78 ms·

Apple has €13bn Irish tax bill overturned

306 points by alvis 6y ago

jka 6y ago
For anyone curious about the background, here's the original basis of the European Commission's claim in this case: https://ec.europa.eu/commission/presscorner/detail/en/IP_16_2923 https://ec.europa.eu/commission/presscorner/detail/en/IP_16_... Selected quote: "The role of EU state aid control is to ensure Member States do not give selected companies a better tax treatment than others, via tax rulings or otherwise."
stepstop 6y ago
> “This case was not about how much tax we pay, but where we are required to pay it," Apple said in a statement. "We're proud to be the largest taxpayer in the world as we know the important role tax payments play in society." That’s a really beautiful example of spinning the story of what’s going on.
- darrenoc 6y ago
  The thinly veiled subtext is that the place they are required to pay it is nowhere.
  - nojito 6y ago
    It's paid in the US. The EU is mad that they aren't getting it and have been targeting American companies for atleast 5 years. This lawyer also has one of the worst success records in these types of cases.
    - tsbinz 6y ago
      It wasn't paid in the US. The purpose of the scheme that Apple (and other companies) were using was to protect profits from US taxes. https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement
      - nodamage 6y ago
        Yes, it was. Their arrangement only helped them defer US taxes, but the taxes were paid when the money was repatriated. https://www.wsj.com/articles/apple-to-pay-38-billion-in-repatriation-tax-plans-new-u-s-campus-1516215419 https://www.wsj.com/articles/apple-to-pay-38-billion-in-repa...
        diffeomorphism 6y ago
        No, as your link says it wasn't. Only part of the taxes were paid when the money was repatriated: > A provision allows for a one-time repatriation of corporate cash held abroad at a lower tax rate than what would have been paid under the previous tax plan. https://www.nytimes.com/2018/01/17/technology/apple-tax-bill-repatriate-cash.html https://www.nytimes.com/2018/01/17/technology/apple-tax-bill...
        nodamage 6y ago
        I mean, tax rates can change over time. It seems like the goalposts have now been moved from "did they pay US tax?" to "did they pay enough US tax?". You're free to argue that 15% is not a high enough corporate tax rate, but it is factually incorrect to say Apple did not pay US tax on the money they earned overseas.
        diffeomorphism 6y ago
        > I mean, tax rates can change over time. It seems like the goalposts have now been moved from "did they pay US tax?" to "did they pay enough US tax?". No, that is decidedly not what we are talking about. The claim was that holding all your money away from the US does not matter because the tax will be paid eventually. As we see, no it wasn't and the tax rate was not lowered because "taxes change over time" but because otherwise companies will just not ever repatriate their money. It is factually correct to say that apple did not pay the full US tax rate on the money they earned overseas. You are free to argue that this is fine and they at least still paid some, lower tax rate, but this is the whole topic we are talking about. Apple pays very low tax rates and the EU, Ireland and the US are arguing whether this is unfair (state aid) and should change.
- politelemon 6y ago
  It is, after all, their area of expertise.
- iRomain 6y ago
  An horrible company that makes great product. Such is my dilemma with Apple!
  - unicornfinder 6y ago
    I mean, their products aren't that great. Their desktop lineup is quite frankly rubbish.
    - routerhash 6y ago
      i haven't seen a desktop without internal wires other than Mac Pro
      - Majestic121 6y ago
        Is this your selling point for 'great' ?
        raxxorrax 6y ago
        Well, it looks good.
        huseyinkeles 6y ago
        how often do you look inside of your PC? :)
      - NoSorryCannot 6y ago
        Single board computers are numerous, mostly but not entirely at the low end, and no cabled interconnects is the defining trait of the class. The reason we don't see as much of this in full-size desktops is because density is clearly not the objective and it would mean sacrificing the modularity and flexibility of established standards. Or in other words, more expensive with no real gain besides aesthetics, which aren't worthless but I'd bet they aren't worth _much_ for a box which spends most of its time under a desk concealing its insides.
- x87678r 6y ago
  Well looks like last year they paid $10.5B in taxes (on 65.7B profits) so which part is wrong? https://finance.yahoo.com/quote/AAPL/financials?p=AAPL https://finance.yahoo.com/quote/AAPL/financials?p=AAPL
  - Luc 6y ago
    16%. Niiiice.
    - twoodfin 6y ago
      Add sales taxes on their products, payroll taxes on their employees, capital gain taxes on the dividends they issue.... and Apple is generating much more than 16% of their profits in government revenue vs. a world where Tim Cook closes up shop tomorrow.
      - sil80to 6y ago
        Indeed - tax the little man from all angles, not the big corporation.
        jtbayly 6y ago
        Taxing the little man vs the big man is not Apple’s decision. Talk to your senator about that.
        sil80to 6y ago
        I am aware, and I don't disagree. I don't even begrudge Apple for using this amazing tax scheme - they'd be foolish not to. But the argument that they're paying enough because they enable the government to milk everyone else in other ways seems entirely wrong.
        dfxm12 6y ago
        They did choose to move to a tax haven though, while still going out of their way to to market themselves as being from California. It sucks they want to reap the benefits of being an American company without sowing their share.
- simonh 6y ago
  Apple pays an effective rate of 21% on foreign earnings, 35% on income earned from cash invested outside the US and over $10bn in corporate taxes overall. That doesn't include property taxes, payroll taxes, VAT, etc, etc. They are the biggest tax payer in the world. The conventional view is that Apple pays no tax, Ive seen that asserted on HN many times, but it's just flat out not true. If you wan to say the above isn't enough, sure, fine that's an opinion you're entitled to hold. I don't even necessarily disagree, I think there's a reasonable case to be made that we are excessively incentivising the concentration of capital but that's a question for voters and politicians not individual companies.
  - hellofunk 6y ago
    It is true about Amazon, though, and I’ve seen Amazon mentioned far more often than Apple in this regard.
  - blibble 6y ago
    companies don't pay VAT because they claim it back on everything they buy they do however collect it
    - kalleboo 6y ago
      They pay VAT on the value they add between what they buy and what they sell. Hence, Value-Added Tax.
      - blibble 6y ago
        no they don't, they collect it, but the consumer pays it this is the entire principle behind VAT
        trollied 6y ago
        You're actually both right. A company collects VAT from customers when they purchase. But it also buys from suppliers at a lower value. It pays the difference in the two VAT numbers (from customer-to supplier) to the VAT authority.
darrenoc 6y ago
This is a disgraceful verdict for the Irish people. We laid ourselves bare as a tax haven for MegaCorps, and now we're not even seeing the benefits.
- stormdennis 6y ago
  No the European Court found for the Irish Government and dismissed pretty much out of hand the allegations that it had shown favouritism to Apple. Most of that €13billion would have gone to other countries anyway.
  - chaz6 6y ago
    Are you suggesting it is better for Apple to keep it all rather than Ireland have to share with the rest of the EU?
    - stormdennis 6y ago
      No rules were broken, it seems, so it's moot to talk about whether it would be better going to European Goverments.
- robertlagrant 6y ago
  > We laid ourselves bare as a tax haven This sort of silly emotionalism gets the conversation nowhere. If you can't write good rules to make companies give you money for efforts mostly done in other countries, what do you expect?
  - thomasahle 6y ago
    > If you can't write good rules to make companies give you money for efforts mostly done in other countries, what do you expect? You make it sound like writing such rules is easy. I don't know of any countries thst have succeeded in doing so.
- deleted 6y ago
  [deleted]
dylkil 6y ago
Irish media spinning this as a win for the irish people, while there are ongoing talks of increasing income tax on normal people to help cover the cost of this pandemic. Disgraceful.
- stormdennis 6y ago
  No tax was owed to the Irish people from Apple. It was European commisson overreach. [Edit: been this comment is oscillating between -1 and 1 like a yoyo.]
  - matthewheath 6y ago
    It was hardly overreach by the Commission. They are entitled to ensure companies pay their fair share of tax, and that Member States don't undercut each other.
  - karavelov 6y ago
