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European Commission to investigate Apple's Ireland tax haven - report

post #1 of 79
Thread Starter 
The competition authority of the European Union is reportedly set to launch a formal investigation on Wednesday into Apple's corporate presence in Ireland, a strategy that it and other companies use to avoid paying taxes.

Cork
Apple's headquarters in Cork, Ireland, via Flickr user Sigalakos.


Additional details on the allegedly impending investigation from the European Commission were not shared by the initial source, Ireland's RTE, according to Reuters. A formal announcement of the investigation is expected to follow.

It's already been established through other investigations that Apple has not broken any laws in utilizing Ireland as a tax haven, so it's unclear exactly what the commission may be seeking in targeting Apple. A U.S. Senate investigation found that Apple paid just 2 percent tax on $74 billion in income made outside America, by moving billions of dollars in profits to affiliate corporations such as Apple Operations International in Ireland, where the effective tax rate is less than 2 percent.

Apple, for its part, has contended that it pays all of the taxes it owes and has broken no laws. Tax laws also force Apple to hold the vast majority of its cash overseas, otherwise it would pay high repatriation rates on bringing that money back to the U.S.

And Apple is not the only company that has set up operations in Ireland for its favorable tax laws. Other major U.S. corporations with a presence there include Google, Microsoft, Facebook, and Amazon.

Facing scrutiny from other countries around the world, legislators in Ireland have expressed interest in closing loopholes that companies use to avoid high taxes. Many companies utilize a strategy famously dubbed the "Double Irish with a Dutch Sandwich," in which funds are routed through the Netherlands to further avoid international taxes.
post #2 of 79
I understand Apple is obeying the local laws but I know the real reason the EU is going after Apple and others is because they don't have any money and haven't figured out a legal and fair way of taxing their people to finance their countries.
post #3 of 79

Interesting. Perhaps an august body should be implemented to find out what these "fact-finders" have been up to since this has been going on for years. Where have these "geniuses" been hiding out, at a local pub?

 

There must come a point where every organization has to justify its existence. Hasn't Apple and all the rest been investigated on this before? The tax officials have been very lax in letting stuff like this happen.

 

Look at the dimwits in the US (congress) who were recently looking into this and when they asked, "What are you doing?" Apple's execs said, in effect, "You tell us. You wrote and passed the laws that allowed us to do this and now you act like we are not patriots."

 

The real problem is, $$$. Somehow, at one time, all this favored senators and congressmen's buddies and so it was OK. Heck, they would get trips to Europe, meals, 5 star hotels etc. Now that the US need money, and lots of it, they are trying to change the direction of the "blame" game. It is "The international corporation's fault, not ours." Send these bastards to jail.

post #4 of 79
For hardware, the way I understand it Apple pays its tax in every EU countries then send the money into Ireland. So its a cash placeholder and it affects US Tax not EU tax. Ireland is a good place to hold cash because Apple can invest its cash and only pay 2% in tax to Ireland on the interest it makes.

For software and services, its another story, it looks like Apple is dodging EU taxes for everything itunes related.

The EU may have a case on itunes sales, but on hardware sales I dont see anything wrong with this.
Edited by herbapou - 6/10/14 at 11:17am
post #5 of 79
Quote:
Originally Posted by rob53 View Post

I understand Apple is obeying the local laws but I know the real reason the EU is going after Apple and others is because they don't have any money and haven't figured out a legal and fair way of taxing their people to finance their countries.


So just like the US then ;-)

post #6 of 79
Apple should just buy the EU. 1wink.gif
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post #7 of 79

I'd offer a special discount on taxes to get this money back to our shores. Maybe it's time to look at lowering marginal rates and broadening the tax base. Simplify the code and regulations. Make it fair and easy. Make it business friendly. Then watch companies disengage from avoidance activities and worry about creating better goods and services.

