that are going to be on the hook. The full 'legal tax' situation must obviously include not only the Irish tax rules, but also the European ones.
• pzh 10y ago
  It seems the EU didn't learn their lesson with the UK and Brexit, and they continue meddling in the affairs of sovereign states by interpreting the rules however and whenever they see fit. I wonder what percentage of this tax Brussels expects to appropriate for itself. It's high time to put an end to this failed experiment and especially to the corrupt EC...
  • k-mcgrady 10y ago
    >> "I wonder what percentage of this tax Brussels expects to appropriate for itself." The money is going to Ireland. It is not a fine but back payment of taxes owed. Looking at it from a 'brexit' perspective it's yet another reason I'm disappointed we left the EU. It's powerful enough to do something about this while our own government can only wrangle £130m out of Google.
    • pzh 10y ago
      But if this money is collected by Ireland and goes into the Irish budget, wouldn't Brussels get a cut?
      • k-mcgrady 10y ago
        The EU will get money from it because Ireland owes money due to the bailout a few years ago and membership contributions I suppose. But those are things Ireland would be paying with or without this ruling. At least that's my understanding.
      • tobltobs 10y ago
        Who told you this "cut" stuff, Farage or the other clown?
  • baq 10y ago
    and wall off the borders while we're at it. /s
  • vilmosi 10y ago
    >>> they continue meddling in the affairs of sovereign states That's their job...
• codeulike 10y ago
  https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement
• jbmorgado 10y ago
  Funny the total brainwashing that is going on in this statement by Apple. Look, Apple failed to pay SALES taxes. And now they are trying to mix SALES taxes with the LABOR taxes of those 60 (sixty) people they actually employ in their operation in Ireland. Apple is the most valuable company in the world, has a huge bank account just sitting there, and yet, they think they shouldn't have to pay taxes.
• jensC 10y ago
  I am sorry Apple, but that message made you look like you are excusing yourself for paying no tax.
• k-mcgrady 10y ago
  I think generally Apple has been a pretty socially responsible company, more so than a lot of other tech companies. I also really admire their stance on privacy. They get no sympathy from me here though and this 'message' makes them look worse. When you have $200bn in cash reserves - literally $200bn you have no idea what to do with - and you're complaining about paying $14bn in back taxes you just make yourself look bad. The excuse that you brought jobs to a struggling economy also doesn't help you. You didn't look at Ireland and say 'those poor unemployed people, lets open an office there', you said 'they really need jobs, we can probably negotiate a good deal'.
  • sjwright 10y ago
    I would agree with you if it were really a case of Apple dodging tax by (for example) lying about their revenues to reduce their tax bill. Except it's not. Apple paid all the tax Ireland asked for. The problem is the EU are saying Ireland should have different tax laws and therefore Apple should now pay Ireland retrospective taxes based on what the UN thinks Ireland's tax law should have been in the past. The problem with that should be mind-numbingly self-evident.
    • k-mcgrady 10y ago
      1. It's the EU, not the UN. 2. My understanding is that Ireland's tax laws should meet a certain EU standard. Apple was meeting Ireland's laws but Ireland was not meeting the EU's and thus Apple wasn't paying the correct amount of tax. So the laws have always been in place, they just weren't being followed correctly by Ireland or by Apple.
      • sjwright 10y ago
        1. Fixed, oops! 2. That sounds like fault lies with Ireland, not Apple. Or perhaps with the EU for failing to enforce their own damn rules.
        • k-mcgrady 10y ago
          >> "That sounds like fault lies with Ireland, not Apple. Or perhaps with the EU for failing to enforce their own damn rules." This decision is the EU enforcing the laws though. And I think the fault does lie with Ireland - but nobody is saying the fault lies with Apple. That's why they're not being fined. They're just being told to pay money they have always owed, money which was never theirs. I can see it from both sides though. Why should Apple be 'punished' if they were told they were paying the right amount? On the other hand if my accountant screws up my taxes and I pay too little I have to pay it back eventually.
