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The problem is the EU, not Ireland. France should be able to tax apple on its own.

by jules 9y ago

seanmcdirmid 9y ago
France does tax Apple on its own. They still pay VAT of course as well as on any profits classified as French (e.g. retail). The question is then everything else whose origin isn’t obvious.
- rsj_hn 9y ago
  The issue is using various IP transfer schemes to make it look like their French division has no profits while the Isle of Man division is earning billions.
  - seanmcdirmid 9y ago
    Technically speaking, almost all of the value is created in the USA via R&D. I don’t think Apple has any significant amount of R&D creation in France (hopefully a lab or two). Then there is some by order manufacturing in China, along with component acquisition, leaving just retail and distribution for local markets. Now, Apple can and has done some dodgy IP transfers to tax havens, but France wouldn’t have been the wronged party in that, the USA would be.
    - realusername 9y ago
      Value is only created when you sell products, not when you create them (and especially not in R&D which is gamble cost for most companies), otherwise all the startups would be rich. If there would be no value creation in France, Apple would not have any business there.
      - seanmcdirmid 9y ago
        Ridiculous, how would that even work? Profit is “sales - expenses.” So how would Apple account for the R&D in the states, or does Apple France just want to tax them assuming all the inputs don’t exist? That’s why Apple USA sells iPhones to Apple France at some price above hardware production costs. It doesn’t make sense any other way. Value isn’t created on sale, it is only realized as money at that point.
        realusername 9y ago
        R&D is a cost center, not a profit center and as you pointed out, you need to sell your products at a higher price to recover that cost. If the value was created on R&D, it would mean that you could manufacture just about anything and it would create profit magically, which is obviously wrong as countless companies fail to monetize products. The value is created at the time you sell the product itself, by demand of consumers.
        seanmcdirmid 9y ago
        R&D is not a cost center, it is widely regarded as a profit center in a tech company. By your definition, Microsoft (assuming they aren’t selling hardware) should be paying all of its profits to where its software is sold vs. where it is produced, because it’s entire operation is just a cost center! Like it or not, taxation internationally is currently based on where value is produced which is why... > Under the current international tax system, profits are taxed based on where the value is created. The taxes Apple pays to countries around the world are based on that principle. The vast majority of the value in our products is indisputably created in the United States — where we do our design, development, engineering work and much more — so the majority of our taxes are owed to the US. https://www.apple.com/newsroom/2017/11/the-facts-about-apple-tax-payments/ https://www.apple.com/newsroom/2017/11/the-facts-about-apple... The value is not created at time of sale! Well, some value is created by virtue of the sale itself that go into retail profits, but the store has to pay its suppliers the price they charge regardless of the supplier’s markup. Imagine it’s a department store (Nordstrom’s or whatever) selling LV bags, LV is not charging the department stores just production cost. France in turn is taxing LV on the design value added in France, that tax money isn’t going to China or the USA where the bag is sold. France would be pissed otherwise. If France wants to tax America’s R&D, then they can change their laws, but the USA isn’t going to be very happy about that, obviously.
        realusername 9y ago
        Apple is heavily biased on the subject so I would not take their PR at face value. It's in their best interest to pretend that all the value is created in the US in order to reduce taxes. Let's say I can recreate the new IPhone with only 1/1000 of the budget of Apple's R&D, would I make a profit? Yes of course I would. If Apple could create their new IPhone for only 100$ of total R&D, be sure they would do it. On the other hand, ask yourself why there is no Apple Store in a lot of African countries. It's because Apple does not meet the local markets requirements for a store there to be profitable, so they would not get any value out of it. R&D being a cost center is the reason most of the countries in the world have tax-breaks specifically on R&D and also why the copyright laws are that harsh to prevent ripping of all the value by selling copies of your competitor.

The problem is the EU, not Ireland. France should be able to tax apple on its own.

by jules 9y ago

The problem is the EU, not Ireland. France should be able to tax apple on its own.

France does tax Apple on its own. They still pay VAT of course as well as on any profits classified as French (e.g. retail). The question is then everything else whose origin isn’t obvious.

rsj_hn 9y ago
The issue is using various IP transfer schemes to make it look like their French division has no profits while the Isle of Man division is earning billions.
- seanmcdirmid 9y ago
  Technically speaking, almost all of the value is created in the USA via R&D. I don’t think Apple has any significant amount of R&D creation in France (hopefully a lab or two). Then there is some by order manufacturing in China, along with component acquisition, leaving just retail and distribution for local markets. Now, Apple can and has done some dodgy IP transfers to tax havens, but France wouldn’t have been the wronged party in that, the USA would be.
  - realusername 9y ago
    Value is only created when you sell products, not when you create them (and especially not in R&D which is gamble cost for most companies), otherwise all the startups would be rich. If there would be no value creation in France, Apple would not have any business there.
    - seanmcdirmid 9y ago
      Ridiculous, how would that even work? Profit is “sales - expenses.” So how would Apple account for the R&D in the states, or does Apple France just want to tax them assuming all the inputs don’t exist? That’s why Apple USA sells iPhones to Apple France at some price above hardware production costs. It doesn’t make sense any other way. Value isn’t created on sale, it is only realized as money at that point.
      - realusername 9y ago
        R&D is a cost center, not a profit center and as you pointed out, you need to sell your products at a higher price to recover that cost. If the value was created on R&D, it would mean that you could manufacture just about anything and it would create profit magically, which is obviously wrong as countless companies fail to monetize products. The value is created at the time you sell the product itself, by demand of consumers.
        seanmcdirmid 9y ago
        R&D is not a cost center, it is widely regarded as a profit center in a tech company. By your definition, Microsoft (assuming they aren’t selling hardware) should be paying all of its profits to where its software is sold vs. where it is produced, because it’s entire operation is just a cost center! Like it or not, taxation internationally is currently based on where value is produced which is why... > Under the current international tax system, profits are taxed based on where the value is created. The taxes Apple pays to countries around the world are based on that principle. The vast majority of the value in our products is indisputably created in the United States — where we do our design, development, engineering work and much more — so the majority of our taxes are owed to the US. https://www.apple.com/newsroom/2017/11/the-facts-about-apple-tax-payments/ https://www.apple.com/newsroom/2017/11/the-facts-about-apple... The value is not created at time of sale! Well, some value is created by virtue of the sale itself that go into retail profits, but the store has to pay its suppliers the price they charge regardless of the supplier’s markup. Imagine it’s a department store (Nordstrom’s or whatever) selling LV bags, LV is not charging the department stores just production cost. France in turn is taxing LV on the design value added in France, that tax money isn’t going to China or the USA where the bag is sold. France would be pissed otherwise. If France wants to tax America’s R&D, then they can change their laws, but the USA isn’t going to be very happy about that, obviously.
        realusername 9y ago
        Apple is heavily biased on the subject so I would not take their PR at face value. It's in their best interest to pretend that all the value is created in the US in order to reduce taxes. Let's say I can recreate the new IPhone with only 1/1000 of the budget of Apple's R&D, would I make a profit? Yes of course I would. If Apple could create their new IPhone for only 100$ of total R&D, be sure they would do it. On the other hand, ask yourself why there is no Apple Store in a lot of African countries. It's because Apple does not meet the local markets requirements for a store there to be profitable, so they would not get any value out of it. R&D being a cost center is the reason most of the countries in the world have tax-breaks specifically on R&D and also why the copyright laws are that harsh to prevent ripping of all the value by selling copies of your competitor.