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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 multina

by 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
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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/
  - FunctionalGuy 10y ago
    I'm going to let the courts decide this, and not some popular vote from some nerds with pitchforks on Hacker News.
  - danielrhodes 10y ago
    It seems hard to believe that Apple was receiving special treatment when practically every MNC has been using this very same loophole. But at this point it is he said/she said. This loophole is now closed, so the EC pursuing this feels more vindictive than anything (especially since the EU has had it out for US tech companies for awhile now).
    - exDM69 10y ago
      It's likely that Google, Facebook, Ikea, et al. will receive similar consequences in the near future. Apple is just the first to receive a slap in the wrists. Hopefully this will reach beyond Ireland and similar investigations will be done in Netherlands and Luxemburg. A lot of Europeans (me included) are not at all happy to see massively profitable companies operating in Europe without paying practically any taxes. This makes it impossible for European companies to compete with them and I'm very glad the authorities are looking to level the playing field and bring in some tax revenue while doing so.
      - pjmlp 10y ago
        Agree, we should take them all down.
      - qaq 10y ago
        You do understand it's a two way street? There is a trade imbalance between EU and US aprox 30% in favor of EU. If your point of view prevails EU will loose tax revenue and US will gain tax revenue :).
        themihai 10y ago
        How is that? Does US has sweetheart deals with EU companies? I highly doubt.
- lossolo 10y ago
  > The EC is now saying that even though it was legal You are wrong. From EC statement: Ireland gave ILLEGAL tax benefits to Apple worth up to €13 billion [1] [1] http://europa.eu/rapid/press-release_IP-16-2923_en.htm http://europa.eu/rapid/press-release_IP-16-2923_en.htm
  - lettergram 10y ago
    Then Ireland should be paying the bill... It's like punishing a student for having a hall pass a teacher admitted writing. There was a discussion yesterday about this on HN. It's pretty much a corporations responsibility to try to avoid as much tax legally as it can. In this case, Ireland gave them LEGAL tax break (at least that was what the Irish believed at the time) and now Apple is getting blamed..? It just doesn't make sense, put the blame where the blame is due.
    - JohnStrange 10y ago
      Perhaps it's more like punishing a student for cheating in an exam with a cheat sheet that some teacher wrote.
      - lettergram 10y ago
        No it's like the teacher told them the answers, then said "HAHA, caught you cheating"
    - LaSombra 10y ago
      IIRC, they will pay the bill in the form that they will collect Apple's money to help pay part of the national debt. Ireland will probably not see a penny from it.
      - LaSombra 10y ago
        Got a source from Bloomberg[1]: The government maintains that even if it were to take the cash, European rules mean it would have to use the money to pay down some of its 180 billion euros of national debt rather than fund spending. [1] http://www.bloomberg.com/news/articles/2016-08-30/why-ireland-doesn-t-want-apple-s-14-5-billion-in-back-taxes http://www.bloomberg.com/news/articles/2016-08-30/why-irelan...
- axlee 10y ago
  It was not legal. Ireland did not have the right to give a preferential tax treatment to Apple.
- hanspeter 10y ago
  Did they ask the EC if it was legal in the first place? If they wanted a guarantee they should not rely solely on the approval from the government in Ireland.
- seszett 10y ago
  > The EC is now saying that even though it was legal, they owe the tax anyways. As far as I understand, the EU is saying that it never was legal under EU law.
  - eknkc 10y ago
    Shouldn't they sue / negotiate with Ireland in that case? Given that they allowed Apple to evade taxes.
    - seszett 10y ago
      If Ireland now refuses to collect taxes from Apple, yes.
- jmfayard 10y ago
  > the point here is that this scheme was entirely legal That is maybe your legal analysis of european union state aid legislation, but in the end it's the commission and the court of justice who have to assess it.
- robmcm 10y ago
  In the UK they did exactly this: http://www.lawandtax-news.com/asp/UK_Court_Allows_HMRC_To_Impose_Retrospective_Penalties_____41478.html http://www.lawandtax-news.com/asp/UK_Court_Allows_HMRC_To_Im... If you evade tax, you know full well what you are doing, even if it's technically legal you should expect to be retrospectively taxed, especially if you are exploiting the system to such an extreme.
  - pluma 10y ago
    The entire argument against "retroactive" corrections sounds a lot like "you can't punish us because we've been doing this for a really long time and getting away with it until now".
    - qaq 10y ago
      the entire argument is that you can not apply laws retroactively.
      - prof_hobart 10y ago
