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France orders Apple to pay $6.5M in taxes for 2011 iPad sales

post #1 of 35
Thread Starter 
A French professional association that collects revenue for artists' copyrighted works has charged Apple $6.5 million in taxes related to iPad sales in 2011.

iPad


The fee of 5 million euros passed on to Apple was revealed by the association known as SACEM, and highlighted by Rude Baguette. The charge comes from a tax that applies in a number of countries across Europe, including France and Germany, that applies to all digital devices that can be used with copyrighted material.

After the fees are collected by SACEM, those taxes are doled out to authors, creators, producers, actors and others.

According to the organization, Apple charged the SACEM fee to consumers who bought iPads in 2011, but the 5 million in euros were never paid to the association.

The French government has also recently considered instituting a so-called "culture tax" on devices like Apple's iPhone and iPad lineup. By levying a 1 percent tax on technology hardware, France would then receive roughly 86 million euros per year that would go to cultural industries focused on French music, images and videos.

As of the end of its last fiscal quarter, Apple had $145 billion in cash and investments, $100 billion of which is housed overseas. As the company's cash hoard has grown, so too has criticism of the taxes it pays.

The $6.5 million sum being charged in France is minuscule compared to the billions in taxes that some believe should be paid in the U.S. Though Apple has broken no laws in sheltering funds overseas, the company came under fire from U.S. lawmakers last month during a Senate subcommittee hearing attended by CEO Tim Cook.
post #2 of 35
When Canada had the iPod levy (thankfully, they don't anymore), lots of people used that levy to justify piracy. Be careful, France. Do you want your citizens to think "hey, I already pay money to the artists, why should I pay them twice?"
post #3 of 35
It is the pirating tax for those not familiar with this. Since the device has the ability to store content which could have been pirated or illegally copied or download, the manufacturers are required to pay a tax equal to the storage capabilities of the device.

In the EU they feel that everyone should pay the cost of few who do illegal things. It most cases the content owner are getting paid twice if you paid for directly.
post #4 of 35
Gustav, excellent point.
post #5 of 35
Originally Posted by Maestro64 View Post
It is the pirating tax for those not familiar with this. Since the device has the ability to store content which could have been pirated or illegally copied or down load, the manufacturers are required to pay a tax equal to the storage capabilities of the device.


Is there a bank robbery tax on all vehicles to cover illegal actions performed with vehicles? Is there an obesity tax on all food to cover the medical costs of eating too much?

 

If not, they're worthless hypocrites and Apple needs to pay France exactly 6.5 million tons of cow droppings. And then pay the methane tax on that. In the equivalent amount of FURTHER cow droppings.

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post #6 of 35
Quote:
Originally Posted by Maestro64 View Post

It is the pirating tax for those not familiar with this. Since the device has the ability to store content which could have been pirated or illegally copied or download, the manufacturers are required to pay a tax equal to the storage capabilities of the device.

In the EU they feel that everyone should pay the cost of few who do illegal things. It most cases the content owner are getting paid twice if you paid for directly.

 

I also remember the proposal in the U.S. to add a fee to every blank VHS tape or blank CD to make up for piracy. I think they wanted to tax the recorder hardware too.

post #7 of 35

Whether or not the tax makes sense or not, if Apple collected it then it should be paid.

 

And I am assuming they collected it.

post #8 of 35
Is anyone else getting the impression that the EU countries are using Apple as an economic and political piñata...
post #9 of 35
Silly tax--but the article said Apple did collect the money, as law required. If they screwed up and kept the tax, that does need to be rectified.
post #10 of 35
Fascism has made quite a comeback.

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post #11 of 35
Quote:
Originally Posted by SpamSandwich View Post

Fascism has made quite a comeback.

To paraphrase LL Cool J, don't call it a comeback it's been here for years.

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post #12 of 35
Quote:
Originally Posted by Rayz View Post

Whether or not the tax makes sense or not, if Apple collected it then it should be paid.

And I am assuming they collected it.

The article says that they collected it, so it obviously needs to be paid.

I can't imagine Apple intentionally collecting the tax and not paying it, though. I'm guessing there's an accounting error somewhere - either in Apple's system or in SACEM's.
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post #13 of 35
Quote:
Originally Posted by jragosta View Post

The article says that they collected it, so it obviously needs to be paid.

I can't imagine Apple intentionally collecting the tax and not paying it, though. I'm guessing there's an accounting error somewhere - either in Apple's system or in SACEM's.