 

Even liberal Steve Jobs decried the unfriendly business climate. Businesses respond to incentives. If we want things done here...........

post #8 of 79
Quote:
Quote:
Originally Posted by rob53 View Post

I understand Apple is obeying the local laws but I know the real reason the EU is going after Apple and others is because they don't have any money and haven't figured out a legal and fair way of taxing their people to finance their countries.

 

Originally Posted by cnocbui View Post
 

So just like the US then ;-)

Yes in some ways. I should include equitable way of taxing but at least in the US too many people could care less about supporting the country, other than to pay for guns and bombs, and simply insist they should get all kinds of support without contributing. I'm not talking about the disadvantaged people, I'm talking about corporations, investors, people who have more money than they need (made on the backs of others), farmers, grossly high paid athletes and crazy owners, and everyone who gets a benefit from our insane tax code geared to make the honest people (without lawyers) pay more taxes than they should. Other than these I'd just say--yep

post #9 of 79

It's not at all "unclear"... The goal is to extort the rich companies. As simple as that.

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post #10 of 79
Quote:
Originally Posted by digitalclips View Post

Apple should just buy the EU. 1wink.gif

 

Yes. Buy it, sell off the assets and shut it down.

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post #11 of 79
Originally Posted by digitalclips View Post
Apple should just buy the EU. 1wink.gif

 

What, uh… what happens if Italy collapses?

 

Because I’ve heard things. Not about Italy–well, yes, about Italy, but that’s not what I mean–but about the EU in this regard.

 

What happens to the Eurozone if one, two, three of its members collapse?

post #12 of 79
With companies leaving California left and right for more tax friendly states like Texas, it surprises me that Apple choose to build their flagship corporate office in un-business-friendly California.

Just ask Toyota about leaving California for Texas. Don't believe the spin that it had nothing to do with California business costs.
post #13 of 79
Same kind of foolery happens within the U.S. as well. That's why all of Microsoft's software sales are "recognized" in Nevada -- no tax. Apple might do the same - I don't know.
post #14 of 79
Quote:
Originally Posted by Tallest Skil View Post
 

 

What, uh… what happens if Italy collapses?

 

Because I’ve heard things. Not about Italy–well, yes, about Italy, but that’s not what I mean–but about the EU in this regard.

 

What happens to the Eurozone if one, two, three of its members collapse?

 

Obviously the EU should never have allowed mismanaged and economically damaged countries to join.

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post #15 of 79
Quote:
Originally Posted by Masteric View Post

With companies leaving California left and right for more tax friendly states like Texas, it surprises me that Apple choose to build their flagship corporate office in un-business-friendly California.

Just ask Toyota about leaving California for Texas. Don't believe the spin that it had nothing to do with California business costs.

 

Apple has a stake in Texas already and they could certainly add more people there if it becomes necessary. I also don't believe the "torus" is a sound business decision. Some may consider it a monument to Steve Jobs, but I think the best tribute to Jobs would be a fiscally responsible company that continues to grow and innovate and pinch pennies (it really doesn't matter how much money they have in the bank). I have a theory about businesses that when they've grown to the point where people are more concerned about the size of their offices, the quality of their furnishings and the appearance of their buildings, they are too "comfortable" and need a shakeup.

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post #16 of 79
Apple, Google, Microsoft, Facebook, and Amazon are all using this Irish Republic loophole and thereby depriving, mainly the US treasurer, of tax income of some considerable order, that could otherwise be used for social services etc. However this can be justified according to Irish law, it is immoral and should be condemned. It could become a reason for us to cease buying Apple products, which would be a great shame.
post #17 of 79
Originally Posted by greatrix View Post
…that could otherwise be used for social services etc.

 

 
However this can be justified according to Irish law, it is immoral and should be condemned.

 

Paying taxes is immoral?

 
  It could become a reason for us to cease buying Apple products, which would be a great shame.


Thanks for the FUD.

post #18 of 79
Quote:
Originally Posted by greatrix View Post

Apple, Google, Microsoft, Facebook, and Amazon are all using this Irish Republic loophole and thereby depriving, mainly the US treasurer, of tax income of some considerable order, that could otherwise be used for social services etc. However this can be justified according to Irish law, it is immoral and should be condemned. It could become a reason for us to cease buying Apple products, which would be a great shame.