        My reading of the ruling is that the EU are saying that it's always been illegal under EU law, but that the Irish government had pretended that it wasn't. What it looks like they are trying to do is apply a legally compliant level of taxes retroactively, not laws.
      - baq 10y ago
        which is not the case here.
      - moomin 10y ago
        We should apply this to murder as well. (Yeah, I know you're saying it was legal under Irish law, but the whole point is that some Irish laws take precedence over others. In this case, their treaty obligations to the EU, codified in their laws, take precedence. If this wasn't the case there wouldn't even be a court case, much less a judgement.)
      - pedrocr 10y ago
- nl 10y ago
  The EU's argument is that it was always illegal under EU law. In their view the analogy would be you local council say the you don't have to pay income tax, and then a court finding they didn't have the right to make that agreement. I don't really have a view which is correct, but I think it's important to note that the EU doesn't accept it is acting retrospectively.
- virtualritz 10y ago
  No, you got it wrong. There is/was no loophole and it wasn't legal. See also https://news.ycombinator.com/item?id=12388945 https://news.ycombinator.com/item?id=12388945
- ivan_gammel 10y ago
  According to press release, the scheme could be legal according to some Irish laws, but it violated EU law, which also applies to Ireland as a member of treaty. If government of Ireland didn't take EU law in account when applied tax rulings, that doesn't mean it was acting legally. So it more looks like the tax office lost your tax declaration and you decided you have your own personal tax rate of 0. No surprise, when the declaration will be found you'll be charged.
- pluma 10y ago
  They gave tax benefits they weren't actually (legally) able to give. So those benefits are entirely void and never existed to begin with. IMO they should be able to sue the agency (or agency's employees) that supposedly granted them the tax benefits for damages because they misrepresented the actual tax situation, but they still owe the unpaid taxes and have to pay them back. Not knowing the law doesn't protect you from breaking it. In this case, they're not even being punished -- the $$ owed aren't a fine, just the taxes (and interest) they should have paid to begin with. This is similar to buying stolen goods: sure, you may not actually have known they were stolen, so you might not be directly punished, but you still don't legally own the goods (even though you paid for them) so they will be confiscated and returned to their rightful owners. You can sue the seller for damages, but the state is under no obligation to reimburse you for handing over "your property" (because it isn't).
  - vr46 10y ago
    It is not as though Apple knocked on the door and were welcomed in with tea and cake. This deal (these deals?) were the result of much planning and lobbying by Apple. And you're right, it's not a punishment, just asking them to pay what was owed. If you owe the taxman £20000, it's a big problem for you. If you owe the taxman £13,000,000,000, then it's definitely a problem for the taxman :)
    - pluma 10y ago
      As a concrete example: German celebrity and football manager Hoeneß was found to have withheld about € 30 million in taxes. He was charged with tax evasion and punished with a prison sentence of 5 years and six months but no additional fine. He did eventually pay back the entire amount (plus interest) but he was released from prison after having spent only roughly half his sentence (which actually didn't confine him to prison for his entire "stay" anyway).
- xg15 10y ago
  but the point here is that this scheme was entirely legal Yes and no - the EC's argument makes a bit more sense imo: Yes, it was legal in the sense that Apple broke no irish tax laws. But the tax laws themselves have violated some higher-level EU laws that Ireland had pledged to obey - at least that's how the EC sees it. Perhaps a more fitting (but still horrible) analogy were if you make an employment contract far below mandatory minimum wage. Neither you nor your employer is violating the contract and both of you might be perfectly happy with the conditions - but your contract might stil cause disadvantages to third parties (other workers) and might violate state laws.
  - talmand 10y ago
    Right, and in that case the worker would not be punished for the illegal activities of the employer.
    - pedrocr 10y ago
      In this analogy the worker is Ireland and the employer Apple. The analogy would be that the worker must now receive, and the employer now pay, the difference between the contract and the minimum wage. Just like Apple must now pay and Ireland now receive the extra tax.
      - talmand 10y ago
        I require extra explanation. Are you saying that Apple wrote Ireland's tax laws that have been deemed improper?
        mechagodzilla 10y ago