• sixhobbits 10y ago
  People filing their own tax returns: "This is pretty complicated. Maybe I should hire an accountant or something" People commenting on a case involving international tax law and how it applies to a mega corporation: "I got this - I'm gonna tell everyone else what the fair and legal result of this case should be" OTOH, I'm getting a bit tired of these PR pieces that pretend that their company is all about uplifting communities and helping people. I've got nothing against free-market capitalism -- it seems to be working out more or less OK compared to some other economic systems we've tried -- but it seems pointless to have to always pretend that you're not playing the game in order to make profits. A "yes, this was a loophole that we found that allowed us to not pay much tax, but that doesn't give anyone the right to close it retrospectively, and we'll be seeing the EU in court" would have been a nicer statement to read from them.
  • duiker101 10y ago
    Tax law is not easy by any stretch and it's probably now more complicated than ever. We are at a point in time where possibly for the first time in history companies are so big to be in every country of the world, there are new fields to regulate, new technologies an situations. Laws are sometimes hard to change and haven't caught up yet with all of this. That's why there are many gray areas and possibly many loopholes. If they had a real interest in the community, what would be really nice to see is companies trying to contribuite to improving this laws rather than trying to find loopholes that then need to be patched with what are more "hacks" than proper solutions. Instead here we see Apple trying to justify themselves with some bs PR. Pretty sad but quite in line with what I would have expected of them.
  • wbillingsley 10y ago
    I thought it was rather barefaced in the article that moments after crediting itself for lifting all those poor citizens of Cork out of poverty by giving them jobs (there's quite the "you should've seen the place before we came along, terrible, terrible" vibe to the first two paragraphs) it then goes on to deride the people it employs as being worthless by saying that of course virtually all the real value is created in California... Sure, it's R&D is in California. But R&D is only 7% of its expenditure. The other 93% is necessary to bring in the revenue, so it very much part of the value.
• anotherhacker 10y ago
  Don't blame Apple, blame the tax laws. i.e. don't hate tha playa, hate da game.
  • k-mcgrady 10y ago
    No, blame Apple. And the other companies exploiting these laws. Companies can choose to be good citizens and socially responsible. Apple doesn't need to be environmentally friendly - it chooses to. $14.5bn is a drop in the ocean of their $200bn cash stockpile that they can't even use, they can easily pay this. It's not going to hurt their ability to compete even if everyone else is doing it.
    • Sk1pp 10y ago
      Billion not Million, although still a small number in respect to 200bn its 7%. But I think you have to look at it in terms of the magnitude of the number, its easy to make it look small in comparison to their reserves but 14 billion is still enough to power a whole lot of economic growth.
      • k-mcgrady 10y ago
        I edited my comment as I was aware it was billion not million, it was just a typo. I think my point still stands though. If Apple were to pay the correct tax and MS, Google, FB still didn't Apple has so much money that it doesn't effect their ability to compete. In other words they can still win without playing this game.
• lstroud 10y ago
  Seems like it boils down to determining who gets to make tax law in the EU. Is the EU able to levy taxes on citizens of their member nations directly? Or, are the nations themselves responsible? I'm not sure the legal structure of the EU gives Brussels tax authority. This will be an interesting question to see resolved. It will tell us a lot about the future of the EU.
• draw_down 10y ago
  The letter is gross but I don't understand why all this is specifically about Apple? Aren't they using the same kind of tax accounting other multinational companies do?
• deleted 10y ago
  [deleted]
• PhilipA 10y ago
  Am I missing something, last time I looked they barely payed taxes in the US, so the argument is a bit of a moot point.
• ctvo 10y ago
  It bothers me that Apple has probably done the market research and identified that they have such a strong brand among some people that these messages work. First the FBI one and now this. Both misrepresented facts to make Apple look flawless. The truth is already debatable in the US ('I don't believe the media / government agencies / research from the educated elite'), having corporations jump in to directly muddle the waters doesn't help.
• cft 10y ago
  If Trump indeed offers an amnesty to one time repatriate large corporate stashes into the US, and to lower C corp taxes to flat 15%, his candidacy may have suddenly become more likely.
