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Apple Faces Large Penalties In EU Tax Probe

Posted by samzenpus on from the was-that-wrong? dept.

First time accepted submitter chasm22 writes EU Regulators are apparently set to accuse Apple and the Irish government of entering into several sweetheart deals that left Apple with lower taxes than what it legally owed. If the ruling is upheld, Apple could owe billions in back taxes. Interestingly, it seems that the Irish government would actually get the extra money and suffer little for its part in the scheme.

39 of 120 comments (clear)

  1. Finally by johnjones · · Score: 4, Insightful

    they should pay tax somewhere... I do and most of the world does... it's that or death...

    1. Re:Finally by Anonymous Coward · · Score: 5, Interesting

      I think we should allow companies with a head office on Mars be exempt from tax. With the money involved some companies might actually profit from setting up a permanent base there.

    2. Re:Finally by Thanshin · · Score: 3, Funny

      However, unlike death, taxes come more than once.

    3. Re:Finally by Ihlosi · · Score: 3, Insightful

      It's "death and taxes", not death (x)or taxes".

    4. Re:Finally by lazyforker · · Score: 3, Insightful

      Apple (and the *many* other companies that indulge in the same behavior) *do* pay all the legally required taxes. The trick is that there are various governments (ranging from municipal to national) that offer perks, tax benefits etc to companies if they locate themselves in their jurisdiction. You can see this at work pretty much everywhere. It's not an Apple story, or an Irish story: it's just corporations using their leverage to get better deals than you or I (probably just average working stiffs) can get. As for the EU trying to get taxes retroactively: surely the EU would have to first prove that *Apple* did something illegal. But if the Irish laws supported Apple what's the legal basis for trying to claim back taxes?

    5. Re:Finally by nospam007 · · Score: 2

      "Meh, corporations will simply set up mailboxes on Mars, much like they do in Luxembourg or Lichtenstein, ..."

      Bullshit. I'm from Luxembourg and those companies have real offices here, they're just here because for the moment they profit from the low VAT of 15% here because of the current EU law, next year they will move on, when customers will have to pay the VAT to their local governments.

      We can actually go to the Paypal Bank Offices and raise hell if there's a problem. :-)

      Lichtenstein is something else entirely, there it's the foundation laws.

    6. Re:Finally by benjymouse · · Score: 3, Interesting

      But if the Irish laws supported Apple what's the legal basis for trying to claim back taxes?

      I believe that the claim is that *both* Apple and the Irish government colluded to bypass Irish laws (derived from EU directives). In that case the Irish government is also going to be in trouble, treaty-wise.

      I have a feeling that we'll soon see a pattern where Microsoft, Apple, Google and more did get illegal tax-breaks by moving european HQs to Ireland. If it can be demonstrated that they colluded to keep the arrangement secrets (to avoid EU commision inquiries) and that Apple et al thus should have known they did not comply with EU law, they could - and should - be in trouble.

      Apple has a big coffer - so naturally that is where the EU commision will look first. I doubt that there is political will to risk the statibily of the Irish economy by forcing fines on Ireland.

      Ireland is a leech, just like Luxembourg, Switzerland, Lichtenstein, the Channel Islands etc.

      --
      Reading slashdot one-liner: (irm http://rss.slashdot.org/Slashdot/slashdot).rdf.item | fl title,desc*
    7. Re:Finally by Carewolf · · Score: 3, Insightful

      They do pay taxes. They just negotiated lower taxes in exchange for bringing those jobs to Ireland. It's a WIN-WIN solution for Ireland and Apple. Ireland still collects more revenue due to all the new jobs. The only losers are the countries who want to maintain a high tax rate and don't appreciate competition from Ireland, hence the EU getting their panties in a bunch.

      Yeah, all that win for Ireland was why they went near bankcrupt and had to bailed out by the rest of the EU?

      Ireland sold out, but sold out so cheap they didn't even get rich from selling out. Hopefully they have learned their lesson, though it seemed some people like you haven't.

    8. Re:Finally by Shatrat · · Score: 3, Interesting

      What lesson is that? Would Ireland have been better off if Apple and Microsoft and Google moved those jobs to Wales or France or Spain? Ireland is collecting income tax from all those employees, and sales tax from everything those employees buy. Why push employers away out of some fashionable drive for 'social justice'?
      For perspective, this same line of thinking comes up around here all the time. The county granted some tax incentives to an automotive factory to come in and unemployment dropped, new business opened up to support all the new faces and new incomes, and the county revenues went through the roof. Every now and then I hear somebody in a bar complaining about how Toyota isn't paying their fair share but most of us are too busy enjoying all the new parks and schools and better roadways.