        Ireland gave Apple tax breaks that were not theirs to give. Just as a worker can't give a break to an employer and work for less than minimum wage (even if they want to, and even if they wrote the contract!). The ruling was effectively saying "Apple does actually owe those taxes to Ireland, even if they were willing to forgo them, since it is against EU rules for Ireland to give tax breaks of that nature." It actually is reasonably equivalent to a court declaring a company needs to give backpay to a worker to make their wages equivalent to minimum wage, even if the worker doesn't want the money.
- jbmorgado 10y ago
  > but the point here is that this scheme was entirely legal No it was clearly not. How did you come up with that?
- PSeitz 10y ago
  I think exploiting a public system, by systematically looking for loopholes should be illegal and the involved parties should be held responsible.
- themihai 10y ago
  It was illegal under EU law but Apple and the Irish government didn't seem to care much. Now, that imaginative case doesn't make me cry because we talk about corporations with preferential deals that stifle competition. It's definitely not fair for mere mortals to pay 20% and Apple 0.0005%. How could a such system be fair?
  - bluedevil2k 10y ago
    Why is it unfair? You're automatically jumping to the assumption that individual people should pay the same tax rate as a corporation. Why? Just because most countries do it now? It wasn't done through most of history though. What about the notion that corporations should pay no tax at all, and the only taxes should be on individuals.
    - themihai 10y ago
      > Why is it unfair? You're automatically jumping to the assumption that individual people should pay the same tax rate as a corporation. I didn't say that corporations should be the same tax as individuals. I've said that's unfair for Apple to pay less tax than any other EU corporation/company. How can you compete with Apple if they pay no tax and your start-up pays 20% ? How could Apple have succeeded if they were to pay 20% tax and all the others (i.e. IBM) was to pay no tax? > What about the notion that corporations should pay no tax at all, and the only taxes should be on individuals. That would be basically slavery of foreign people(not nice).
      - bluedevil2k 10y ago
        Slavery? That's quite a jump of thought from tax policy. Maybe you should reconsider your statement
        themihai 10y ago
        The burden of the taxes they don't pay winds up on others, who have to make up the difference. What is when you are forced to work for a powerful company that pays you nothing? Extortion, fraud?
- cwisecarver 10y ago
  Shouldn't they be taking this up with Ireland? Like, Apple pays Ireland, Ireland pays the EC. Ireland failed to collect the correct amount of money owed to the EC. It's Ireland who's at fault, and "oops, GFY EC we're brexiting." (assuming that the EU and the EC are related) Seems like interesting timing. They've decided to go after back taxes right before the UK leaves the party.
  - coriny 10y ago
    > Ireland failed to collect the correct amount of money owed to the EC Just for your info this isn't what happened, it's Ireland's tax money. The EC doesn't collect taxes. Instead the EC ruled that Ireland was providing illegal state aid (under EU rules) to Apple through its tax arrangements. So this loophole was nullified and Apple have to pay the back taxes to Ireland. The EU gets nothing (the EC is the executive body of the EU). This investigation into dodgy corporate tax deals has nothing to do with Brexit (note that this is about Ireland, not the UK), and it's been going on for most of a decade now.
    - cwisecarver 10y ago
      Thanks for the info!
  - notahacker 10y ago
    > Shouldn't they be taking this up with Ireland? Like, Apple pays Ireland, Ireland pays the EC. No. This isn't over money owed to the EC, it's over state aid perceived as manipulating the Single Market in a company's favour, which is [to an extent] undone by requiring that company to repay the money > Seems like interesting timing. They've decided to go after back taxes right before the UK leaves the party. It's the culmination of a three year investigation and legal process, and they've been going after companies with other special tax arrangements with local governments for years. I don't think Brexit had anything to do with it.
- random_upvoter 10y ago
  > That is not how things should work in a system based on the rule of law and fairness. Not all law needs to be 100% formalist. It's perfectly possible to have a blanket law that says "If some tax evasion scheme is generally considered to be unfair/unreasonable, it can be annulled no matter what the letter of the law says".
- notacoward 10y ago
  > not how things should work in a system based on the rule of law and fairness. The problem here is that the rule of law and the rule of fairness had diverged, and there was a higher-level law forbidding that. This kind of conflict happens all the time. In the US, the most common manifestation is laws being struck down as unconstitutional. Governments are bound by laws too. When they break those laws by treating people unfairly, correction is needed.
- Oletros 10y ago
  > Of course they did (the loophole is now closed), but the point here is that this scheme was entirely legal No, it was not legal, this is what the ruling says