    It is owned to EU people as the extracted profits from EU were transferred to Ireland and not taxed due to loop hole in Irish law
    - alphadevx 6y ago
      Well apparently not, according to the ruling being overturned today by the EU court. They are the legal facts.
- robertlagrant 6y ago
  Apple is ultimately normal people as well, either buying from them or working for them.
  - lemontruth 6y ago
    do you mean more equal? tell me which normal company (people) pay sub-1% tax?
oblio 6y ago
This isn't over, they'll go to the European Court of Justice for sure.
- nojito 6y ago
  The lawyers in this case have a godawful track record of winning, because their arguments are lackluster at best.
- stormdennis 6y ago
  They'll appeal most likely but their chances of success look slim.
  - oblio 6y ago
    It could be. But they're only going to piss off the EU even more with these moves. Right now Apple is probably winning a battle but might be losing the war. The next big EU mandate, besides tackling climate change, will probably be clamping down on tax shenanigans. Next time they won't even be able to win anything as the law will be explicitly against such corporate maneuvers.
    - stormdennis 6y ago
      The commission isn't all powerful. There are different national interests in Europe and all countries have a veto on such matters I believe
      - matthewheath 6y ago
        > all countries have a veto on such matters I believe In most cases, a veto can't happen unless the following conditions are met: 1) Less than 55% of total Member States (less than 15) voting AND 2) The voting Member States represent less than 65% of the total EU population AND (assuming at least one of the conditions above aren't met) 3) At least four countries vote to block the measure OR (if not all countries are voting) 4) The minimum number of countries that represent more than 35% of the total EU population, plus one country, vote to block the measure. This prevents e.g. 3 big countries from blocking the others.
dgellow 6y ago
The commission can still appeal the decision.
- s_dev 6y ago
  Given this disastrous result for the Commision -- I don't think they will but I'm not sure. They'll be accused of wasting time and doubling down will further enrage EU citizens unless they can ensure a favourable outcome.
m12k 6y ago
Transfer pricing and tax havens are draining money out of the economies of most European countries, breaking the virtuous cycle where consumer spending also leads to salaries, taxes and more investment in the community, to keep the economy going - instead we have a shrinking middle class, as the fuel is drained from the engine. Ireland, Luxembourg and certain other countries are complicit in this. We clearly need better tax laws to combat this, but I'm glad the commission is trying to fight this to the extent they can within current laws, and I hope they win the case on appeal.
- logicchains 6y ago
  >Transfer pricing and tax havens are draining money out of the economies of most European countries, breaking the virtuous cycle where consumer spending also leads to salaries, taxes and more investment in the community, to keep the economy going - instead we have a shrinking middle class, as the fuel is drained from the engine. An alternative interpretation is that the high degree of taxes and regulations in Europe is preventing the growth of new companies there, resulting in fewer jobs, opportunities and investments. If Apple was a European company Europe would be getting a lot more taxes from it. In spite of Europe's larger population, in the past few decades it has produced way fewer new Fortune 500 companies than the US (and now also fewer than China).
  - fladrif 6y ago
    What are the benefits of a fortune 500? Who are the beneficiaries? The main ones would be investors and management, including a subset of employees. Given the tax loopholes that are often taken advantage of, I would hardly say that the countries or cities they reside in are beneficiaries in as far as tax income, though they definitely have a hub effect of drawing people into the locations they are in. Whether that is beneficial for original inhabitants is debatable, given gentrification and increased inequality of those who the city warps around to serve, and those who serve them. On the other hand, Europe has lower inequality amongst citizens, and an argument could be made to say that this increases happiness. What they are missing out on wrt fortune 500's is creativity that creates new technologies that pushes boundaries and revolutionizes the world (perhaps an oversimplification of the argument). Though they may not be at the forefront of this, it would be inaccurate to say that they do not benefit from innovations occurring in the world. My argument is that they currently occupy the coveted position to benefit both from the inequality of other countries yet retain the benefits of a more equal society. Viewing the entire world as an unequal society, the winners would be the ones at the top of unequal countries, followed by the equal countries, with those at the bottom of unequal societies trailing. Ideally the entire world would all have equal societies, but in no situation would I think countries with equality strive for the benefits of those with unequality
kasperni 6y ago
From the original finding: "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. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 percent on its European profits in 2003 down to 0.005 percent in 2014." [1] [1] https://en.wikipedia.org/wiki/EU_illegal_State_aid_case_against_Apple_in_Ireland https://en.wikipedia.org/wiki/EU_illegal_State_aid_case_agai...
- alphadevx 6y ago
  Yes and that finding has just been overturned.
  - SahAssar 6y ago
    Are the facts in dispute or just the legality of them?
    - alphadevx 6y ago
      The legality I believe. I don't think the Irish Government or Apple tried to hide anything, so the facts are out there in the public domain (Apple is a public company). More about the EC implying it was illegal, but that has now been overturned so all parties legally (if not morally, depending on your point of view...) vindicated.
      - SahAssar 6y ago
        If so the only part of the comment you were replying to above that was "overturned" was the word "illegal". Just wanted to make that clear, since I'm one of the people who think that it's still immoral and should be illegal.
        alphadevx 6y ago
        Well in a court of law, it is the letter of the law that matters, not how we feel. So it may be immoral but is not illegal.
alphadevx 6y ago
I am Irish and perfectly fine with this being overturned. Irish capitalists will love it, Irish socialists will hate it, same as the rest of the World it depends on your personal prism. Overall seems the EC claim was weak enough to be overturned by appeal, so clearly not a water-tight case, burden of prove not strong enough: "The EU's General Court said it had annulled that decision because the Commission had not proved that Apple had broken competition rules."
akvadrako 6y ago
The ruling is here: http://curia.europa.eu/juris/document/document.jsf?text=&docid=228621&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=9563817 http://curia.europa.eu/juris/document/document.jsf?text=&doc...
andrewstuart 6y ago
Here's what big tech companies don't pay their fair share of: * defence * education * infrastructure * health * etc But our political systems are so corrupt there's nothing can be done about it because they just line the pockets of the political parties who in turn make sure they never have to pay their fair share.
- apta 6y ago
  Why are you constraining it to "big tech"? All large companies in all fields want to avoid paying tax as much as possible.
  - kazen44 6y ago
    In the end, it comes down to the amount of resources and influences different parties have in society. Corporations have become more powerful than ever thanks to globalization. Globalisation has also reduced individual goverments power over land/resources. (this is why supranational is a thing).
  - bryan_w 6y ago
    Why constraint it to large companies? Most companies avoid paying taxes. Heck, most people who have their taxes professionally prepared are avoiding paying tax
- lucb1e 6y ago
  Why list of government spending destinations? I don't think it's unclear what tax money goes to.
zubairq 6y ago
Living in Denmark and having worked for the tax system (SKAT) here I am glad that this ruling was overturned. I believe that Margrethe Vestager should clean up the tax system here in her home country of Denmark before trying to clean up the tax system in Ireland. The tax system here is slow, corrupt, beaurocratic, and prosecutes the weak and vunerable, while letting people who are famous, or people who owe billions that are hard to prosecute off the hook.
- httpsterio 6y ago
  What's wrong with the Danish tax system? Do you have gripes on the technical side, how its hard to use as a consumer or what?
  - deleted 6y ago
    [deleted]
  - zubairq 6y ago