      --
      09 F9 11 02 9D 74 E3 5B D8 41 56 C5 63 56 88 C0
    9. Re:Finally by gbjbaanb · · Score: 3, Interesting

      real offices.... 1 real office block with 100,000 post office boxes and a lawyer. that's how they roll in the Cayman Isles at least, I figured Luxembourg did the same.

      Either way, are you getting "Google Luxembourg" confused with Google? A bit like Google UK that is staffed by salesmen... oh no, wait, they don't actually have any salesmen, oh no, because all sales are made by a member of staff from Google Ireland, I forgot. Or at least, that's what they told the taxman.

      All countries have a subsidiary office for the company, if only to be a front to pass the "IP licencing money" back to the real HQ in the Bahamas (via the other subsidiaries in Holland and Ireland of course)

    10. Re:Finally by Plumpaquatsch · · Score: 4, Informative

      But if the Irish laws supported Apple what's the legal basis for trying to claim back taxes?

      I believe that the claim is that *both* Apple and the Irish government colluded to bypass Irish laws (derived from EU directives). In that case the Irish government is also going to be in trouble, treaty-wise.

      You, like most her, completely misunderstood what's going on. QTFA: "While the companies themselves aren't under investigation, their input is being sought because they would be required to return any unpaid taxes."

      I repeat: Apple is not under investigation, they will not be fined. The worst that can happen to them is be required to pay taxes saved. It's only Ireland who is in trouble (and the other countries under investigation).

      --
      Of course news about a fake are Fake News.
    11. Re:Finally by Carewolf · · Score: 2

      What lesson is that? Would Ireland have been better off if Apple and Microsoft and Google moved those jobs to Wales or France or Spain? Ireland is collecting income tax from all those employees, and sales tax from everything those employees buy. Why push employers away out of some fashionable drive for 'social justice'?

      I made no comment on social justice. I said it was bad business. A race to the bottom leaves you at the bottom, and since the rest of the EU was not racing against Ireland, they just raced themselves to the bottom. It was bad business and economically idiotic.

    12. Re:Finally by Plumpaquatsch · · Score: 2

      Meh, corporations will simply set up mailboxes on Mars, much like they do in Luxembourg or Lichtenstein,

      You are confusing that with Delaware. http://en.wikipedia.org/wiki/C... - this single-story building is the (US-) residence of 6,500 corporations, and more than 200,000 businesses.

      --
      Of course news about a fake are Fake News.
    13. Re:Finally by Carewolf · · Score: 2

      It's not a race to the bottom, it's an optimization. If corporate tax rate is X and total tax revenue is Y, past a certain point as X goes up, Y goes down because of competitive forces elsewhere.

      Yeah, but if you give away more free stuff than you ever get back in revenue you will be losing money. This is what Ireland did. They got less than a thousand jobs out of it, and would lose them in an instant if they ever tried to make Apple or Google pay for what they actually use of public resources. Selling for less than cost is BAD BUSINESS.

  2. I would like to see a return... by Anonymous Coward · · Score: 2, Interesting

    to how taxes were done right after WWII. 39% across the board for all companies. Close the loophole. If you have "a" presence in a given country, you pay taxes in that country.

    We could have socialized medicine in the US if we could get this money. Countries should band together and collect what owed. Full stop. Let's also kill right now, the notion that corporations are persons. It's a fallacy designed to be pro-business.

    1. Re:I would like to see a return... by khallow · · Score: 3, Informative
      "to how taxes were done" by whom? When I see stuff like this, it's usually from a US citizen who doesn't have a clue what sort of loopholes were around 50 years ago.

      We could have socialized medicine in the US if we could get this money.

      Or we could have something useful. Or just not collect the taxes in the first place, if that's the best you can do with it.

      Let's also kill right now, the notion that corporations are persons.

      Definitely from the US. Well, I guess you'll be pleased to find out that everyone including the US Supreme Court already agrees with you. Corporations aren't people and there just isn't any disagreement on that. OTOH, corporate personhood is a legal fiction used to insure that the people involved with a corporation receive proper protection under a variety of developed world legal systems, including the US.

      It's a fallacy designed to be pro-business.

      Let me note that pro-business is far less harmful and crazy to human society than anti-business.

    2. Re:I would like to see a return... by JosKarith · · Score: 3, Interesting

      I see that BS line trotted out by companies all the time - "If you don't give us favourable treatment we'll go play with our ball somewhere else". I say that government should call their bluff - the next company that tries it just gets their licence to trade pulled and their shares suspended. See how quick the other companies back down.

      --
      'Don't worry' said the trees when they saw the axe coming, 'The handle is one of us.'
    3. Re:I would like to see a return... by jbssm · · Score: 5, Informative

      We could have socialized medicine in the US if we could get this money.

      USA doesn't need more taxes to have socialized medicine. USA has the 10th biggest public healthcare expenditure per capita of the world already, more than 20% higher than the UK and Canada for instance.

