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Am I getting this right? Apple pays 1% or less on corporate profits in the EU. An EU court decides that this is bullshit and shouldn't be that way. Tim Cook com

Am I getting this right? Apple pays 1% or less on corporate profits in the EU. An EU court decides that this is bullshit and shouldn't be that way. Tim Cook complains that they made everything up and that the below 1% tax rate is reasonable and completely legal. Meanwhile Apple's $200 billion are sitting in Europe far away from the 35% tax rate in the US. Tim Cook says that 35% is too high to pay and says that something like 25% would be reasonable. If the US doesn't change its corporate tax rate to something lower, they won't get a single dollar from Apple. Here's the thing I don't get, how is 25% in the US acceptable but more than 1% in Europe is considered wrong? 25% of the $200 billion would be $50 billion which is way higher than the $13 billion fine... Am I comparing Apples to Oranges here? Or is Apple simply unwilling to pay any corporate taxes outside the US?

hodder 10y ago
Well Europe is changing the rules retroactively, while the US is clear about taking their share upon repatriation.
- lokedhs 10y ago
  This has been discussed multiple times in several thread, and no, Europe (i.e. the EU) is not changing any rules retroactively. You're welcome to point out the specific rule they have changed if you feel that I'm wrong.
izacus 10y ago
It's actually more absurd - Apple paid between 0,05 and 0,005% in taxes and EU now wants to collect the difference UP TO 1% ;)
yummyfajitas 10y ago
First of all, the 25% in the US is on top of what is taken in Europe. The US has pretty insane taxes. Secondly, Europe is looking more kleptocratic, and while maybe he can afford to pay up today, who knows what they might take in the future? Would you be willing to put your money into Venezuela even at 0% tax?
- melvinmt 10y ago
  It's not as if you would move your money out of Europe they suddenly can't hit you with taxes anymore. If you want to keep doing business in the EU, you'll need to comply with EU rules (and yes, pay taxes).
NelsonMinar 10y ago
Apples and oranges. "1% or less" is the effective tax rate Apple has historically paid in the EU. 35% (or 25%) is the nominal tax rate Apple is discussing paying in the US. After a bunch of tax avoidance gimmick the nominal 35% rate will be much lower. The US tax code is an outlier in the world in having both a very high corporate tax rate and then also a huge number of ways to avoid actually paying that tax. The Economist has written extensively about this, for example http://www.economist.com/news/leaders/21608751-restricting-companies-moving-abroad-no-substitute-corporate-tax-reform-how-stop http://www.economist.com/news/leaders/21608751-restricting-c...
perseusprime11 10y ago
Does anyone know how much money is sitting outside the country from all companies so we know the total impact of bringing money back? Can we incentivize bringing money back so we can reinvest in infrastructure for high speed transportation, self-driving cars and insanely crazy high speed Internet?
- deleted 10y ago
  [deleted]
brador 10y ago
It's posturing, not meant to be taken seriously, just a way to negotiate with the EU ruling.
snowwrestler 10y ago
The situation is complicated. There actually is no "EU tax"--each member of the EU sets its own tax policy. This is similar to state tax regimes in the United States, and it creates a similar situation: some EU countries compete for business revenue by trying to make their tax systems kind to business. Ireland, a little nation on an island far away from the rest of the EU, has decided that they will attract businesses by offering very low tax rates. Apple obliged them and based their European business in Ireland. BUT, the EU requires that each member nation "play fair" in how it subsidizes national businesses. The kerfluffle over Apple's Irish tax bill is because the EU competitiveness committee has ruled that Ireland's low taxes are equivalent to an unfair subsidy. But the key point is that it is Ireland's rate, which is why Ireland is also fighting the EU ruling. If they can't have lower-than-average business tax rates, they might have a harder-than-average time attracting businesses. U.S. federal taxes apply to ALL U.S.-based businesses, and apply to their global business (unlike every other national tax regime in the world). So--since Apple is a U.S.-based business, they cannot avoid federal taxes if they bring profits home the U.S. Apple cannot realistically expect to get more than a marginal improvement in the U.S. federal rate, because there is not competition with the federal government for setting that rate. So they store their profits outside the U.S., hoping the rate goes down in the future.
- omonra 10y ago
  This part of your comment is factually not true: "The kerfluffle over Apple's Irish tax bill is because the EU competitiveness committee has ruled that Ireland's low taxes are equivalent to an unfair subsidy. But the key point is that it is Ireland's rate, which is why Ireland is also fighting the EU ruling. If they can't have lower-than-average business tax rates, they might have a harder-than-average time attracting businesses." Ireland made a deal with Apple, whereby Apple effectively paid NO tax (vs the standard Irish rate of 12.5 or 13%). THAT is the problem - that Apple scored a preferential one-off deal that is not available to most other business operating in Ireland.
  - snowwrestler 10y ago
    > THAT is the problem - that Apple scored a preferential one-off deal that is not available to most other business operating in Ireland. Apple and Ireland both seem to disagree with this. It's a major point of contention in the case. Anyway, even if Ireland did give Apple a special rate, that would still arguably be "Ireland's rate." I just wanted to illustrate the difference between the EU, where the component nations are the highest taxing authorities and can compete on tax rates (now in question, to some extent), vs. the U.S, where the federal government is the single highest taxing authority. Edit to add: In the EU, multinationals have leverage because they can choose their tax regime. In the U.S. multinationals have little leverage over the federal government. This explains why Apple would expect to have a lower tax rate in the EU than the U.S.

