Originally Posted by alanc
This is how I believe Apple are avoiding paying tax in Europe and beyond.
All Apple Intellectual property is held in Irish Apple subsidiaries.
When an Apple product is sold anywhere outside of the USA (not just Europe) the local Apple company (say in Germany or Korea or Mexico) pay a royalty to the Irish subsidiary, this reduces (or effectively transfers) any profit made on the sale to the Irish subsidiary where they pay a very low tax rate, believed to be 2%.
Local sales tax (VAT) is if course paid where the product is sold, including online sales. This arrangement is only in place for non US business activity.
More detail of this setup in the link below.
The focus of this thread has been mostly on how Apple stash their cash, after the taxes have been paid. And their reluctance to repatriate the profits.
I think they do this to avoid the 35% double-taxation they would have to pay in the US (double because tax has already paid)
Apple also in the past (Apple Ireland was incorporated in 1980) have relied on this stash of cash to survive, so the arrangement is at the core of Apple's survival strategy. They previously repatriated their stash to invest in new products when they were almost bust, there would probably be no iPhone if they didnt have this arrangement. So I believe caution should be taken in any attempt to change this.
I don't think that Apple are in any way wrong to do what they are doing and probably would not even exist anymore if they didn't.http://www.irishtimes.com/business/sectors/financial-services/intellectual-property-rights-at-the-core-of-apple-s-irish-subsidiaries-1.1401739
Is it not ironic and sad, that due to the fact:
a) that Apple makes and sells products that people want to buy in recent years,
b) is very frugal with their investments... in essence SAVING their profits for a rainy day...
...that they are now being raked over the coals by the media, government and *uninformed Anarchists.
There's change in the air, and I would bet that Ireland will be the first to implement a change that mandates Apple and the other companies in the country to be resident. THEY will collect immediately 10-12%... and the US will be left with nothing due to their massive bureaucracy.
* Yesterday I posted a comment on the mega-thread at WP, pointing out the hypocrisy of the idiots pointing their fingers ONLY at the "Evil, Tax-dodging, Slave-Master Apple" while typing their sorry-assed and class-warfare remarks on...well... anything!
If it has Intel Inside, using Windows, Chrome or Linux, and a *bleapin'* keyboard and monitor...they are also supporting an "Evil, Tax-dodging, Slave-Master" of one kind or another. It just so happens that through the coercion (/s) of Apple creating the most sought after and profitable products, and because they are savers not spenders, that people see them as "being the worst" offender... which is far from the truth of the matter.
So in the public's uninformed mind-set, it is far better:
1) for a company to throw their money out the window by over-paying for a company,
2) making the board and officers of that company very rich,
3) toss the workers out in the name of synergy,
4) drive the business into the ground or ignore it,
5) then write the loss from the investment off of a future Tax Return to in effect... PAY NO TAXES!
Simple 5 Step Plan to transfer wealth "legally" and to avoid fair taxation in the US of A. Ask HP, MS, and Google.
But SAVING on the other hand: OMG! You are sooooo cheating! /s
Edited to add: NO... I do not think Apple or any of the companies should be labelled with "Evil, Tax-dodging, Slave-Master", as long as they are abiding by the laws that are on the books. If it can be proved that any of them are breaking the law, let them then... and only then... enjoy that title.