    I guess it is not easy to say what is wrong with the system as there are many deep rooted cultural issues at play here. What I have seen however is that the danish tax system has fined many well intentioned tax payers, often when the problem was that the SKAT themselves have made a mistake. And then at the same time many people who run businesses are able to avoid tax by negotiating with SKAT. I guess the problem is that instead of being run as a public service which is funded by the public, it seems to be run like a business now, trying to get income any way it can. This is partly caused by the compartmentalised departments in Skat and internal prosecution targets
LatteLazy 6y ago
Isn't the obvious answer to this an EU wide corporation tax or minimum corporation tax rate?
- MagnumOpus 6y ago
  No, this isn't about Ireland only levying 12% corporate tax (which is already a beggar-thy-neighbour race to the bottom). This is about Ireland abetting Apple (and every other large US tech and pharma firm) to not even pay the 12% but pretend that all of its EU profits were created in Bermuda, BVI or some other zero-tax offshore tax haven. (Via the Double Irish Dutch Sandwich legislation they offered until this year, or the newer and improved "Patent Box" law.)
- anonymousDan 6y ago
  No. Tax is not an EU competency, which is what the whole point of this appeal was from an Irish perspective. Of course it could be made one as part of a treaty, but I don't see that France/Germany's approach to taxation is inherently better than Ireland's.
- kazen44 6y ago
  this would probably be a solutions yes. Getting there politically is a hard and long process. The EU exists partially to prevent large multinational companies from playing smaller countries against each other (by having a common market). Personally, i think european integration is necessary to keep the continent afloat in the era of globalization. Europe is a continent that is highly fractured politically, and having smaller nations is a problem against gianst like the USA and china.
julienfr112 6y ago
It's not clear what type of tax are we talking about ? Is it corporate tax on gross income ?
nodamage 6y ago
I'm not surprised by this. The European Commission's original decision was based on a technicality related to the fact that Apple did not use the "classic" double-Irish arrangement when setting up their companies in Ireland, but instead used two branches of the same company. If Apple had set up the double-Irish with two separate companies (like most other multinationals), there would have been no question that what they were doing was perfectly allowed under Irish and EU law. I was always skeptical that this decision would stand up under appeal, since the argument that they received a special benefit from these tax rulings (relative to other multinationals) never made much sense. They were actually worse off under this arrangement than they would have been if they had just done the proper double-Irish in the first place, like Google and Microsoft and everyone else.
627467 6y ago
> "This case was not about how much tax we pay, but where we are required to pay it," Apple said in a statement. We have come to accept that certain tax payers (ie. corporate or well lawyered individuals) can chose where their revenue should be taxed. It think it has become obvious that this freedom distorts the spirit of taxation in most (all?) countries. I think it is fair to prevent double taxation across countries but IMHO revenue should be taxed as close to the source (revenue-generating-event) as possible. > "We're proud to be the largest taxpayer in the world, as we know the important role tax payments play in society." The old PR line Apple (and others) have been repeating ad nauseum... No one questions your place in the ranking, people care about the proportion (rate) you end up paying. If you're among the largest companies in the world by revenue it's not surprising that you'd be among the largest tax payers.
- nodamage 6y ago
  There's an argument to be made that since Apple is a US company, ultimately their revenue should be taxed in the US. And ultimately that is what happened: the money Apple made outside the US was eventually taxed when they repatriated it into the US. https://www.wsj.com/articles/apple-to-pay-38-billion-in-repatriation-tax-plans-new-u-s-campus-1516215419 https://www.wsj.com/articles/apple-to-pay-38-billion-in-repa...
  - negrit 6y ago
    I'm pretty sure Apple has an entity in Europe therefor the money this entity makes in Europe should be taxed in Europe.
    - pwinnski 6y ago
      That is the other argument, and definitely makes sense, but that's also where things get complicated. Normally you tax profits, which are gross revenue minus cost of goods sold (and yeah, I'm oversimplifying a bit). But in Europe, Apple has only profits, no cost of goods sold at all, since the costs are incurred in the USA. This would seem to lead to super-high taxes everywhere else, where profits are close to 100%, but huge losses in the USA, where the costs for the whole world aren't met by enough gross revenue to cover them. To avoid that, the European entity takes on a share of the costs by "buying" from the USA entity. And that's where the games come in. What are they buying? The physical goods? Are what markup? Are they also buying the advantages that come from the Apple name and logo? They can basically set the cost of that IP to whatever they want, and therefore show as much or as little net profit as they choose. Which is what they've been doing. Again, oversimplifying a bit, they recorded all European revenue through Ireland, and set the cost of product + IP + ad share + everything else so high that the net profit was very, very, very low, and sad that very, very, very low number is what they had to pay taxes on.
jojobas 6y ago
It doesn't seem to be an Irish tax bill, it's a EU tax bill which Ireland opposes. One rather curious feature of this case is that if the ruling had gone the other way, and Ireland had been on the losing side, its "punishment" for breaching EU law would have been to receive a large amount of money: taxes the Commission said were owed by Apple.
netcan 6y ago
Some irish background: About 30% of Irish GDP is "leprechaun economics." Funds that transfer through ireland without touching anything, and "would disappear if you tried to touch it." If you look up financial statistics that rely on gdp (eg oecd stuff), they're nonsensical. This isn't a normal "bidding for jobs" situation. We recently had an election that upended political norms. The two major parties (like US republicans and democrats) now have <50% of parliament seats. So they now collaborate, almost like a single party. They even negotiate with third parties (recently the greens) jointly. What tipped the balance was a "left wing wave." The largest party in this wave is Sinn Fein, a nationalist-republican party. Their campaign focused more on left wing issues than republican ones. In any case, this whole leprechaun economics thing is rarely mentioned. Ostensibly, the political turn should have turned on leprechaun economics. Almost no one mentioned it though. The benefit to Ireland isn't clear to me. Apple, Google, etc do have real operations here. They employ people and such. But, it's not clear how these relate to the tax evasion. I have never heard an explicit articulation or quantification of benefits. Politically, I think people just assume that it's beneficial because it's sneaky. A weird expression in irish chitchat is "say nothin!" It's part of a whole dialect (or kant) of gestures & phrases to communicate collusion. It's a part of irish culture, and it plays here. The upshot is that no one really understands why we have this system, but no one wants to give up the game by talking about it. $13bn is a lot of money here, about $3-$4,00 per person. It's shocking how little political debate we have on this... not even from those who want to spend this money.
aosaigh 6y ago
Is there any concensus at all on how global corporations _should_ pay tax? These sort of cases illustrate how institutions think they _shouldn't_ handle tax, but it's not clear to me how we apply tax to a globalised economy? It's seems to be a hugely complex issue with many different stakeholders. Where is the nuanced discussion about these issues that falls somewhere between "Corps are evil" and "innovation is vital"?
- apta 6y ago
  Why should corporations pay even more tax? They're paying salaries, which are subject to income tax, and stock gains are also taxed when sold. Also, any sales they generate are subject to VAT/sales tax. Not to mention property taxes for their offices, etc.
  - aosaigh 6y ago
    Is this related to my original comment or a different one? I agree with this by the way, I think that it's definitely a part of the discussion.
  - mdszy 6y ago
    How do corporate boots taste there, bud?
    - dang 6y ago
      We've banned this account for breaking the site guidelines and ignoring our requests to stop. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
      - mdszy 6y ago
        lmao all 0 requests to stop, just constant downvotes for telling people, rightfully, how much boot they're guzzling
        6y ago
quijoteuniv 6y ago
Next time EU needs to hire the lawyers that Apple had. Is sad to see corporations milking the planet
DoctorOetker 6y ago