 

Who cares? Government is a living, growing entity since it is made of self-interested people. Unchecked, government will tax and spend without regard to the harm caused to the taxpaying citizenry.

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post #19 of 79
Quote:
Originally Posted by greatrix View Post

Apple, Google, Microsoft, Facebook, and Amazon are all using this Irish Republic loophole and thereby depriving, mainly the US treasurer, of tax income of some considerable order, that could otherwise be used for social services etc. However this can be justified according to Irish law, it is immoral and should be condemned. It could become a reason for us to cease buying Apple products, which would be a great shame.


They are using US tax loopholes more than Irish ones.

post #20 of 79
The main issue is that the US and Irish tax laws are not aligned. Apple (and other American companies) can avoid paying taxes on profits made on software and service sales in Europe, by a simple accounting trick.
In a nutshell, according to the US tax laws the tax should be paid in Ireleand and according to Irish tax laws the tax should be paid in the US. Or the perfect definition of a loophole.
Because all European App Store and iTunes Store sales is handled via Ireland, the amount of avoided taxes is considerable.
So the fact that the EU wants to eliminate such a loophole is quite logical. Apple just happens to be the example wth the biggest impact
post #21 of 79
So I assume they're going to inspect Google, Microsoft and Amazon (and 100 other huge multinational corporations) as well? I'm absolutely certain they all use the double-dutch irish coffee sandwich, or whatever it's called these days, to avoid taxes.
post #22 of 79
Quote:
Originally Posted by SpamSandwich View Post

Apple has a stake in Texas already and they could certainly add more people there if it becomes necessary. I also don't believe the "torus" is a sound business decision. Some may consider it a monument to Steve Jobs, but I think the best tribute to Jobs would be a fiscally responsible company that continues to grow and innovate and pinch pennies (it really doesn't matter how much money they have in the bank). I have a theory about businesses that when they've grown to the point where people are more concerned about the size of their offices, the quality of their furnishings and the appearance of their buildings, they are too "comfortable" and need a shakeup.
Lest I remind you: Steve Jobs lobbied his cancer-stricken butt off for the building permits and the authorization needed from Cupertino to build "The Torus". I rather think he considered a tribute to the people that made Apple to what is today, surely realizing he (probably) wouldn't be around to enjoy it himself... 1frown.gif
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post #23 of 79
This appleinsider write-up does somewhat look like it is lobbying on behalf of Apple.
post #24 of 79
Quote:
Originally Posted by r00fus View Post

So I assume they're going to inspect Google, Microsoft and Amazon (and 100 other huge multinational corporations) as well? I'm absolutely certain they all use the double-dutch irish coffee sandwich, or whatever it's called these days, to avoid taxes.

Yes of course their also going after the companies you listed and others as well, it would help if you actually read the article before calling foul.
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post #25 of 79
Quote:
Originally Posted by greatrix View Post

Apple, Google, Microsoft, Facebook, and Amazon are all using this Irish Republic loophole and thereby depriving, mainly the US treasurer, of tax income of some considerable order,

Nonsense.

They are using the irish/dutch loophole to avoid paing taxes in Europe for the money the earned in Europe!

And then, by not patriating the money they got this way, they avoid paying taxes in the US - but that are loopholes in US law.

(BTW it is not repatriating - the money wasn't in the US before)

post #26 of 79
Quote:
Originally Posted by Tallest Skil View Post
 

 

 

Paying taxes is immoral?


The old covenant required 10 percent.  If man requires more from his fellow man then God, then yes, maybe it is immoral!

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post #27 of 79
Quote:
Originally Posted by ThePixelDoc View Post

Lest I remind you: Steve Jobs lobbied his cancer-stricken butt off for the building permits and the authorization needed from Cupertino to build "The Torus". I rather think he considered a tribute to the people that made Apple to what is today, surely realizing he (probably) wouldn't be around to enjoy it himself... 1frown.gif

I'm aware of that.