      So, unlike what the majority of the Americans actually thinks, they are paying more for much much less, just out of they congenital spite over "paying stuff to poor people".

      Source: PRB Per Capita Public Expenditure on Health (US$)

    4. Re:I would like to see a return... by Anonymous Coward · · Score: 2, Interesting

      Good. Let them actually carry their empty threats and try to do a Burger King.

      They will just owe more in import taxes after their temper tantrum is done. In fact, the US government might make more revenue if they add a penalty on their goods, similar to the expat citizen renouncing tax.

      Import duties are quite useful. It allows US businesses a level playing field, and if businesses choose to leave, revenue still comes in.

    5. Re:I would like to see a return... by jaseuk · · Score: 4, Interesting

      The USA may have highest per-capita spending, but that hides the fact that you have a system where very few people OVERPAY for your health-care compared to much of the rest of the developed world. It doesn't mean it's evenly spent.

      http://liberalconspiracy.org/2... : "For a direct comparison, that means that in England the government spends around $3,200 per capita on healthcare and covers the entire population whereas in the US the federal government spends around $3,700 per capita and yet covers less than a third of the population."

      You should have a much better economy of scale, particularly with drugs purchasing, research and best practice. Yet it doesn't bear out in practice somehow...

      Jason.

    6. Re:I would like to see a return... by Eunuchswear · · Score: 5, Insightful

      Just in case anyone is misunderstanding what jbssm is saying.

      The US public spending on healthcare is the 10th biggest in the world, larger than many countries (E.G. the UK) that have "socialised" health care.

      I.E. The taxes Americans already pay are enough to provide "free" healthcare for every American. And you could stop paying health insurance and all other health costs.

      --
      Watch this Heartland Institute video
    7. Re:I would like to see a return... by MrL0G1C · · Score: 3, Insightful

      And yet the UK Tories are doing everything they can to move towards the American system so that someone can turn ever larger profits at our expense.

      --
      Waterfox - a Firefox fork with legacy extension support, security updates and better privacy by default.
    8. Re:I would like to see a return... by Xest · · Score: 4, Insightful

      Yep, they'd never follow through with the bluff anyway. If the UK government called say, Amazon's bluff, and said we're forcing you to pay this tax so go ahead, leave the country if you want and Amazon left then that'd create a massive void in which a competitor for Amazon could start up in the UK and use it as a launchpad to challenge Amazon elsewhere in the world.

      It is genuinely a ridiculous argument that they'd leave if they had to pay intended corporation tax, especially in a country like the UK - no major company is going to forfeit a market like that over a 21% corporation tax rate, it's just still way too profitable to ignore and way too risky to leave open to a competitor that would gladly fill the void and gain a foothold.

      It's even more ridiculous in the context of companies like Starbucks who face heavy competition in the UK from companies like Costa and Cafe Nero - these guys could take over Starbucks' premises and hire all their staff within no time so you wouldn't even really see anything more than a very very short term hit in terms of job losses in many cases. As we've seen during the recession as a result of bankruptcies, you can take over another companies stores post-Administration and rebrand them and get their staff working for you in their old premises within a matter of only as little as a week or two in many cases.

      Companies aren't simply going to turn away and say "We can only make £100 million in profit if we pay corporation tax, instead of £120 million, it's just not worth it" if they were given an ultimatum between paying corporation tax and leaving the UK market altogether. They might well sulk, but millions in profit is millions in profit and you don't say no to that- especially when all your competitors are at the exact same disadvantage.

    9. Re:I would like to see a return... by Rhipf · · Score: 5, Insightful

      The reason no one heads to Canada for medical treatment is that they wouldn't be covered and would have to pay out of pocket.

      Are there problems with the Canadian healthcare system? Sure.
      Would I be willing to give up my healthcare coverage for a US type system? No @#$%ing way!!!
      I am more than willing to put up with the limitations of the Canadian system secure in the knowledge that I won't go bankrupt if something happens to me that involve extensive medical care.

    10. Re:I would like to see a return... by mlw4428 · · Score: 2

      > all other health costs.

      Let's clarify this. Universal Coverage doesn't mean "free" healthcare. It would work the same way a private insurance plan works now, except it's the government running the program and doing so without charging money to pay for CEO private jets, bonuses, and lobbying efforts. No one I know has a problem with paying copays, deductibles, or coinsurances, it's the massive premiums (of which a not-insignificant chunk of which goes to paying silly things while insurance companies actively work to deny claims for any small reason they can find).

    11. Re:I would like to see a return... by Eunuchswear · · Score: 2

      No one I know has a problem with paying copays, deductibles, or coinsurances

      Why not? Ask someone in the UK what "copays, deductibles, or coinsurances" are and they will look at you blankly.