how about international agreement that a half of taxes are paid to the buyers residence nation, and half to the sellers' residence nation?
mister_hn 6y ago
This is major loss for everyone
dicomdan 6y ago
EU needs to solve this problem at its roots and put pressure on tax Haven states directly. If that necessitates a reform that gives expanded authority to EU so be it.
- eschulz 6y ago
  I'm not confident that the EU will address this situation, much less solve it. The government in Brussels does not want to be known for challenging domestic tax policy that has existed for years, especially in a post-Brexit era. I could be wrong, and maybe the EU will put pressure on small tax havens in order to give reassurance to working class citizens in larger countries.
- alphadevx 6y ago
  That is exactly what they shouldn't do. Firstly, what is the agreed definition of a tax haven, and secondly, which countries belong on that naughty list? Thirdly, when many of those countries are EU members with voting and even veto rights to block such reforms, how exactly do you think the EU is going to put pressure on itself?
coronadisaster 6y ago
Probably a good time to sell AAPL seing that peek
Isamu 6y ago
Also Ireland is off the hook, if you remember they also disagreed with the original ruling and maintained that they were not offering special deals to various companies like Apple. Instead they benefited from the massive influx of liquidity in their banking system, and all that implies on their domestic economy. They have since reportedly closed down this option in their tax code because of optics, and they probably don’t need it so much anymore.
- alphadevx 6y ago
  Are you sure we benefited from that "massive influx of liquidity in their banking system"? That was loans not gifts, my income tax as an Irish person has never been so high, as we will be repaying that "massive influx" for a generation, the burden we must bare to stop that bank system failure from spreading through the eurozone.
yashap 6y ago
Standard Ireland stuff. They want to bring jobs to Ireland, so they create international corporate tax loopholes. My understanding is these loopholes mostly allow US tech companies to make large real profits in Europe, have them attribute to an Irish office, but then bullshit the profits away by claiming things like paying licensing fees to themselves, for their own tech, paid to a subsidiary in an even sketchier tax haven. So they have zero European profits, and thus zero taxes, on paper. This isn’t ILLEGAL, Ireland is literally creating laws to intentionally make these loopholes legal, as it gets tech companies to open offices in Ireland, and bring jobs with them. Many (myself included) consider it deeply unethical, but courts judge the laws, not the ethics, so if you’re like Apple, and basically in a position where you can write your own laws, then you won’t be found guilty in a court of law.
- markdown 6y ago
  It's really a form of tyranny how wealthy western nations get to do this, but out here in Fiji, we get hit by shit like [1] despite absolutely NOT being a tax haven in any shape or form. 1. https://www.rnz.co.nz/international/pacific-news/384636/fiji-vanuatu-marshall-islands-added-to-eu-tax-blacklist https://www.rnz.co.nz/international/pacific-news/384636/fiji...
- LudwigNagasena 6y ago
  It seems to me absolutely ethical. Any country can make whatever tax laws they want to get an advantage over other countries. If the EU and its population want to ban this practice, they should reorganize the tax laws.
  - anoncareer0212 6y ago
    The ethical problem here is the consequence of the same game theory you're citing as a solution - the next country can always cut taxes more
    - bagacrap 6y ago
      I'm sorry, I still don't see the ethical implications. Is universally lower taxation inherently unethical?
INTPenis 6y ago
What could possibly be the motivation to say no to 13bn EUR in tax revenue just to suck up to big corporations like Apple? To me it stinks of private deals made behind closed doors. Why else would politicians not give a damn about their own country. As long as their ass is dry. I just hope the EU don't give up. I actually see hope when the EU is made up of people from all sorts of countries, that even a Danish woman can go up against this corruption. DO NOT GIVE UP.
- jedberg 6y ago
  > What could possibly be the motivation to say no to 13bn EUR in tax revenue just to suck up to big corporations like Apple? Because if you do that they'll keep their offices open there, which employ a lot of Irish people, as well as bring in a lot of business travelers (current situation not withstanding). Keeping employment up, especially good tech employment, and the PR that goes with it, is probably worth a lot more than 13B.
  - francilien 6y ago
    What good PR is there in being know as scraping other EU countries of it’s tax dollars? Ireland would still had good tech employment as the only sizable English speaking country left in the EU.
    - bodono 6y ago
      Ireland has a low tax rate, other countries are free to lower theirs. This is not a 'race to the bottom' for the simple reason that people will vote out a government that gives too much to multinationals at the expense of the people. Low corporate taxes are extremely popular in Ireland, so it's obviously working there. On the other hand, if you're referring to where taxation occurs, then other countries are free to change their rules to make sure taxation occurs where they want it. Simply put, Ireland is successfully out-competing high tax, high waste countries (like most of the rest of the EU), and they are sore losers about it.
6510 6y ago
I'd rather pay Aple 13bn and have them stop their idiotic business practices.
- MuffinFlavored 6y ago
  can you give an example of a few of their "idiotic business practices"? They seem to be market-leading in quite a few areas.
  - 6510 6y ago
    They are doing lots of stuff that is bad for users and good for apple.[0][1] We could list some and argue but even if you don't agree it is possible for the peoples representatives to negotiate deals. (Or do we need a separate union for this?) It would be somewhat of a pain in the ass to figure out a legal model that doesn't create unfair advantage/disadvantage but I leave that as an exercise for the law makers. Users want something like a TB worth of compatible storage on icloud or google drive or $whatEver, for "free" and a pony. Apple can be like, that would be 4 euro and 22 cents per EU citizen, 2.34 billion for compatibility with other hosting providers and no to the pony, we don't do ponies. [0] - https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1073 https://ec.europa.eu/commission/presscorner/detail/en/ip_20_... [1] - https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1075 https://ec.europa.eu/commission/presscorner/detail/en/ip_20_...
alkonaut 6y ago
This will hopefully be overturned in the higher court. More importantly, all the Dutch/Irish tax loopholes should be closed.
acd 6y ago
For Every tax haven and tax cut there is a school not being built, a hospital not created. Nor does zero taxes pay teachers and nurses nor roads.
- bodono 6y ago
  Yes, taxes should be 100%, for the nurses! /s
LockAndLol 6y ago
Honestly, if we really wanted to do something against mega-corps, we wouldn't: 1. Use their products 2. Vote for people that support them 3. Just complain and take no action Since we don't do any of the above, can't be surprised at the outcome. We are all to blame.
- justaguyhere 6y ago
  It is not easy to avoid these mega-corps though, they make it very hard. If you go to the supermarket, how do you know any product that you pick is not coming from a shitty mega-corp? How much time an average person is willing (or able to) spend to check they are not giving their hard earned money to a mega corp? Maybe they will spend a few hours researching when they shop for a high ticket item like a computer, but a chips bag? water bottle? 3$ chocolate? Then there are monopolies like internet service providers. Even if people want to switch, they can't, in many places. Unless there is mass awareness, nothing is going to change.
bedobi 6y ago
"Eliminate the corporate income tax. Completely. If companies reinvest the money into their businesses, that's good. Don't tax companies in an effort to tax rich people." Economists universally agree both personal and corporate income taxes should be abolished and replaced with taxes on carbon, wealth etc. https://www.npr.org/sections/money/2012/07/19/157047211/six-policies-economists-love-and-politicians-hate https://www.npr.org/sections/money/2012/07/19/157047211/six-...
kazinator 6y ago
> Dutch MEP Paul Tang called the ruling "deeply unfair". "I suspect that many people in Ireland think... 'Why is there a company that pays 0.05% in taxes?' I pay more taxes than Apple, for that matter. Many people pay more taxes." Does this guy pay nonzero tax in Ireland at all? Would he pay more tax than Apple if he resided in Ireland? Or is he just saying that he pays more personal tax than Apple somewhere on the planet (such as, oh, in the Netherlands) and therefore Apple should pay at least that much in Ireland?