- reacweb 10y ago
  "That is not how things should work in a system based on the rule of law and fairness". If you find a loophole in the fiscal system and exploit, you are following the rules, but at the same time, you are clearly robbing the society as a whole. In France, this is a fraud. see https://xkcd.com/1494/ https://xkcd.com/1494/
- rdtsc 10y ago
  > That is not how things should work in a system based on the rule of law and fairness. Something doesn't jive here. If it is that clear cut, didn't EC read its own laws before asking Apple to pay? If there is a paragraph they skipped someone should point to that, Apple should perhaps. It would seem to me EC is implying what has happened in the past was not entirely legal somehow. Then it is not obvious what should happen next. Notice Apple mentions how they "asked govt. of Ireland" for guidance. That means they might have documentation of a govt. official advising it to act that way. That is very important because it is building the case of Ireland here doing something illegal against the EC laws. So Apple is washing their hands here of this case.
- d_t_w 10y ago
  Imagine for a moment that you enter into an extremely complicated tax arrangement aimed to reduce your tax burden, quite aware of the risk that at a later date the authorities will judge you to owe that tax regardless and you will end up with a massive bill. Tax judgements often don't occur immediately. Just ask any one of the 50,000 IT contractors in the UK that are facing this exact situation right now with respect to EBT arrangements. Some owe tax dating back over more than a decade. They knew the risk, they took it, they lost. No-one is naive here, certainly not Apple.
goranb 10y ago
The letter reads as a "But, but... I don't wanna pay taaax..." cry.
- kolbe 10y ago
  I think it reads more like, "tax us, and you'll see what we can do to you."
emp_zealoth 10y ago
The letter is fucking pathetic. They are literally trying to conscript fanboys to cause some drama so they are off the hook. For a company that literally has hundreds of billions floating about its just pathetic
jjtheblunt 10y ago
Except "ex post facto" contradicts "no exceptions": abide by the laws in play at the time, and it seems Apple actually did.
- kaoD 10y ago
  > it seems Apple actually did. According to Tim Cook/Apple's PR team.
shaqbert 10y ago
"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." And yet the value creation seems to be happening mostly in tax havens... and NOT in the US. Nice try, Timmy. Be a sport and put your money where your mouth is, and repatriate all that foreign stash cash to the US, and I am happy to side with you. Yet somehow, I believe this won't be on the menu anytime soon...
- celticninja 10y ago
  The EU have even said the bill could be reduced if further US taxes are paid.
- andy_ppp 10y ago
  They won't do it until Hillary gets in and reduces the rate of repatriations which Apple has been lobbying for for a long time...
  - josho 10y ago
    I've read this theme several times. What has she done to lead you to make this conclusion? Or is this no more than your own bias and fear?
    - the-dude 10y ago
      Temporary 'tax holidays' have happened before. Sorry, no links atm.
    - andy_ppp 10y ago
      Yeah, I read it. Which is how I know about it. It's not at all an unreasonable suggestion. http://www.cnbc.com/2016/08/14/tim-cook-addresses-apples-us-taxes-says-no-repatriation-without-fair-rate.html http://www.cnbc.com/2016/08/14/tim-cook-addresses-apples-us-... "Cook added that it was up to Congress and the president to enact tax reform, which he is "optimistic" will take place sometime next year." I am actually both scared and biased, you got me!
deleted 10y ago
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cbasoftware 10y ago
I concur 100%. BTW, Apple doesn't pay the tax they owe in this country either due to moving IP to Ireland and other tax favorable countries. Of course, they'll just move to Panama.
gchokov 10y ago
You are wrong. Actually right, but why should you pay back? There must be agreement going forward. How about your family pays new taxes for the last 100 years, taxes that are invented TODAY?
- gchokov 10y ago
  Thank you for down-voting me without explanation. How retarding.
cft 10y ago
Did you read the article? They are forced to pay retroactively. It's like if the government raised income tax rates and tried to collect the difference for the last 12 years from your taxes. Would you like that?
- d_t_w 10y ago
  IT Contractors in the UK right now are facing demands to pay retroactively for tax stretching back over a decade in some cases that they purposefully avoided at the time using a scheme called EBT (or, being paid in loans by a trust because loans aren't taxed). They had advice at the time that these schemes were legit (though every adviser would deliver that with a wink), any adult human must have known there was a large risk HMRC would disagree eventually (just as Apple knew they were running a risk), and now they face demands to pay the tax they failed to pay in the first place. Are they the victims? Certainly they will tell you so. Sympathy I have for them? Nil.