      --
      Watch this Heartland Institute video
  3. Re:From what I've heard... by TheP4st · · Score: 5, Funny

    You are confusing Apple with their customers.

    --
    "I have downloaded hundreds and hundreds of records, why would I care if somebody downloads ours?" Robin Pecknold
  4. Ireland perhaps not so unscathed by Anonymous Coward · · Score: 2, Insightful

    If this probe results in a precedent that companies can't use Ireland to handwave their taxes away, that may cause companies to stop setting up "headquarters" there, which I imagine could be worse for Ireland than any fine could ever be.

  5. Takes two to tango by qbast · · Score: 3, Interesting

    So if deal between Apple and Ireland was illegal, shouldn't Ireland be fined as well?

    1. Re:Takes two to tango by MrL0G1C · · Score: 2

      So if deal between Apple and Ireland was illegal, shouldn't Ireland be fined as well?

      Nobody can do that.

      Sure they can and they should be. The UK faces being fined not dealing with it's traffic pollution.

      --
      Waterfox - a Firefox fork with legacy extension support, security updates and better privacy by default.
    2. Re:Takes two to tango by MrL0G1C · · Score: 2

      Ireland can't violate the law; it's a sovereign country.

      Whether or not EU countries are sovereign is highly debatable, I'd say they are not sovereign, they would have to declare independence from EU to regain their sovereignty.

      Every law that applies to Ireland is made by Ireland.

      Wrong, most laws that apply to Ireland are made by EU commission then passed by the EU parliament and are automatically rubber-stamped in Ireland.

      --
      Waterfox - a Firefox fork with legacy extension support, security updates and better privacy by default.
  6. Not true by MikeMo · · Score: 5, Informative

    The EU never made such a statement and never levies fines in such cases even if the action turns out to be illegal.

    This is another case of breathless reporters doing their best to get clicks by accusing Apple of something, anything.

  7. Re:Some justice by pijokela · · Score: 3, Informative

    EU actually does have minimum and maximum levels for some taxes. So as a member of EU they are not completely free to choose the level of their taxes. I also think that Ireland has been one of the countries opposing a raise in the minimum tax paid by companies. But anyway, the current beef is like you said.

  8. Another nonsense article by gnasher719 · · Score: 2

    Fact: The EU is having a close look at the deals between Apple and the Irish government. Fact: There is no indication whatsoever that anyone is asking for any back payments, and there is no indication whatsoever that anyone is asking for large penalties.

    In other words, the whole article is pure nonsense.

  9. $8.283 billion taxes in 2011 Re:Finally by justcauseisjustthat · · Score: 2

    Apple made provisions for tax of $8.283 billion (Provision for income taxes 8,283). Which was indeed 24.2% of their profits declared in that year.

    http://www.forbes.com/sites/ti...

    1. Re:$8.283 billion taxes in 2011 Re:Finally by Tough+Love · · Score: 2

      If this ruling sticks then a major adjustment in AAPL's price is coming down the tracks. Should be good for roughly a 15-20% drop. At 16, AAPL's p/e is looking a little pricey in any case. Other tech perps are no doubt peering anxiously over their shoulders but AAPL is the standout bad actor.

      --
      When all you have is a hammer, every problem starts to look like a thumb.
    2. Re:$8.283 billion taxes in 2011 Re:Finally by Plumpaquatsch · · Score: 2

      If this ruling sticks then a major adjustment in AAPL's price is coming down the tracks. Should be good for roughly a 15-20% drop. At 16, AAPL's p/e is looking a little pricey in any case. Other tech perps are no doubt peering anxiously over their shoulders but AAPL is the standout bad actor.

      Then please do short Apple - this should be fun.

      --
      Of course news about a fake are Fake News.
  10. Time to short by paysonwelch · · Score: 2

    Apple CEOs recently sold off a lot of their stock at the height of the iPhone 6 release: http://www.businessinsider.com... My guess is that they knew this was coming and cashed out at the highest possible value. It might be time to short AAPL.

    1. Re:Time to short by gnasher719 · · Score: 2

      Apple CEOs recently sold off a lot of their stock at the height of the iPhone 6 release: http://www.businessinsider.com... [businessinsider.com] My guess is that they knew this was coming and cashed out at the highest possible value. It might be time to short AAPL.

      You are welcome to short AAPL, but you should be careful, since apparently you have not a clue how the stock market works. When insiders like Apple's CEO trade shares, they can't use the insider information which they obviously have, because that would mean jail time if the SEC finds out. Instead, they have to enter these trades a long time (around a year) before the trade is executed, and there is no way to back out of this. So Tim Cook could today set up a trade to sell 10,000 AAPL shares on the 23rd of September 2015, and if he does that, the sale will go through on that day - even if AAPL is at a low on that day and Tim Cook has news that will double the share price on the next day.