306 points by alvis 6y ago

jka 6y ago

For anyone curious about the background, here's the original basis of the European Commission's claim in this case: https://ec.europa.eu/commission/presscorner/detail/en/IP_16_2923 https://ec.europa.eu/commission/presscorner/detail/en/IP_16_... Selected quote: "The role of EU state aid control is to ensure Member States do not give selected companies a better tax treatment than others, via tax rulings or otherwise."

stepstop 6y ago

> “This case was not about how much tax we pay, but where we are required to pay it," Apple said in a statement. "We're proud to be the largest taxpayer in the world as we know the important role tax payments play in society." That’s a really beautiful example of spinning the story of what’s going on.

darrenoc 6y ago
The thinly veiled subtext is that the place they are required to pay it is nowhere.
- nojito 6y ago
  It's paid in the US. The EU is mad that they aren't getting it and have been targeting American companies for atleast 5 years. This lawyer also has one of the worst success records in these types of cases.
  - tsbinz 6y ago
    It wasn't paid in the US. The purpose of the scheme that Apple (and other companies) were using was to protect profits from US taxes. https://en.wikipedia.org/wiki/Double_Irish_arrangement https://en.wikipedia.org/wiki/Double_Irish_arrangement
    - nodamage 6y ago
      Yes, it was. Their arrangement only helped them defer US taxes, but the taxes were paid when the money was repatriated. https://www.wsj.com/articles/apple-to-pay-38-billion-in-repatriation-tax-plans-new-u-s-campus-1516215419 https://www.wsj.com/articles/apple-to-pay-38-billion-in-repa...
      - diffeomorphism 6y ago
        No, as your link says it wasn't. Only part of the taxes were paid when the money was repatriated: > A provision allows for a one-time repatriation of corporate cash held abroad at a lower tax rate than what would have been paid under the previous tax plan. https://www.nytimes.com/2018/01/17/technology/apple-tax-bill-repatriate-cash.html https://www.nytimes.com/2018/01/17/technology/apple-tax-bill...
        nodamage 6y ago
        I mean, tax rates can change over time. It seems like the goalposts have now been moved from "did they pay US tax?" to "did they pay enough US tax?". You're free to argue that 15% is not a high enough corporate tax rate, but it is factually incorrect to say Apple did not pay US tax on the money they earned overseas.
        diffeomorphism 6y ago
        > I mean, tax rates can change over time. It seems like the goalposts have now been moved from "did they pay US tax?" to "did they pay enough US tax?". No, that is decidedly not what we are talking about. The claim was that holding all your money away from the US does not matter because the tax will be paid eventually. As we see, no it wasn't and the tax rate was not lowered because "taxes change over time" but because otherwise companies will just not ever repatriate their money. It is factually correct to say that apple did not pay the full US tax rate on the money they earned overseas. You are free to argue that this is fine and they at least still paid some, lower tax rate, but this is the whole topic we are talking about. Apple pays very low tax rates and the EU, Ireland and the US are arguing whether this is unfair (state aid) and should change.
politelemon 6y ago
It is, after all, their area of expertise.
iRomain 6y ago
An horrible company that makes great product. Such is my dilemma with Apple!
- unicornfinder 6y ago
  I mean, their products aren't that great. Their desktop lineup is quite frankly rubbish.
  - routerhash 6y ago
    i haven't seen a desktop without internal wires other than Mac Pro
    - Majestic121 6y ago
      Is this your selling point for 'great' ?
      - raxxorrax 6y ago
        Well, it looks good.
        huseyinkeles 6y ago
        how often do you look inside of your PC? :)
    - NoSorryCannot 6y ago
      Single board computers are numerous, mostly but not entirely at the low end, and no cabled interconnects is the defining trait of the class. The reason we don't see as much of this in full-size desktops is because density is clearly not the objective and it would mean sacrificing the modularity and flexibility of established standards. Or in other words, more expensive with no real gain besides aesthetics, which aren't worthless but I'd bet they aren't worth _much_ for a box which spends most of its time under a desk concealing its insides.
x87678r 6y ago
Well looks like last year they paid $10.5B in taxes (on 65.7B profits) so which part is wrong? https://finance.yahoo.com/quote/AAPL/financials?p=AAPL https://finance.yahoo.com/quote/AAPL/financials?p=AAPL
- Luc 6y ago
  16%. Niiiice.
  - twoodfin 6y ago
    Add sales taxes on their products, payroll taxes on their employees, capital gain taxes on the dividends they issue.... and Apple is generating much more than 16% of their profits in government revenue vs. a world where Tim Cook closes up shop tomorrow.
    - sil80to 6y ago
      Indeed - tax the little man from all angles, not the big corporation.
      - jtbayly 6y ago
        Taxing the little man vs the big man is not Apple’s decision. Talk to your senator about that.
        sil80to 6y ago
        I am aware, and I don't disagree. I don't even begrudge Apple for using this amazing tax scheme - they'd be foolish not to. But the argument that they're paying enough because they enable the government to milk everyone else in other ways seems entirely wrong.
        dfxm12 6y ago
        They did choose to move to a tax haven though, while still going out of their way to to market themselves as being from California. It sucks they want to reap the benefits of being an American company without sowing their share.
simonh 6y ago
Apple pays an effective rate of 21% on foreign earnings, 35% on income earned from cash invested outside the US and over $10bn in corporate taxes overall. That doesn't include property taxes, payroll taxes, VAT, etc, etc. They are the biggest tax payer in the world. The conventional view is that Apple pays no tax, Ive seen that asserted on HN many times, but it's just flat out not true. If you wan to say the above isn't enough, sure, fine that's an opinion you're entitled to hold. I don't even necessarily disagree, I think there's a reasonable case to be made that we are excessively incentivising the concentration of capital but that's a question for voters and politicians not individual companies.
- hellofunk 6y ago
  It is true about Amazon, though, and I’ve seen Amazon mentioned far more often than Apple in this regard.
- blibble 6y ago
  companies don't pay VAT because they claim it back on everything they buy they do however collect it
  - kalleboo 6y ago
    They pay VAT on the value they add between what they buy and what they sell. Hence, Value-Added Tax.
    - blibble 6y ago
      no they don't, they collect it, but the consumer pays it this is the entire principle behind VAT
      - trollied 6y ago
        You're actually both right. A company collects VAT from customers when they purchase. But it also buys from suppliers at a lower value. It pays the difference in the two VAT numbers (from customer-to supplier) to the VAT authority.

darrenoc 6y ago

This is a disgraceful verdict for the Irish people. We laid ourselves bare as a tax haven for MegaCorps, and now we're not even seeing the benefits.

stormdennis 6y ago
No the European Court found for the Irish Government and dismissed pretty much out of hand the allegations that it had shown favouritism to Apple. Most of that €13billion would have gone to other countries anyway.
- chaz6 6y ago
  Are you suggesting it is better for Apple to keep it all rather than Ireland have to share with the rest of the EU?
  - stormdennis 6y ago
    No rules were broken, it seems, so it's moot to talk about whether it would be better going to European Goverments.
robertlagrant 6y ago
> We laid ourselves bare as a tax haven This sort of silly emotionalism gets the conversation nowhere. If you can't write good rules to make companies give you money for efforts mostly done in other countries, what do you expect?
- thomasahle 6y ago
  > If you can't write good rules to make companies give you money for efforts mostly done in other countries, what do you expect? You make it sound like writing such rules is easy. I don't know of any countries thst have succeeded in doing so.
deleted 6y ago
[deleted]

dylkil 6y ago

Irish media spinning this as a win for the irish people, while there are ongoing talks of increasing income tax on normal people to help cover the cost of this pandemic. Disgraceful.