• jacknews 10y ago
  Oh dear this is pretty mendacious: " A company’s profits should be taxed in the country where the value is created. ... In Apple’s case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States." No, I don't think the agreed principle is at all to tax research and development - it is to apply taxes at the point where the transactions take place. In this case, in Europe. And the European UNION is named that way for a reason; the states have to abide by rules that are designed to protect and enhance the European collective-bargaining position, just as for workers in a labor union. Even so, some states still try to use lax corporate legislation as a competitive edge. Now they've been caught out. I'm no fan of retroactive taxation, but there it is - if the tax arrangements are deemed illegal, then the beneficiaries of that are going to be on the hook. Apple's claim that they followed the law may be true to an extent, but the full 'legal tax' situation must obviously include not only the Irish tax rules, but also the European ones, so they appear to have failed in due diligence.
• digi_owl 10y ago
  the Apple marketing machine is going all out with this. Looks like the circus is in full swing, so where is the popcorn vendor?
• bluecalm 10y ago
  EU should consider this hypothetical: Imagine that aliens from a remote galaxy came to Earth to trade. They sell alPads and alPhones. They don't have any papers about how those were created and what kind of costs they paid in their galaxy. It was so long ago no one remembers and why would it matter anyway, maybe alPads and alPhones grow on trees in their world. Now consider how we would like to tax those. Is VAT enough? If not maybe tax for land where they open their office? Whatever you decide do the same with foreign companies in Europe. It's the only way as digging into costs/deals in other countries which may not even be friendly with EU in the future doesn't make much sense.
• clarkmoody 10y ago
  The real issue here is that a multinational tax-avoidance scheme is only available to large corporations. This means that their smaller competitors who do not have millions to spend on lawyers each year are taxed at the insane rates of their local jurisdictions. The larger competitors shield their incomes from those same rates, making them more competitive than the smaller companies. This pay-to-play scheme, coupled with other regulations tailored specifically for large corporations, keeps them shielded from upstart competition. The best thing for consumers and business alike would be to slash the taxes and regulations, instead of going after what the companies "owe" the government -- as if a group of bureaucrats in some capital city have any justified prior claim on the fruits of someone else's labor.
• mrmarquo 10y ago
  EU totalitarians will not see a penny from this. Tim Cook's clear here. Taxes are paid. It's a moral and legal duty of Apple to protect their profits from these morons.
  • sctb 10y ago
    Please avoid calling such names as "totalitarians" and "morons". The guidelines ask that you comment civilly and substantively. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
    • mrmarquo 10y ago
      Ok sorry, I was pissed. I understand for "morons" but for "totalitarians"? Totalitiarinism is a political ideology being practiced in this case.
• gerty 10y ago
  State aid has been forbidden or at least heavily regulated in the EU since the Treaty of Rome in 1957, although Ireland joined later in 1973. No need to play the victim here and stoke anti-EU feelings. Apple got caught, and rightfully so. Time to pay up what is due. Hopefully, others will follow.
• saynsedit 10y ago
  At the time, the company knew that in order to serve customers in Europe, it would need a base there. Are you sure this had nothing to do with avoiding US tax and keeping a cash stronghold in Europe?
• gadders 10y ago
  With a bit of luck this will trigger an Irexit.
  • tobltobs 10y ago
    So Ireland will loose access to the EU market and all those double irish deals are worthless?
• tuna-piano 10y ago
  One side note I haven't seen covered yet: The court ordered Apple to pay the penalty of 13 billion euros, plus interest. For the last couple years, many bonds in Europe have been sold at negative interest rates. Does that mean Apple could potentially be paying less than 13B back?
• zyngaro 10y ago
  Given the current political context in Europe (Brexit, fears of populations across the continent of loosing their sovereignty to Brussels (i.e the EC), the message of Tim Cook is very political and bold: -"We believe these changes should come about through the proper legislative process, in which proposals are discussed among the leaders and citizens of the affected countries" - "This would strike a devastating blow to the sovereignty of EU member states over their own tax matters" I am not sure this is the way to go. Apple should fight this decision on a legal basis: laws cannot be retroactive - and not a political (borderline populist) one.