6.5 million is a rounding error. Apple should sent it to the gov if they did collect the fees.
post #14 of 35
This is the copie privee levy which is applied to all storage media...cd, DVD, USB stick, hdd, cable boxes, tv media players..etc. it's applied retrospectively, is almost impossible to calculate, is not transparent and is not popular, especially with French home grown companies like Archos who feel they are being double taxed. They even went to court over it but the trail is dead since freedom of information is not an established procedure when dealing in taxation matters in France.
post #15 of 35
Quote:
Originally Posted by lkrupp View Post

I also remember the proposal in the U.S. to add a fee to every blank VHS tape or blank CD to make up for piracy. I think they wanted to tax the recorder hardware too.

I believe it was instituted for certain CD types.  So-called "Music CD" or "Consumer CD" blanks (versus "data CD" blanks).  The Consumer CDs were subject to a manufacturer tax, and were higher-priced, as a result. A few CD burners could actually tell the difference between the two types of CD, though the ones for computers generally did not care.  I once had a tabletop device called a "Terrapin" which would encode and burn Video-CDs from an analog source, such as a broadcast signal.  It required "Consumer CD" blanks, and would not work with standard computer data CDs.  Yes, the fact that I was being taxed for piracy when I was merely making VCDs of my home movies did sting.  Sad to see that France (and the EU) want to continue this stupidity.

post #16 of 35
Quote:
Originally Posted by jragosta View Post


The article says that they collected it, so it obviously needs to be paid.

I can't imagine Apple intentionally collecting the tax and not paying it, though. I'm guessing there's an accounting error somewhere - either in Apple's system or in SACEM's.

 

 

Given the tonality of the previous comments, I did not intend to participate to this "discussion", especially given the fact that from a personal standpoint, I also question the usefulness of this tax.....

 

I only wanted to precise to jragosta that the reason for this situation is that Apple challenges the way the amount is calculated, but not the principle itself. This dispute will be settled through the adequate legal body, and Apple has provisioned the amount anyway.

 

To the other commenters, I just want you to notice that this amount is less than 1/10 th of the monthly salary of P Oppenheimer, so, keep cool, I know you live in a wonderful country where taxes do not exist, but ....this is a ridiculous amount for Apple .. and -isms metaphors are somewhat "inappropriate", using a British formulation ....


Edited by umrk_lab - 6/3/13 at 10:53am
post #17 of 35

When they finally invent a transporter like they have in Star Trek, the first trial runs will be between France and San Francisco.

post #18 of 35
Quote:
Originally Posted by Tallest Skil View Post


Is there a bank robbery tax on all vehicles to cover illegal actions performed with vehicles?

 

Oh precisely, it's absolutely ridiculous. Europe is a joke.

post #19 of 35
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Originally Posted by msimpson View Post

When they finally invent a transporter like they have in Star Trek, the first trial runs will be between France and San Francisco.

Luc Besson already invented The Transporter.
Edited by SolipsismX - 6/3/13 at 11:28am

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post #20 of 35
Quote:
Originally Posted by monstrosity View Post

Oh precisely, it's absolutely ridiculous. Europe is a joke.
Welcome to the melting pot - its what we say about American law. 1smoking.gif
post #21 of 35
Quote:
Originally Posted by SolipsismX View Post


To paraphrase LL Cool J, don't call it a comeback it's been here for years.

 

Now you're quoting my favorite rap song... not fair. :D


Edited by SpamSandwich - 6/3/13 at 11:59am

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post #22 of 35
Quote:
Originally Posted by umrk_lab View Post


Given the tonality of the previous comments, I did not intend to participate to this "discussion", especially given the fact that from a personal standpoint, I also question the usefulness of this tax.....

I only wanted to precise to jragosta that the reason for this situation is that Apple challenges the way the amount is calculated, but not the principle itself. This dispute will be settled through the adequate legal body, and Apple has provisioned the amount anyway.

That's the kind of accounting issue I was suggesting.

It's not a case of Apple refusing to pay the tax or collecting tax that they didn't plan to pay. It's a question of just how much they actually owe - which is a factual matter to be resolved, not a reason to attack Apple's integrity (which seems to be the tenor of the original article).
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post #23 of 35

The $6.5 million sum being charged in France is minuscule compared to the billions in income taxes that some believe should be paid in the EU.

 

TFTFY

post #24 of 35
Quote:
Originally Posted by smalM View Post

The $6.5 million sum being charged in France is minuscule compared to the billions in income taxes that some believe should be paid in the EU.

 

TFTFY

 

 

Mind that "some" believe these Billion $ taxes should instead be paid in the US ... or at both places ... Finally, the only consensus is that Apple should pay ....