hodder 10y ago

Well Europe is changing the rules retroactively, while the US is clear about taking their share upon repatriation.

lokedhs 10y ago
This has been discussed multiple times in several thread, and no, Europe (i.e. the EU) is not changing any rules retroactively. You're welcome to point out the specific rule they have changed if you feel that I'm wrong.

izacus 10y ago

It's actually more absurd - Apple paid between 0,05 and 0,005% in taxes and EU now wants to collect the difference UP TO 1% ;)

yummyfajitas 10y ago

First of all, the 25% in the US is on top of what is taken in Europe. The US has pretty insane taxes. Secondly, Europe is looking more kleptocratic, and while maybe he can afford to pay up today, who knows what they might take in the future? Would you be willing to put your money into Venezuela even at 0% tax?

melvinmt 10y ago
It's not as if you would move your money out of Europe they suddenly can't hit you with taxes anymore. If you want to keep doing business in the EU, you'll need to comply with EU rules (and yes, pay taxes).

NelsonMinar 10y ago

Apples and oranges. "1% or less" is the effective tax rate Apple has historically paid in the EU. 35% (or 25%) is the nominal tax rate Apple is discussing paying in the US. After a bunch of tax avoidance gimmick the nominal 35% rate will be much lower. The US tax code is an outlier in the world in having both a very high corporate tax rate and then also a huge number of ways to avoid actually paying that tax. The Economist has written extensively about this, for example http://www.economist.com/news/leaders/21608751-restricting-companies-moving-abroad-no-substitute-corporate-tax-reform-how-stop http://www.economist.com/news/leaders/21608751-restricting-c...

perseusprime11 10y ago

Does anyone know how much money is sitting outside the country from all companies so we know the total impact of bringing money back? Can we incentivize bringing money back so we can reinvest in infrastructure for high speed transportation, self-driving cars and insanely crazy high speed Internet?

deleted 10y ago
[deleted]

brador 10y ago

It's posturing, not meant to be taken seriously, just a way to negotiate with the EU ruling.

snowwrestler 10y ago

The situation is complicated. There actually is no "EU tax"--each member of the EU sets its own tax policy. This is similar to state tax regimes in the United States, and it creates a similar situation: some EU countries compete for business revenue by trying to make their tax systems kind to business. Ireland, a little nation on an island far away from the rest of the EU, has decided that they will attract businesses by offering very low tax rates. Apple obliged them and based their European business in Ireland. BUT, the EU requires that each member nation "play fair" in how it subsidizes national businesses. The kerfluffle over Apple's Irish tax bill is because the EU competitiveness committee has ruled that Ireland's low taxes are equivalent to an unfair subsidy. But the key point is that it is Ireland's rate, which is why Ireland is also fighting the EU ruling. If they can't have lower-than-average business tax rates, they might have a harder-than-average time attracting businesses. U.S. federal taxes apply to ALL U.S.-based businesses, and apply to their global business (unlike every other national tax regime in the world). So--since Apple is a U.S.-based business, they cannot avoid federal taxes if they bring profits home the U.S. Apple cannot realistically expect to get more than a marginal improvement in the U.S. federal rate, because there is not competition with the federal government for setting that rate. So they store their profits outside the U.S., hoping the rate goes down in the future.

omonra 10y ago
This part of your comment is factually not true: "The kerfluffle over Apple's Irish tax bill is because the EU competitiveness committee has ruled that Ireland's low taxes are equivalent to an unfair subsidy. But the key point is that it is Ireland's rate, which is why Ireland is also fighting the EU ruling. If they can't have lower-than-average business tax rates, they might have a harder-than-average time attracting businesses." Ireland made a deal with Apple, whereby Apple effectively paid NO tax (vs the standard Irish rate of 12.5 or 13%). THAT is the problem - that Apple scored a preferential one-off deal that is not available to most other business operating in Ireland.
- snowwrestler 10y ago
  > THAT is the problem - that Apple scored a preferential one-off deal that is not available to most other business operating in Ireland. Apple and Ireland both seem to disagree with this. It's a major point of contention in the case. Anyway, even if Ireland did give Apple a special rate, that would still arguably be "Ireland's rate." I just wanted to illustrate the difference between the EU, where the component nations are the highest taxing authorities and can compete on tax rates (now in question, to some extent), vs. the U.S, where the federal government is the single highest taxing authority. Edit to add: In the EU, multinationals have leverage because they can choose their tax regime. In the U.S. multinationals have little leverage over the federal government. This explains why Apple would expect to have a lower tax rate in the EU than the U.S.