by d_t_w 10y ago

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/
- FunctionalGuy 10y ago
  I'm going to let the courts decide this, and not some popular vote from some nerds with pitchforks on Hacker News.
- danielrhodes 10y ago
  It seems hard to believe that Apple was receiving special treatment when practically every MNC has been using this very same loophole. But at this point it is he said/she said. This loophole is now closed, so the EC pursuing this feels more vindictive than anything (especially since the EU has had it out for US tech companies for awhile now).
  - exDM69 10y ago
    It's likely that Google, Facebook, Ikea, et al. will receive similar consequences in the near future. Apple is just the first to receive a slap in the wrists. Hopefully this will reach beyond Ireland and similar investigations will be done in Netherlands and Luxemburg. A lot of Europeans (me included) are not at all happy to see massively profitable companies operating in Europe without paying practically any taxes. This makes it impossible for European companies to compete with them and I'm very glad the authorities are looking to level the playing field and bring in some tax revenue while doing so.
    - pjmlp 10y ago
      Agree, we should take them all down.
    - qaq 10y ago
      You do understand it's a two way street? There is a trade imbalance between EU and US aprox 30% in favor of EU. If your point of view prevails EU will loose tax revenue and US will gain tax revenue :).
      - themihai 10y ago
        How is that? Does US has sweetheart deals with EU companies? I highly doubt.
lossolo 10y ago
> The EC is now saying that even though it was legal You are wrong. From EC statement: Ireland gave ILLEGAL tax benefits to Apple worth up to €13 billion [1] [1] http://europa.eu/rapid/press-release_IP-16-2923_en.htm http://europa.eu/rapid/press-release_IP-16-2923_en.htm
- lettergram 10y ago
  Then Ireland should be paying the bill... It's like punishing a student for having a hall pass a teacher admitted writing. There was a discussion yesterday about this on HN. It's pretty much a corporations responsibility to try to avoid as much tax legally as it can. In this case, Ireland gave them LEGAL tax break (at least that was what the Irish believed at the time) and now Apple is getting blamed..? It just doesn't make sense, put the blame where the blame is due.
  - JohnStrange 10y ago
    Perhaps it's more like punishing a student for cheating in an exam with a cheat sheet that some teacher wrote.
    - lettergram 10y ago
      No it's like the teacher told them the answers, then said "HAHA, caught you cheating"
  - LaSombra 10y ago
    IIRC, they will pay the bill in the form that they will collect Apple's money to help pay part of the national debt. Ireland will probably not see a penny from it.
    - LaSombra 10y ago
      Got a source from Bloomberg[1]: The government maintains that even if it were to take the cash, European rules mean it would have to use the money to pay down some of its 180 billion euros of national debt rather than fund spending. [1] http://www.bloomberg.com/news/articles/2016-08-30/why-ireland-doesn-t-want-apple-s-14-5-billion-in-back-taxes http://www.bloomberg.com/news/articles/2016-08-30/why-irelan...
axlee 10y ago
It was not legal. Ireland did not have the right to give a preferential tax treatment to Apple.
hanspeter 10y ago
Did they ask the EC if it was legal in the first place? If they wanted a guarantee they should not rely solely on the approval from the government in Ireland.
seszett 10y ago
> The EC is now saying that even though it was legal, they owe the tax anyways. As far as I understand, the EU is saying that it never was legal under EU law.
- eknkc 10y ago
  Shouldn't they sue / negotiate with Ireland in that case? Given that they allowed Apple to evade taxes.
  - seszett 10y ago
    If Ireland now refuses to collect taxes from Apple, yes.
jmfayard 10y ago
> the point here is that this scheme was entirely legal That is maybe your legal analysis of european union state aid legislation, but in the end it's the commission and the court of justice who have to assess it.
robmcm 10y ago
In the UK they did exactly this: http://www.lawandtax-news.com/asp/UK_Court_Allows_HMRC_To_Impose_Retrospective_Penalties_____41478.html http://www.lawandtax-news.com/asp/UK_Court_Allows_HMRC_To_Im... If you evade tax, you know full well what you are doing, even if it's technically legal you should expect to be retrospectively taxed, especially if you are exploiting the system to such an extreme.
- pluma 10y ago
  The entire argument against "retroactive" corrections sounds a lot like "you can't punish us because we've been doing this for a really long time and getting away with it until now".
  - qaq 10y ago
    the entire argument is that you can not apply laws retroactively.
    - prof_hobart 10y ago
      My reading of the ruling is that the EU are saying that it's always been illegal under EU law, but that the Irish government had pretended that it wasn't. What it looks like they are trying to do is apply a legally compliant level of taxes retroactively, not laws.
    - baq 10y ago
      which is not the case here.
    - moomin 10y ago
      We should apply this to murder as well. (Yeah, I know you're saying it was legal under Irish law, but the whole point is that some Irish laws take precedence over others. In this case, their treaty obligations to the EU, codified in their laws, take precedence. If this wasn't the case there wouldn't even be a court case, much less a judgement.)
    - pedrocr 10y ago
nl 10y ago
