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Apple Ordered To Pay Up To $14.5 Billion in EU Tax Crackdown, Cook Refutes EU's Conclusion (bloomberg.com)
Apple has been ordered to pay a record sum of 13 billion euros ($14.5 billion) plus interest after the European Commission said Ireland illegally slashed the iPhone maker's tax bill, in a crackdown on fiscal loopholes that also risks inflaming tensions with the United States Treasury. According to the European Union regulator, Apple benefited from selective tax treatment that gave it an unfair advantage over other businesses. In the meanwhile, Apple has refuted such accusations, saying that EU's conclusion has "no basis in fact or law." EU Competition Commissioner Margrethe Vestager said, "If my effective tax rate would be 0.05 percent falling to 0.005 percent -- I would have felt that maybe I should have a second look at my tax bill." Apple CEO Tim Cook said, "Over the years, we received guidance from Irish tax authorities on how to comply correctly with Irish tax law -- the same kind of guidance available to any company doing business there. In Ireland and in every country where we operate, Apple follows the law and we pay all the taxes we owe."
Apple got a special tax deal from the Irish government in exchange for locating their European headquarters in Ireland. This has been ruled illegal state aid which was illegal at the time.
A number of other companies such as Microsoft, Dell and Google have similar arrangements and they are now all under investigation.
Yes but 6500 jobs plus the tax from profits in Ireland is better than nothing. That back tax which the EU want paying would not have been paid to the Irish government had they not given Apple the special tax deal. So the deal that Ireland cut Apple was good for Ireland. Problem for Ireland and Apple is the deal has been ruled illegal under EU state aid laws.
Funnelling the sales through Ireland was not illegal.
What was illegal was Ireland giving Apple a special tax deal where they only needed to pay tax on profits generated in Ireland, so all the profits from sales in the rest of the EU where tax free. EU has now decided that this is against the state aid rules. Had every firm in Ireland had the same tax deal it would not have been illegal.
So while Mr. Cook is claiming that they complied with Irish law and may well be right, this is utterly irrelevant to whether they broke EU laws.
EU which has overall governance over Ireland
That's not correct. In this case the EU can't actually force Ireland to collect the tax, but they will because they want to remain part of the club and not face other sanctions. The EU doesn't actually have powers to govern Ireland directly, although Irish law does recognize EU institutions.
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SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
What? The EU, formally known as the EEC, has existed since 1958, if you discount the ECSC. The provisions against state aid within the single market were established in the Treaty of Rome (1958). Ireland joined in 1973.
Whether or not the tax breaks were illegal, Apple simply paid what the Irish government told them to pay, so as far I am concerned the EU can pound sand.
Apple didn't simply "pay what the Irish government told them to pay", there was a huge amount of negotiation between the two parties, leading to an agreement.
That agreement does not transcend EU rules, so it was illegal at the time and I'm sure you will understand that illegal agreements are not worth the paper they are written on.
I believe Apple has replied "You can have your back taxes or you can have our jobs - but not both."
Good for them.
Wow. 6,000 jobs. When Apple already employ more than that in the UK, where they have no tax deal. What a wonderful deal the Irish got...
extremely advantageous tax arrangements in Ireland for Apple were incompatible
FTFY.
The problem is that Ireland didn't even charge Apple it's standard corporation tax rate that other businesses were liable for. That is state aid.
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From what I gather, it is not the EU ordering Apple to do anything, but the EC ordering Ireland to collect the money as outstanding taxes.
If Ireland refuses, the EC could fine them, or better, remove Ireland from the Common Market, incl all effects this would have.
If Ireland does end up having to collect the taxes, and Apple refuses to pay them, then freezing assets would be on the table.
But if Ireland broke its treaty with the EU, why punish Apple for following the law as it stood at the time? Punishing Ireland would seem fairer.
They are not punishing Apple, there is absolutely no punishment levied against Apple. Apple is just asked to pay what they owe Ireland with no damages or punishment added on top.
This is not true. What Ireland did was patently against EU law, violating the no state aid rule. And this is what the Comission decided today, that this sweetheart deal configured state aid because it was not available to all companies, it was only for some select few.
And you are being disingenuous by suggesting that Apple did nothing wrong. The deal was obviously negotiated directly between Ireland and Apple. And to suggest that Apple didn't know this was illegal, come on. They can afford some pretty good lawyers, you know.
This all, of course, without mentioning the massive scam that is establishing itself in Ireland in the first place. Apple pretends to make no profit in any EU country, all of it goes to Ireland. But this is apparently legal.
entropy happens
You are apparently completely ignorant of what Apple's tax arrangement was. Please read the statement of the European Comission.
To spell it out: Ireland was charging Apple the 12.5% tax on sales made in Ireland. The sales made in the rest of Europe were not taxed. At all. So Ireland was simply robbing the other EU countries of their tax money. Stopping this scam is precisely what we need the EU comission to do.
And you think exiting the EU would be the proper answer to this? Go ahead, please. Let's see how Apple likes to stay in Ireland without access to the European market.
entropy happens