stormdennis 6y ago
No tax was owed to the Irish people from Apple. It was European commisson overreach. [Edit: been this comment is oscillating between -1 and 1 like a yoyo.]
- matthewheath 6y ago
  It was hardly overreach by the Commission. They are entitled to ensure companies pay their fair share of tax, and that Member States don't undercut each other.
- karavelov 6y ago
  It is owned to EU people as the extracted profits from EU were transferred to Ireland and not taxed due to loop hole in Irish law
  - alphadevx 6y ago
    Well apparently not, according to the ruling being overturned today by the EU court. They are the legal facts.
robertlagrant 6y ago
Apple is ultimately normal people as well, either buying from them or working for them.
- lemontruth 6y ago
  do you mean more equal? tell me which normal company (people) pay sub-1% tax?

oblio 6y ago

This isn't over, they'll go to the European Court of Justice for sure.

nojito 6y ago
The lawyers in this case have a godawful track record of winning, because their arguments are lackluster at best.
stormdennis 6y ago
They'll appeal most likely but their chances of success look slim.
- oblio 6y ago
  It could be. But they're only going to piss off the EU even more with these moves. Right now Apple is probably winning a battle but might be losing the war. The next big EU mandate, besides tackling climate change, will probably be clamping down on tax shenanigans. Next time they won't even be able to win anything as the law will be explicitly against such corporate maneuvers.
  - stormdennis 6y ago
    The commission isn't all powerful. There are different national interests in Europe and all countries have a veto on such matters I believe
    - matthewheath 6y ago
      > all countries have a veto on such matters I believe In most cases, a veto can't happen unless the following conditions are met: 1) Less than 55% of total Member States (less than 15) voting AND 2) The voting Member States represent less than 65% of the total EU population AND (assuming at least one of the conditions above aren't met) 3) At least four countries vote to block the measure OR (if not all countries are voting) 4) The minimum number of countries that represent more than 35% of the total EU population, plus one country, vote to block the measure. This prevents e.g. 3 big countries from blocking the others.

dgellow 6y ago

The commission can still appeal the decision.

s_dev 6y ago
Given this disastrous result for the Commision -- I don't think they will but I'm not sure. They'll be accused of wasting time and doubling down will further enrage EU citizens unless they can ensure a favourable outcome.

m12k 6y ago

Transfer pricing and tax havens are draining money out of the economies of most European countries, breaking the virtuous cycle where consumer spending also leads to salaries, taxes and more investment in the community, to keep the economy going - instead we have a shrinking middle class, as the fuel is drained from the engine. Ireland, Luxembourg and certain other countries are complicit in this. We clearly need better tax laws to combat this, but I'm glad the commission is trying to fight this to the extent they can within current laws, and I hope they win the case on appeal.

logicchains 6y ago
>Transfer pricing and tax havens are draining money out of the economies of most European countries, breaking the virtuous cycle where consumer spending also leads to salaries, taxes and more investment in the community, to keep the economy going - instead we have a shrinking middle class, as the fuel is drained from the engine. An alternative interpretation is that the high degree of taxes and regulations in Europe is preventing the growth of new companies there, resulting in fewer jobs, opportunities and investments. If Apple was a European company Europe would be getting a lot more taxes from it. In spite of Europe's larger population, in the past few decades it has produced way fewer new Fortune 500 companies than the US (and now also fewer than China).
- fladrif 6y ago
  What are the benefits of a fortune 500? Who are the beneficiaries? The main ones would be investors and management, including a subset of employees. Given the tax loopholes that are often taken advantage of, I would hardly say that the countries or cities they reside in are beneficiaries in as far as tax income, though they definitely have a hub effect of drawing people into the locations they are in. Whether that is beneficial for original inhabitants is debatable, given gentrification and increased inequality of those who the city warps around to serve, and those who serve them. On the other hand, Europe has lower inequality amongst citizens, and an argument could be made to say that this increases happiness. What they are missing out on wrt fortune 500's is creativity that creates new technologies that pushes boundaries and revolutionizes the world (perhaps an oversimplification of the argument). Though they may not be at the forefront of this, it would be inaccurate to say that they do not benefit from innovations occurring in the world. My argument is that they currently occupy the coveted position to benefit both from the inequality of other countries yet retain the benefits of a more equal society. Viewing the entire world as an unequal society, the winners would be the ones at the top of unequal countries, followed by the equal countries, with those at the bottom of unequal societies trailing. Ideally the entire world would all have equal societies, but in no situation would I think countries with equality strive for the benefits of those with unequality

kasperni 6y ago

From the original finding: "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. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 percent on its European profits in 2003 down to 0.005 percent in 2014." [1] [1] https://en.wikipedia.org/wiki/EU_illegal_State_aid_case_against_Apple_in_Ireland https://en.wikipedia.org/wiki/EU_illegal_State_aid_case_agai...

alphadevx 6y ago
Yes and that finding has just been overturned.
- SahAssar 6y ago
  Are the facts in dispute or just the legality of them?
  - alphadevx 6y ago
    The legality I believe. I don't think the Irish Government or Apple tried to hide anything, so the facts are out there in the public domain (Apple is a public company). More about the EC implying it was illegal, but that has now been overturned so all parties legally (if not morally, depending on your point of view...) vindicated.
    - SahAssar 6y ago
      If so the only part of the comment you were replying to above that was "overturned" was the word "illegal". Just wanted to make that clear, since I'm one of the people who think that it's still immoral and should be illegal.
      - alphadevx 6y ago
        Well in a court of law, it is the letter of the law that matters, not how we feel. So it may be immoral but is not illegal.

alphadevx 6y ago

I am Irish and perfectly fine with this being overturned. Irish capitalists will love it, Irish socialists will hate it, same as the rest of the World it depends on your personal prism. Overall seems the EC claim was weak enough to be overturned by appeal, so clearly not a water-tight case, burden of prove not strong enough: "The EU's General Court said it had annulled that decision because the Commission had not proved that Apple had broken competition rules."

akvadrako 6y ago

The ruling is here: http://curia.europa.eu/juris/document/document.jsf?text=&docid=228621&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=9563817 http://curia.europa.eu/juris/document/document.jsf?text=&doc...

andrewstuart 6y ago

Here's what big tech companies don't pay their fair share of: * defence * education * infrastructure * health * etc But our political systems are so corrupt there's nothing can be done about it because they just line the pockets of the political parties who in turn make sure they never have to pay their fair share.

apta 6y ago
Why are you constraining it to "big tech"? All large companies in all fields want to avoid paying tax as much as possible.
- kazen44 6y ago
  In the end, it comes down to the amount of resources and influences different parties have in society. Corporations have become more powerful than ever thanks to globalization. Globalisation has also reduced individual goverments power over land/resources. (this is why supranational is a thing).
- bryan_w 6y ago
  Why constraint it to large companies? Most companies avoid paying taxes. Heck, most people who have their taxes professionally prepared are avoiding paying tax
lucb1e 6y ago
Why list of government spending destinations? I don't think it's unclear what tax money goes to.

zubairq 6y ago

Living in Denmark and having worked for the tax system (SKAT) here I am glad that this ruling was overturned. I believe that Margrethe Vestager should clean up the tax system here in her home country of Denmark before trying to clean up the tax system in Ireland. The tax system here is slow, corrupt, beaurocratic, and prosecutes the weak and vunerable, while letting people who are famous, or people who owe billions that are hard to prosecute off the hook.

httpsterio 6y ago
What's wrong with the Danish tax system? Do you have gripes on the technical side, how its hard to use as a consumer or what?
- deleted 6y ago
  [deleted]
- zubairq 6y ago
  I guess it is not easy to say what is wrong with the system as there are many deep rooted cultural issues at play here. What I have seen however is that the danish tax system has fined many well intentioned tax payers, often when the problem was that the SKAT themselves have made a mistake. And then at the same time many people who run businesses are able to avoid tax by negotiating with SKAT. I guess the problem is that instead of being run as a public service which is funded by the public, it seems to be run like a business now, trying to get income any way it can. This is partly caused by the compartmentalised departments in Skat and internal prosecution targets

LatteLazy 6y ago

Isn't the obvious answer to this an EU wide corporation tax or minimum corporation tax rate?