The EU's argument is that it was always illegal under EU law. In their view the analogy would be you local council say the you don't have to pay income tax, and then a court finding they didn't have the right to make that agreement. I don't really have a view which is correct, but I think it's important to note that the EU doesn't accept it is acting retrospectively.
virtualritz 10y ago
No, you got it wrong. There is/was no loophole and it wasn't legal. See also https://news.ycombinator.com/item?id=12388945 https://news.ycombinator.com/item?id=12388945
ivan_gammel 10y ago
According to press release, the scheme could be legal according to some Irish laws, but it violated EU law, which also applies to Ireland as a member of treaty. If government of Ireland didn't take EU law in account when applied tax rulings, that doesn't mean it was acting legally. So it more looks like the tax office lost your tax declaration and you decided you have your own personal tax rate of 0. No surprise, when the declaration will be found you'll be charged.
pluma 10y ago
They gave tax benefits they weren't actually (legally) able to give. So those benefits are entirely void and never existed to begin with. IMO they should be able to sue the agency (or agency's employees) that supposedly granted them the tax benefits for damages because they misrepresented the actual tax situation, but they still owe the unpaid taxes and have to pay them back. Not knowing the law doesn't protect you from breaking it. In this case, they're not even being punished -- the $$ owed aren't a fine, just the taxes (and interest) they should have paid to begin with. This is similar to buying stolen goods: sure, you may not actually have known they were stolen, so you might not be directly punished, but you still don't legally own the goods (even though you paid for them) so they will be confiscated and returned to their rightful owners. You can sue the seller for damages, but the state is under no obligation to reimburse you for handing over "your property" (because it isn't).
- vr46 10y ago
  It is not as though Apple knocked on the door and were welcomed in with tea and cake. This deal (these deals?) were the result of much planning and lobbying by Apple. And you're right, it's not a punishment, just asking them to pay what was owed. If you owe the taxman £20000, it's a big problem for you. If you owe the taxman £13,000,000,000, then it's definitely a problem for the taxman :)
  - pluma 10y ago
    As a concrete example: German celebrity and football manager Hoeneß was found to have withheld about € 30 million in taxes. He was charged with tax evasion and punished with a prison sentence of 5 years and six months but no additional fine. He did eventually pay back the entire amount (plus interest) but he was released from prison after having spent only roughly half his sentence (which actually didn't confine him to prison for his entire "stay" anyway).
xg15 10y ago
but the point here is that this scheme was entirely legal Yes and no - the EC's argument makes a bit more sense imo: Yes, it was legal in the sense that Apple broke no irish tax laws. But the tax laws themselves have violated some higher-level EU laws that Ireland had pledged to obey - at least that's how the EC sees it. Perhaps a more fitting (but still horrible) analogy were if you make an employment contract far below mandatory minimum wage. Neither you nor your employer is violating the contract and both of you might be perfectly happy with the conditions - but your contract might stil cause disadvantages to third parties (other workers) and might violate state laws.
- talmand 10y ago
  Right, and in that case the worker would not be punished for the illegal activities of the employer.
  - pedrocr 10y ago
    In this analogy the worker is Ireland and the employer Apple. The analogy would be that the worker must now receive, and the employer now pay, the difference between the contract and the minimum wage. Just like Apple must now pay and Ireland now receive the extra tax.
    - talmand 10y ago
      I require extra explanation. Are you saying that Apple wrote Ireland's tax laws that have been deemed improper?
      - mechagodzilla 10y ago
        Ireland gave Apple tax breaks that were not theirs to give. Just as a worker can't give a break to an employer and work for less than minimum wage (even if they want to, and even if they wrote the contract!). The ruling was effectively saying "Apple does actually owe those taxes to Ireland, even if they were willing to forgo them, since it is against EU rules for Ireland to give tax breaks of that nature." It actually is reasonably equivalent to a court declaring a company needs to give backpay to a worker to make their wages equivalent to minimum wage, even if the worker doesn't want the money.
jbmorgado 10y ago
> but the point here is that this scheme was entirely legal No it was clearly not. How did you come up with that?
PSeitz 10y ago
I think exploiting a public system, by systematically looking for loopholes should be illegal and the involved parties should be held responsible.
themihai 10y ago
It was illegal under EU law but Apple and the Irish government didn't seem to care much. Now, that imaginative case doesn't make me cry because we talk about corporations with preferential deals that stifle competition. It's definitely not fair for mere mortals to pay 20% and Apple 0.0005%. How could a such system be fair?
- bluedevil2k 10y ago
  Why is it unfair? You're automatically jumping to the assumption that individual people should pay the same tax rate as a corporation. Why? Just because most countries do it now? It wasn't done through most of history though. What about the notion that corporations should pay no tax at all, and the only taxes should be on individuals.