 

To those interested in how Apple legally (like many other multinational companies) avoids taxes in EU see http://en.wikipedia.org/wiki/Dutch_Sandwich, and you will know everything about the "Dutch sandwich"/ double Irish arrangement

 

 

 

Major companies known to employ the double Irish strategy are:


Edited by umrk_lab - 6/3/13 at 12:30pm
post #25 of 35

In the EU not in every county has this law and the ones that do it is hurting consumers that is for sure, and you wonder why their economy is still sucking wind. In countries which have the tax and they  have DVR service the biggest DVR drive they can get from their service provider is 160GB, since the tax is close to 10 Euro. and the cable company pays this cost not the consumer since they do not buy the cable box. The taxes goes up more then double as the storage capacity doubles.

 

As someone pointed out Apple is arguing the amount of tax is  because the calculation is not simple and it based on actually usable capacity to storage copy protected content. Apple is probably subtracting out the amount used to run the device. Also, Apple is probably not passing the tax on, since in France you can pay the same price for an Ipad as any other EU country. Apple is absorbing the cost for the France citizens. Or the rest of us are subsidizing the French government for it citizens.

post #26 of 35
Quote:
Originally Posted by umrk_lab View Post

... see http://en.wikipedia.org/wiki/Dutch_Sandwich, and you will know everything about the "Dutch sandwich"/ double Irish arrangement

 

I'm not Dutch, but I resemble that remark...

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post #27 of 35
Quote:
Originally Posted by smalM View Post

The $6.5 million sum being charged in France is minuscule compared to the billions in income taxes that some believe should be paid in the EU.

TFTFY

Who believes that? Obviously, not the people who write the laws that Apple is following.

Everything Apple is doing is perfectly legal. They have no obligation (moral or otherwise) to pay more in taxes than required. In fact, their obligation to the shareholders requires them to pay the minimum required taxes - which is what they do.

If EU officials think Apple should be paying more, they are free to write the laws however they think they should be written.
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post #28 of 35

Taxes will solve Apple's cash hoard problems. If Apple pays all the taxes everyone claims they owe because of what the 'intent and spirit' of the tax law were and are then the cash will be gone and Apple will be in debt. No sense in Apple paying only the taxes that Apple is legally obligated to pay because then everyone will criticize them for not paying their 'fair' share.

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post #29 of 35
Quote:
Originally Posted by Realistic View Post

Taxes will solve Apple's cash hoard problems. If Apple pays all the taxes everyone claims they owe because of what the 'intent and spirit' of the tax law were and are then the cash will be gone and Apple will be in debt.

I don't think they've avoided over $20b total and they have $145b cash. Paying expected tax rates wouldn't make a dent on their cash pile. Even repatriating all of it would leave them with over $97b.

All of the money was paid by customers. This $6.5m is collected like sales tax and not really up to Apple to decide on. It goes straight from the customer to the tax recipient. You can see on the French checkout page the fee on the iPad Mini:



The SACEM organisation apparently collects over 800m euros a year, 15% of which goes to pay 1400 staff. That's an average salary of 85k euros/year. Apparently the SACEM president got 750k as a salary. Tax collection is nice work if you can get it.
post #30 of 35
Quote:
Originally Posted by SolipsismX View Post

To paraphrase LL Cool J, don't call it a comeback it's been here for years.

And to paraphrase The Offspring, you're pretty fly for a white guy.
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post #31 of 35
In other news, America orders Apple to immediately start giving out free iPads to everyone not owning any.

What the bloody hell, you can just "imagine" news now?

France did not order Apple to do anything. SACEM, which is the French equivalent of RIAA, did.

If RIAA (or the pro-gun movement, or any kind of non-government thingie) decides to demand something, it doesn't mean the country did it, what kind of "journalism" is this?

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post #32 of 35
Quote:
Originally Posted by Gustav View Post

When Canada had the iPod levy (thankfully, they don't anymore), lots of people used that levy to justify piracy. Be careful, France. Do you want your citizens to think "hey, I already pay money to the artists, why should I pay them twice?"

SACEM is RIAA.

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post #33 of 35
Actually it is not a piracy tax, but rather a tax on your right to copy and re-use a legally acquired content for private purposes. For example you buy a CD, you rip it to put it on your phone, on an other CD for your car etc... It does not give you any right to download content illegally. That being said, the way the amount of this tax is being chosen, and the way it is collected is simply outrageous. And last, this tax is not an invention of the current French government, it has been around for a few years in most European countries.
post #34 of 35
Originally Posted by reroll View Post
…a tax on your right to copy and re-use a legally acquired content for private purposes. For example you buy a CD, you rip it to put it on your phone, on an other CD for your car etc... 

 

I'm unfamiliar with French law, but everything I know about sanity and common sense says that this is ludicrous.

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post #35 of 35
Quote:
Originally Posted by Tallest Skil View Post

I'm unfamiliar with French law, but everything I know about sanity and common sense says that this is ludicrous.

Magnifique!

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