MagnumOpus 6y ago
No, this isn't about Ireland only levying 12% corporate tax (which is already a beggar-thy-neighbour race to the bottom). This is about Ireland abetting Apple (and every other large US tech and pharma firm) to not even pay the 12% but pretend that all of its EU profits were created in Bermuda, BVI or some other zero-tax offshore tax haven. (Via the Double Irish Dutch Sandwich legislation they offered until this year, or the newer and improved "Patent Box" law.)
anonymousDan 6y ago
No. Tax is not an EU competency, which is what the whole point of this appeal was from an Irish perspective. Of course it could be made one as part of a treaty, but I don't see that France/Germany's approach to taxation is inherently better than Ireland's.
kazen44 6y ago
this would probably be a solutions yes. Getting there politically is a hard and long process. The EU exists partially to prevent large multinational companies from playing smaller countries against each other (by having a common market). Personally, i think european integration is necessary to keep the continent afloat in the era of globalization. Europe is a continent that is highly fractured politically, and having smaller nations is a problem against gianst like the USA and china.

julienfr112 6y ago

It's not clear what type of tax are we talking about ? Is it corporate tax on gross income ?

nodamage 6y ago

I'm not surprised by this. The European Commission's original decision was based on a technicality related to the fact that Apple did not use the "classic" double-Irish arrangement when setting up their companies in Ireland, but instead used two branches of the same company. If Apple had set up the double-Irish with two separate companies (like most other multinationals), there would have been no question that what they were doing was perfectly allowed under Irish and EU law. I was always skeptical that this decision would stand up under appeal, since the argument that they received a special benefit from these tax rulings (relative to other multinationals) never made much sense. They were actually worse off under this arrangement than they would have been if they had just done the proper double-Irish in the first place, like Google and Microsoft and everyone else.

627467 6y ago

> "This case was not about how much tax we pay, but where we are required to pay it," Apple said in a statement. We have come to accept that certain tax payers (ie. corporate or well lawyered individuals) can chose where their revenue should be taxed. It think it has become obvious that this freedom distorts the spirit of taxation in most (all?) countries. I think it is fair to prevent double taxation across countries but IMHO revenue should be taxed as close to the source (revenue-generating-event) as possible. > "We're proud to be the largest taxpayer in the world, as we know the important role tax payments play in society." The old PR line Apple (and others) have been repeating ad nauseum... No one questions your place in the ranking, people care about the proportion (rate) you end up paying. If you're among the largest companies in the world by revenue it's not surprising that you'd be among the largest tax payers.

nodamage 6y ago
There's an argument to be made that since Apple is a US company, ultimately their revenue should be taxed in the US. And ultimately that is what happened: the money Apple made outside the US was eventually taxed when they repatriated it into the US. https://www.wsj.com/articles/apple-to-pay-38-billion-in-repatriation-tax-plans-new-u-s-campus-1516215419 https://www.wsj.com/articles/apple-to-pay-38-billion-in-repa...
- negrit 6y ago
  I'm pretty sure Apple has an entity in Europe therefor the money this entity makes in Europe should be taxed in Europe.
  - pwinnski 6y ago
    That is the other argument, and definitely makes sense, but that's also where things get complicated. Normally you tax profits, which are gross revenue minus cost of goods sold (and yeah, I'm oversimplifying a bit). But in Europe, Apple has only profits, no cost of goods sold at all, since the costs are incurred in the USA. This would seem to lead to super-high taxes everywhere else, where profits are close to 100%, but huge losses in the USA, where the costs for the whole world aren't met by enough gross revenue to cover them. To avoid that, the European entity takes on a share of the costs by "buying" from the USA entity. And that's where the games come in. What are they buying? The physical goods? Are what markup? Are they also buying the advantages that come from the Apple name and logo? They can basically set the cost of that IP to whatever they want, and therefore show as much or as little net profit as they choose. Which is what they've been doing. Again, oversimplifying a bit, they recorded all European revenue through Ireland, and set the cost of product + IP + ad share + everything else so high that the net profit was very, very, very low, and sad that very, very, very low number is what they had to pay taxes on.

jojobas 6y ago

It doesn't seem to be an Irish tax bill, it's a EU tax bill which Ireland opposes. One rather curious feature of this case is that if the ruling had gone the other way, and Ireland had been on the losing side, its "punishment" for breaching EU law would have been to receive a large amount of money: taxes the Commission said were owed by Apple.

netcan 6y ago

Some irish background: About 30% of Irish GDP is "leprechaun economics." Funds that transfer through ireland without touching anything, and "would disappear if you tried to touch it." If you look up financial statistics that rely on gdp (eg oecd stuff), they're nonsensical. This isn't a normal "bidding for jobs" situation. We recently had an election that upended political norms. The two major parties (like US republicans and democrats) now have <50% of parliament seats. So they now collaborate, almost like a single party. They even negotiate with third parties (recently the greens) jointly. What tipped the balance was a "left wing wave." The largest party in this wave is Sinn Fein, a nationalist-republican party. Their campaign focused more on left wing issues than republican ones. In any case, this whole leprechaun economics thing is rarely mentioned. Ostensibly, the political turn should have turned on leprechaun economics. Almost no one mentioned it though. The benefit to Ireland isn't clear to me. Apple, Google, etc do have real operations here. They employ people and such. But, it's not clear how these relate to the tax evasion. I have never heard an explicit articulation or quantification of benefits. Politically, I think people just assume that it's beneficial because it's sneaky. A weird expression in irish chitchat is "say nothin!" It's part of a whole dialect (or kant) of gestures & phrases to communicate collusion. It's a part of irish culture, and it plays here. The upshot is that no one really understands why we have this system, but no one wants to give up the game by talking about it. $13bn is a lot of money here, about $3-$4,00 per person. It's shocking how little political debate we have on this... not even from those who want to spend this money.

aosaigh 6y ago

Is there any concensus at all on how global corporations _should_ pay tax? These sort of cases illustrate how institutions think they _shouldn't_ handle tax, but it's not clear to me how we apply tax to a globalised economy? It's seems to be a hugely complex issue with many different stakeholders. Where is the nuanced discussion about these issues that falls somewhere between "Corps are evil" and "innovation is vital"?

apta 6y ago
Why should corporations pay even more tax? They're paying salaries, which are subject to income tax, and stock gains are also taxed when sold. Also, any sales they generate are subject to VAT/sales tax. Not to mention property taxes for their offices, etc.
- aosaigh 6y ago
  Is this related to my original comment or a different one? I agree with this by the way, I think that it's definitely a part of the discussion.
- mdszy 6y ago
  How do corporate boots taste there, bud?
  - dang 6y ago
    We've banned this account for breaking the site guidelines and ignoring our requests to stop. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
    - mdszy 6y ago
      lmao all 0 requests to stop, just constant downvotes for telling people, rightfully, how much boot they're guzzling
      - 6y ago

quijoteuniv 6y ago

Next time EU needs to hire the lawyers that Apple had. Is sad to see corporations milking the planet

DoctorOetker 6y ago

how about international agreement that a half of taxes are paid to the buyers residence nation, and half to the sellers' residence nation?