• sjwright 10y ago
  Apple got a sweetheart tax deal from Ireland. Tesla got a sweetheart tax deal from Nevada. Pfizer got a sweetheart tax deal from the United States. I don't see the difference.
  • themihai 10y ago
    Hopefully this will make a difference(at least in the EU).
• lochlainn 10y ago
  Does anyone feel like Apple might start abusing the "open letter" format whenever they're in hot water? Since they're so famous for ubiquitous brand representation, it automatically grabs your attention when a letter written by the CEO himself is posted. Even if it's subconscious, I'm sure some people (me included) read the letter and think that if it's important enough for Tim Cook to write passionately about, on the main site of his company, then Apple's probably in the right. I wonder how many more open letters we'll be seeing in the next few years.
• gavanwoolery 10y ago
  I see a battle between two sides here in the comments which basically winds down to capitalism vs big government. There is an incredible amount of corruption in both areas, and even between them (we call this "crony capitalism"). Both within the government, and within the private sector, corruption can be used to squeeze money out of the general population. Both have necessary roles, and their benefits usually outweigh their level of corruption. But to take the side of one or the other is a rather fruitless exercise. Instead, effort should be focused on how to improve the laws so that we can make them work well for all parties involved, especially the general population. And sadly, its beyond the level of conspiracy at this point that the people who control the laws are the people who benefit most from them.
• sydney6 10y ago
  Could someone please explain why this isn't on the top of the front page anymore?
  • detaro 10y ago
    The answer to that question typically is: Because people flagged it, and possibly the many comments going back-and-forth look like a flamewar (which AFAIK also causes a lower scoring). Also, there are already multiple discussions about the base topic, not sure if another one helps much... (which might be one reason people are flagging)
    • sydney6 10y ago
      Thank you. I always thought it was somehow only about a correlation between submission time and vote count.
• ranit 10y ago
  > Countless multinational companies followed Apple by investing in Cork, and today the local economy is stronger than ever. Is the local economy in Cork much better than the rest of Ireland? I tried to search data that supports the Apple’s statement and couldn’t find any.
• yyyuuu 10y ago
  Forgive my ignorance, but what would happen if Apple chooses to ignore this ruling and doesn't pay any retroactive tax at all? Could it still be business as usual?
• Twisell 10y ago
  I totally get that Apple should pay more tax. However I also understand that it must not be pleasant to be caught between two hammers. UE want them to pay more taxes to them because of this wrongful loophole... USA want them to pay more taxes because of this wrongful loophole... Maybe it's only common sense for Apple to wait that USA and UE define exactly what is actually the lawful taxes process that must replace this no longer existing loophole. Also the very notion of retroactive "crimes" is usually not compatible with a healthy democracy. How can you be condamned for following instruction a sovereign state (Irland) gave you?
• chinathrow 10y ago
  Why did this fall off of the startpage?
• WayneBro 10y ago
  I love to see Apple get hit with the kind of taxes that they themselves put on the marketplace with their over-priced hardware and the 30% cut that they take from the captive/locked-in audience of developers and users. Down with Apple. They are a drain on society and they deserve everything they're getting right here.
• lifeisstillgood 10y ago
  I think the most important question is how often does the US Federal government overturn special deals arranged by State governments for favoured companies? Europe is in the midst of deciding if it wants to Federalise - and it's unprecedented to do this without war or the expectation of war. Additionally most countries are in a race to the bottom in collecting MNC taxes. The two issues are heavily intertwined and this is just the first "battle" that has risen to attention It's going to be interesting to see what artillery both sides have.
• apple_fanboi 10y ago
  Thank you my fellow apple fanbois and apple employees for flagging this thread. Has it been on the internal company slack?
• julianozen 10y ago
  Designed by Apple in Ireland
• sudeepj 10y ago
  The Joy of tech on this story: http://cdn.iphonehacks.com/wp-content/uploads/2012/04/joy-of-tech.png http://cdn.iphonehacks.com/wp-content/uploads/2012/04/joy-of...