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post #28 of 79
Quote:
Originally Posted by Masteric View Post

With companies leaving California left and right for more tax friendly states like Texas, it surprises me that Apple choose to build their flagship corporate office in un-business-friendly California.

Just ask Toyota about leaving California for Texas. Don't believe the spin that it had nothing to do with California business costs.

 

Apple stays in California because it's easy to attract the calibre of employee they need to California. It's easy to move manufacturing jobs to Texas. because it's an employer's market. It's less easy to move engineering jobs because it's an employee's market.

 

California keeps its taxes high because it knows that it has more to offer than just low taxes. It's only shit-hole states that no-one wants to live in that have to lower their taxes to attract business.

 

The same applies to Europe. 

post #29 of 79
Quote:
Originally Posted by greatrix View Post

Apple, Google, Microsoft, Facebook, and Amazon are all using this Irish Republic loophole and thereby depriving, mainly the US treasurer, of tax income of some considerable order, that could otherwise be used for social services etc. However this can be justified according to Irish law, it is immoral and should be condemned. It could become a reason for us to cease buying Apple products, which would be a great shame.

They are doing nothing illegal. Try living in the real world where companies and people only pay what they have to and no more. A company who paid extra taxes voluntarily would be sued by its' shareholders.

 

Will never happen!

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post #30 of 79
Quote:
Originally Posted by SpamSandwich View Post
 

 

Apple has a stake in Texas already and they could certainly add more people there if it becomes necessary. I also don't believe the "torus" is a sound business decision. Some may consider it a monument to Steve Jobs, but I think the best tribute to Jobs would be a fiscally responsible company that continues to grow and innovate and pinch pennies (it really doesn't matter how much money they have in the bank). I have a theory about businesses that when they've grown to the point where people are more concerned about the size of their offices, the quality of their furnishings and the appearance of their buildings, they are too "comfortable" and need a shakeup.

You are welcome to disagree with me on this, but I would suggest that money is better spent attracting the best talent than on furnishings. I would rather see it invested in people rather than luxuries, and for what it's worth, I am fairly thrifty with my own spending by any standard.

 

Quote:
Originally Posted by r00fus View Post

So I assume they're going to inspect Google, Microsoft and Amazon (and 100 other huge multinational corporations) as well? I'm absolutely certain they all use the double-dutch irish coffee sandwich, or whatever it's called these days, to avoid taxes.

They have inspected each of those companies. You just weren't aware of it. In some cases it is ongoing. The articles go back several years, but not all of them appeared on AI.

post #31 of 79
Quote:
Originally Posted by greatrix View Post

Apple, Google, Microsoft, Facebook, and Amazon are all using this Irish Republic loophole and thereby depriving, mainly the US treasurer, of tax income of some considerable order, that could otherwise be used for social services etc. However this can be justified according to Irish law, it is immoral and should be condemned. It could become a reason for us to cease buying Apple products, which would be a great shame.

Oh please. Everyone looks for deductions and it's all legal. I'm sure you pay all your taxes including sales tax for online sales, right?
post #32 of 79
Quote:
Originally Posted by herbapou View Post

For hardware, the way I understand it Apple pays its tax in every EU countries then send the money into Ireland. So its a cash placeholder and it affects US Tax not EU tax. Ireland is a good place to hold cash because Apple can invest its cash and only pay 2% in tax to Ireland on the interest it makes.

For the hardware Apple doesn't pay tax, the customer does. Same with income tax, the employees pay that.
post #33 of 79
Quote:
Originally Posted by digitalclips View Post

Apple should just buy the EU. 1wink.gif

And shut it down.
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post #34 of 79
Quote:
Originally Posted by SpamSandwich View Post

Quote:
Originally Posted by Tallest Skil View Post

 

What, uh… what happens if Italy collapses?