  - themihai 10y ago
    > Why is it unfair? You're automatically jumping to the assumption that individual people should pay the same tax rate as a corporation. I didn't say that corporations should be the same tax as individuals. I've said that's unfair for Apple to pay less tax than any other EU corporation/company. How can you compete with Apple if they pay no tax and your start-up pays 20% ? How could Apple have succeeded if they were to pay 20% tax and all the others (i.e. IBM) was to pay no tax? > What about the notion that corporations should pay no tax at all, and the only taxes should be on individuals. That would be basically slavery of foreign people(not nice).
    - bluedevil2k 10y ago
      Slavery? That's quite a jump of thought from tax policy. Maybe you should reconsider your statement
      - themihai 10y ago
        The burden of the taxes they don't pay winds up on others, who have to make up the difference. What is when you are forced to work for a powerful company that pays you nothing? Extortion, fraud?
cwisecarver 10y ago
Shouldn't they be taking this up with Ireland? Like, Apple pays Ireland, Ireland pays the EC. Ireland failed to collect the correct amount of money owed to the EC. It's Ireland who's at fault, and "oops, GFY EC we're brexiting." (assuming that the EU and the EC are related) Seems like interesting timing. They've decided to go after back taxes right before the UK leaves the party.
- coriny 10y ago
  > Ireland failed to collect the correct amount of money owed to the EC Just for your info this isn't what happened, it's Ireland's tax money. The EC doesn't collect taxes. Instead the EC ruled that Ireland was providing illegal state aid (under EU rules) to Apple through its tax arrangements. So this loophole was nullified and Apple have to pay the back taxes to Ireland. The EU gets nothing (the EC is the executive body of the EU). This investigation into dodgy corporate tax deals has nothing to do with Brexit (note that this is about Ireland, not the UK), and it's been going on for most of a decade now.
  - cwisecarver 10y ago
    Thanks for the info!
- notahacker 10y ago
  > Shouldn't they be taking this up with Ireland? Like, Apple pays Ireland, Ireland pays the EC. No. This isn't over money owed to the EC, it's over state aid perceived as manipulating the Single Market in a company's favour, which is [to an extent] undone by requiring that company to repay the money > Seems like interesting timing. They've decided to go after back taxes right before the UK leaves the party. It's the culmination of a three year investigation and legal process, and they've been going after companies with other special tax arrangements with local governments for years. I don't think Brexit had anything to do with it.
random_upvoter 10y ago
> That is not how things should work in a system based on the rule of law and fairness. Not all law needs to be 100% formalist. It's perfectly possible to have a blanket law that says "If some tax evasion scheme is generally considered to be unfair/unreasonable, it can be annulled no matter what the letter of the law says".
notacoward 10y ago
> not how things should work in a system based on the rule of law and fairness. The problem here is that the rule of law and the rule of fairness had diverged, and there was a higher-level law forbidding that. This kind of conflict happens all the time. In the US, the most common manifestation is laws being struck down as unconstitutional. Governments are bound by laws too. When they break those laws by treating people unfairly, correction is needed.
Oletros 10y ago
> Of course they did (the loophole is now closed), but the point here is that this scheme was entirely legal No, it was not legal, this is what the ruling says
reacweb 10y ago
"That is not how things should work in a system based on the rule of law and fairness". If you find a loophole in the fiscal system and exploit, you are following the rules, but at the same time, you are clearly robbing the society as a whole. In France, this is a fraud. see https://xkcd.com/1494/ https://xkcd.com/1494/
rdtsc 10y ago
> That is not how things should work in a system based on the rule of law and fairness. Something doesn't jive here. If it is that clear cut, didn't EC read its own laws before asking Apple to pay? If there is a paragraph they skipped someone should point to that, Apple should perhaps. It would seem to me EC is implying what has happened in the past was not entirely legal somehow. Then it is not obvious what should happen next. Notice Apple mentions how they "asked govt. of Ireland" for guidance. That means they might have documentation of a govt. official advising it to act that way. That is very important because it is building the case of Ireland here doing something illegal against the EC laws. So Apple is washing their hands here of this case.
d_t_w 10y ago
Imagine for a moment that you enter into an extremely complicated tax arrangement aimed to reduce your tax burden, quite aware of the risk that at a later date the authorities will judge you to owe that tax regardless and you will end up with a massive bill. Tax judgements often don't occur immediately. Just ask any one of the 50,000 IT contractors in the UK that are facing this exact situation right now with respect to EBT arrangements. Some owe tax dating back over more than a decade. They knew the risk, they took it, they lost. No-one is naive here, certainly not Apple.