mister_hn 6y ago

This is major loss for everyone

dicomdan 6y ago

EU needs to solve this problem at its roots and put pressure on tax Haven states directly. If that necessitates a reform that gives expanded authority to EU so be it.

eschulz 6y ago
I'm not confident that the EU will address this situation, much less solve it. The government in Brussels does not want to be known for challenging domestic tax policy that has existed for years, especially in a post-Brexit era. I could be wrong, and maybe the EU will put pressure on small tax havens in order to give reassurance to working class citizens in larger countries.
alphadevx 6y ago
That is exactly what they shouldn't do. Firstly, what is the agreed definition of a tax haven, and secondly, which countries belong on that naughty list? Thirdly, when many of those countries are EU members with voting and even veto rights to block such reforms, how exactly do you think the EU is going to put pressure on itself?

coronadisaster 6y ago

Probably a good time to sell AAPL seing that peek

Isamu 6y ago

Also Ireland is off the hook, if you remember they also disagreed with the original ruling and maintained that they were not offering special deals to various companies like Apple. Instead they benefited from the massive influx of liquidity in their banking system, and all that implies on their domestic economy. They have since reportedly closed down this option in their tax code because of optics, and they probably don’t need it so much anymore.

alphadevx 6y ago
Are you sure we benefited from that "massive influx of liquidity in their banking system"? That was loans not gifts, my income tax as an Irish person has never been so high, as we will be repaying that "massive influx" for a generation, the burden we must bare to stop that bank system failure from spreading through the eurozone.

yashap 6y ago

Standard Ireland stuff. They want to bring jobs to Ireland, so they create international corporate tax loopholes. My understanding is these loopholes mostly allow US tech companies to make large real profits in Europe, have them attribute to an Irish office, but then bullshit the profits away by claiming things like paying licensing fees to themselves, for their own tech, paid to a subsidiary in an even sketchier tax haven. So they have zero European profits, and thus zero taxes, on paper. This isn’t ILLEGAL, Ireland is literally creating laws to intentionally make these loopholes legal, as it gets tech companies to open offices in Ireland, and bring jobs with them. Many (myself included) consider it deeply unethical, but courts judge the laws, not the ethics, so if you’re like Apple, and basically in a position where you can write your own laws, then you won’t be found guilty in a court of law.

markdown 6y ago
It's really a form of tyranny how wealthy western nations get to do this, but out here in Fiji, we get hit by shit like [1] despite absolutely NOT being a tax haven in any shape or form. 1. https://www.rnz.co.nz/international/pacific-news/384636/fiji-vanuatu-marshall-islands-added-to-eu-tax-blacklist https://www.rnz.co.nz/international/pacific-news/384636/fiji...
LudwigNagasena 6y ago
It seems to me absolutely ethical. Any country can make whatever tax laws they want to get an advantage over other countries. If the EU and its population want to ban this practice, they should reorganize the tax laws.
- anoncareer0212 6y ago
  The ethical problem here is the consequence of the same game theory you're citing as a solution - the next country can always cut taxes more
  - bagacrap 6y ago
    I'm sorry, I still don't see the ethical implications. Is universally lower taxation inherently unethical?

INTPenis 6y ago

What could possibly be the motivation to say no to 13bn EUR in tax revenue just to suck up to big corporations like Apple? To me it stinks of private deals made behind closed doors. Why else would politicians not give a damn about their own country. As long as their ass is dry. I just hope the EU don't give up. I actually see hope when the EU is made up of people from all sorts of countries, that even a Danish woman can go up against this corruption. DO NOT GIVE UP.

jedberg 6y ago
> What could possibly be the motivation to say no to 13bn EUR in tax revenue just to suck up to big corporations like Apple? Because if you do that they'll keep their offices open there, which employ a lot of Irish people, as well as bring in a lot of business travelers (current situation not withstanding). Keeping employment up, especially good tech employment, and the PR that goes with it, is probably worth a lot more than 13B.
- francilien 6y ago
  What good PR is there in being know as scraping other EU countries of it’s tax dollars? Ireland would still had good tech employment as the only sizable English speaking country left in the EU.
  - bodono 6y ago
    Ireland has a low tax rate, other countries are free to lower theirs. This is not a 'race to the bottom' for the simple reason that people will vote out a government that gives too much to multinationals at the expense of the people. Low corporate taxes are extremely popular in Ireland, so it's obviously working there. On the other hand, if you're referring to where taxation occurs, then other countries are free to change their rules to make sure taxation occurs where they want it. Simply put, Ireland is successfully out-competing high tax, high waste countries (like most of the rest of the EU), and they are sore losers about it.

6510 6y ago

I'd rather pay Aple 13bn and have them stop their idiotic business practices.

MuffinFlavored 6y ago
can you give an example of a few of their "idiotic business practices"? They seem to be market-leading in quite a few areas.
- 6510 6y ago
  They are doing lots of stuff that is bad for users and good for apple.[0][1] We could list some and argue but even if you don't agree it is possible for the peoples representatives to negotiate deals. (Or do we need a separate union for this?) It would be somewhat of a pain in the ass to figure out a legal model that doesn't create unfair advantage/disadvantage but I leave that as an exercise for the law makers. Users want something like a TB worth of compatible storage on icloud or google drive or $whatEver, for "free" and a pony. Apple can be like, that would be 4 euro and 22 cents per EU citizen, 2.34 billion for compatibility with other hosting providers and no to the pony, we don't do ponies. [0] - https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1073 https://ec.europa.eu/commission/presscorner/detail/en/ip_20_... [1] - https://ec.europa.eu/commission/presscorner/detail/en/ip_20_1075 https://ec.europa.eu/commission/presscorner/detail/en/ip_20_...

alkonaut 6y ago

This will hopefully be overturned in the higher court. More importantly, all the Dutch/Irish tax loopholes should be closed.

acd 6y ago

For Every tax haven and tax cut there is a school not being built, a hospital not created. Nor does zero taxes pay teachers and nurses nor roads.

bodono 6y ago
Yes, taxes should be 100%, for the nurses! /s

LockAndLol 6y ago

Honestly, if we really wanted to do something against mega-corps, we wouldn't: 1. Use their products 2. Vote for people that support them 3. Just complain and take no action Since we don't do any of the above, can't be surprised at the outcome. We are all to blame.

justaguyhere 6y ago
It is not easy to avoid these mega-corps though, they make it very hard. If you go to the supermarket, how do you know any product that you pick is not coming from a shitty mega-corp? How much time an average person is willing (or able to) spend to check they are not giving their hard earned money to a mega corp? Maybe they will spend a few hours researching when they shop for a high ticket item like a computer, but a chips bag? water bottle? 3$ chocolate? Then there are monopolies like internet service providers. Even if people want to switch, they can't, in many places. Unless there is mass awareness, nothing is going to change.

bedobi 6y ago

"Eliminate the corporate income tax. Completely. If companies reinvest the money into their businesses, that's good. Don't tax companies in an effort to tax rich people." Economists universally agree both personal and corporate income taxes should be abolished and replaced with taxes on carbon, wealth etc. https://www.npr.org/sections/money/2012/07/19/157047211/six-policies-economists-love-and-politicians-hate https://www.npr.org/sections/money/2012/07/19/157047211/six-...

kazinator 6y ago

> Dutch MEP Paul Tang called the ruling "deeply unfair". "I suspect that many people in Ireland think... 'Why is there a company that pays 0.05% in taxes?' I pay more taxes than Apple, for that matter. Many people pay more taxes." Does this guy pay nonzero tax in Ireland at all? Would he pay more tax than Apple if he resided in Ireland? Or is he just saying that he pays more personal tax than Apple somewhere on the planet (such as, oh, in the Netherlands) and therefore Apple should pay at least that much in Ireland?