Because I’ve heard things. Not about Italy–well, yes, about Italy, but that’s not what I mean–but about the EU in this regard.

What happens to the Eurozone if one, two, three of its members collapse?

Obviously the EU should never have allowed mismanaged and economically damaged countries to join.

Maybe. But then it would consist of no countries. Bit like a perfectly-run hospital with no patients.
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post #35 of 79
Quote:
Originally Posted by greatrix View Post

Apple, Google, Microsoft, Facebook, and Amazon are all using this Irish Republic loophole and thereby depriving, mainly the US treasurer, of tax income of some considerable order, that could otherwise be used for social services etc. However this can be justified according to Irish law, it is immoral and should be condemned. It could become a reason for us to cease buying Apple products, which would be a great shame.

Is your name Ricks and you are great, or Trix and you are grey?
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post #36 of 79

Reforming tax law is one of those things like trying to reform patent law. It is almost impossible because big corporations have unlimited lobbying budgets. Just because something is legal doesn't make it ethical. Everyone knows what Apple and others are doing with the Ireland EU HQ. The fact that they charge themselves huge royalties on patent licensing to avoid taxes in every other country, is really a gray area. 

 

As a private citizen, perhaps I should register a patent on "method and process for living in my house". It is completely original because no one else has ever lived in my house. Then I can charge myself huge royalties to license the patent of "method and process for living in my house", allowing me to deduct that from my income statement and pay nothing in taxes.

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post #37 of 79
Quote:
Originally Posted by AppleInsider View Post

It's already been established through other investigations that Apple has not broken any laws in utilizing Ireland as a tax haven, so it's unclear exactly what the commission may be seeking in targeting Apple.

$ and 

post #38 of 79
Quote:
Originally Posted by herbapou View Post

For hardware, the way I understand it Apple pays its tax in every EU countries then send the money into Ireland. So its a cash placeholder and it affects US Tax not EU tax. Ireland is a good place to hold cash because Apple can invest its cash and only pay 2% in tax to Ireland on the interest it makes.

For software and services, its another story, it looks like Apple is dodging EU taxes for everything itunes related.

The EU may have a case on itunes sales, but on hardware sales I dont see anything wrong with this.

If that's the case, then that seems to explain the "region locking" by store pushed by Apple, Nintendo, Microsoft, Steam, etc is to force the taxes and royalties to be paid to the correct countries media monopoly and tax system. Think about it. If the taxes are the lowest in Ireland, everyone in the EU would buy from the Ireland iTunes store.

I think what needs to happen, realistically, is that the "internet" needs to be treated as it's own country for the purposes of tax and laws are concerned. Between each country and state unwillingness or strongarming of/by corporations, each piece of the internet falls under different laws and regulations. This would at least move the question of "what is legal" to the physical realm. If a user is pirating a video or watching Netflix, would not be a decision left to the ISP and/or the physical country the user is in. Taxes collected "inside" the internet would only go to fund infrastructure supporting the internet pathways used in that transaction and not into the purse of the country whom the end points terminate in. That would put capacity investment right where it is needed.
post #39 of 79
Quote:
Originally Posted by jfanning View Post


For the hardware Apple doesn't pay tax, the customer does. Same with income tax, the employees pay that.

 

That is an overly simplified view of it, because demand isn't entirely elastic. Using a rather extreme example, Apple could in theory price each iphone at $10k today. This would offer a higher gross margin per device, but it's unlikely that they would sell enough of them to maintain a viable product line. Changes in taxes can affect the price paid, but it isn't the only factor. They do in fact have to balance what is considered an acceptable margin against how many would sell at that price. It would be different if the devices were right on the edge of being profitable where a few percentage points could push them into a loss. That isn't the case here, so they have a certain amount of leeway when it comes to pricing structure. Apple much like other companies also rounds to certain price points, so any impact on costs must be great enough to motivate a pricing difference of $50 or $100 depending on the price range of that product.

post #40 of 79

When you have so much money that you don't know what to do with and only pay 2% tax there's something wrong

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