goranb 10y ago

The letter reads as a "But, but... I don't wanna pay taaax..." cry.

kolbe 10y ago
I think it reads more like, "tax us, and you'll see what we can do to you."

emp_zealoth 10y ago

The letter is fucking pathetic. They are literally trying to conscript fanboys to cause some drama so they are off the hook. For a company that literally has hundreds of billions floating about its just pathetic

jjtheblunt 10y ago

Except "ex post facto" contradicts "no exceptions": abide by the laws in play at the time, and it seems Apple actually did.

kaoD 10y ago
> it seems Apple actually did. According to Tim Cook/Apple's PR team.

shaqbert 10y ago

"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." And yet the value creation seems to be happening mostly in tax havens... and NOT in the US. Nice try, Timmy. Be a sport and put your money where your mouth is, and repatriate all that foreign stash cash to the US, and I am happy to side with you. Yet somehow, I believe this won't be on the menu anytime soon...

celticninja 10y ago
The EU have even said the bill could be reduced if further US taxes are paid.
andy_ppp 10y ago
They won't do it until Hillary gets in and reduces the rate of repatriations which Apple has been lobbying for for a long time...
- josho 10y ago
  I've read this theme several times. What has she done to lead you to make this conclusion? Or is this no more than your own bias and fear?
  - the-dude 10y ago
    Temporary 'tax holidays' have happened before. Sorry, no links atm.
  - andy_ppp 10y ago
    Yeah, I read it. Which is how I know about it. It's not at all an unreasonable suggestion. http://www.cnbc.com/2016/08/14/tim-cook-addresses-apples-us-taxes-says-no-repatriation-without-fair-rate.html http://www.cnbc.com/2016/08/14/tim-cook-addresses-apples-us-... "Cook added that it was up to Congress and the president to enact tax reform, which he is "optimistic" will take place sometime next year." I am actually both scared and biased, you got me!

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cbasoftware 10y ago

I concur 100%. BTW, Apple doesn't pay the tax they owe in this country either due to moving IP to Ireland and other tax favorable countries. Of course, they'll just move to Panama.

gchokov 10y ago

You are wrong. Actually right, but why should you pay back? There must be agreement going forward. How about your family pays new taxes for the last 100 years, taxes that are invented TODAY?

gchokov 10y ago
Thank you for down-voting me without explanation. How retarding.

cft 10y ago

Did you read the article? They are forced to pay retroactively. It's like if the government raised income tax rates and tried to collect the difference for the last 12 years from your taxes. Would you like that?

d_t_w 10y ago
IT Contractors in the UK right now are facing demands to pay retroactively for tax stretching back over a decade in some cases that they purposefully avoided at the time using a scheme called EBT (or, being paid in loans by a trust because loans aren't taxed). They had advice at the time that these schemes were legit (though every adviser would deliver that with a wink), any adult human must have known there was a large risk HMRC would disagree eventually (just as Apple knew they were running a risk), and now they face demands to pay the tax they failed to pay in the first place. Are they the victims? Certainly they will tell you so. Sympathy I have for them? Nil.