Luxembourg official sticks up for Apple's iTunes operations in EU
Responding to a The New York Times report on Apple's efforts to reduce its tax bill, a Luxembourg trade official has spoken up in defense of the company's operations.
Georges Schmit, executive director of the Luxembourg Trade and Investment Office in San Francisco, defended Apple in a letter to the editor published by the Times on Monday.
The letter specifically took issue with an assertion from a report by the publication last month that Luxembourg had "promised" to tax Apple and other corporations at a low rate if they routed transactions through the country. The report, part of the publication's iEconomy series on Apple, portrayed the company as dodging billions of dollars in taxes each year.
Schmit argued that the Luxembourg-based operations of Apple's iTunes and other tech companies are "not the result of these e-service providers' intent to cheat the taxman," but rather "the consequence of a combination" of the following factors:
Apple itself has responded to the original report with a statement highlighting the "incredible number of jobs" that it has created in the U.S. in recent years.
Source: TechNet
"By focusing on innovation, we've created entirely new products and industries, and more than 500,000 jobs for U.S. workers ? from the people who create components for our products to the people who deliver them to our customers," the statement read. "Apple's international growth is creating jobs domestically since we oversee most of our operations from California."
Georges Schmit, executive director of the Luxembourg Trade and Investment Office in San Francisco, defended Apple in a letter to the editor published by the Times on Monday.
The letter specifically took issue with an assertion from a report by the publication last month that Luxembourg had "promised" to tax Apple and other corporations at a low rate if they routed transactions through the country. The report, part of the publication's iEconomy series on Apple, portrayed the company as dodging billions of dollars in taxes each year.
Schmit argued that the Luxembourg-based operations of Apple's iTunes and other tech companies are "not the result of these e-service providers' intent to cheat the taxman," but rather "the consequence of a combination" of the following factors:
The official concluded by noting that both Luxembourg and iTunes S.?.r.l. "simply apply" E.U. tax law in a "well-functioning Internet-based E.U. single market.
- European indirect tax law applicable to cross-border business-to-consumer transactions in e-services.
- A well-functioning E.U. internal market, which allows for cross-border trade of all e-services from a single location to all other 26 national markets.
- The lowest tax rate in the applicable 15 to 25 percent range for standard VAT rates in the 27 European Union member states. So, iTunes S.?.r.l. collects 15 eurocents for every euro spent on iTunes services in VAT from each and every customer, wherever he or she is in the European Union.
Apple itself has responded to the original report with a statement highlighting the "incredible number of jobs" that it has created in the U.S. in recent years.
Source: TechNet
"By focusing on innovation, we've created entirely new products and industries, and more than 500,000 jobs for U.S. workers ? from the people who create components for our products to the people who deliver them to our customers," the statement read. "Apple's international growth is creating jobs domestically since we oversee most of our operations from California."
Comments
Another non story about this stupid tax stuff....Lets get over it and move on to when the new Iphone is coming out.
Quote:
Originally Posted by Ed Steinberg
Another non story about this stupid tax stuff....Lets get over it and move on to when the new Iphone is coming out.
October. How is THAT news? How about when the new MacBook family is being released, instead? And the iMac, and the Mac Mini, and the Mac Pro.
… And then Apple slips us a curveball and discontinues all of them.
Point 1, rubbish, if itunes want to sell to my country the better get taxed directly according to the same country rules I am getting taxed by and everyone is getting taxed by, point 2 is bs all markets within the EU are well functioning enough to have itunes operating from them and trade an e-service cross borders, point 3 is rubbish as well, this just gives apple a wider margin, it's not benefiting me, I 'd benefit from having them pay my government the same VAT every business working within my nation state has to pay.
Luxembourg might be having the time of their life in their mini tax haven over there, but when the whole of Europe is going from one recession to another with basic public sector services being cut one after the other and unemployment rates hitting 20% they have some nerve claiming they should get away with offering the lowest VAT rates to apple because they don't have any population or government expenses to support via VAT taxation to begin with. European leaders should get their act together and stop this insanity from taking place. And it's certainly not just about apple. European e-service offering businesses cannot pick and chose where they get taxed in Europe and play one against the other. It's as simple as that. If apple or any other business think it's not a viable business proposition for them to offer a service with the current VAT taxation of said country they should simply not be offering it.
All in all the most rubbish reply I 've heard in a long time.
Quote:
Originally Posted by Ed Steinberg
Another non story about this stupid tax stuff....Lets get over it and move on to when the new Iphone is coming out.
Speak for yourself, and make a minimum effort to inform yourself about world politics once in a while, it will make you sound a bit less insultingly ignorant.
Apple pays all the taxes that they are legally obligated to pay. ff you don't like what Apple pays for taxes then work to get the laws changed. Don't blame Apple for not volunteering to pay more than the existing tax laws mandate.
As far as I'm concerned, the NYT can go F#!K themselves. Apple is not doing anything illegal, and they are taking advantage of all tax-savings techniques that our good-old U.S. of A. government has approved of.
You want to point the finger at someone? Point it directly at the government(s). Whether it's a multi-billion dollar corporation or the humble Joe-Taxpayer, we will all do what we can to legally pay only what we're required to pay, and not a penny more.
Can't someone throw a brick and the jackoffs at NYT? It's obvious they have an anti-Apple agenda.
Quote:
Originally Posted by myapplelove
Point 1, rubbish, if itunes want to sell to my country the better get taxed directly according to the same country rules I am getting taxed by and everyone is getting taxed by, point 2 is bs all markets within the EU are well functioning enough to have itunes operating from them and trade an e-service cross borders, point 3 is rubbish as well, this just gives apple a wider margin, it's not benefiting me, I 'd benefit from having them pay my government the same VAT every business working within my nation state has to pay.
Luxembourg might be having the time of their life in their mini tax haven over there, but when the whole of Europe is going from one recession to another with basic public sector services being cut one after the other and unemployment rates hitting 20% they have some nerve claiming they should get away with offering the lowest VAT rates to apple because they don't have any population or government expenses to support via VAT taxation to begin with. European leaders should get their act together and stop this insanity from taking place. And it's certainly not just about apple. European e-service offering businesses cannot pick and chose where they get taxed in Europe and play one against the other. It's as simple as that. If apple or any other business think it's not a viable business proposition for them to offer a service with the current VAT taxation of said country they should simply not be offering it.
All in all the most rubbish reply I 've heard in a long time.
So the blame still falls solely on the world governments. This has nothing to do with Apple or any other company for that matter. They should not have to pay any more tax than they are legally obligated to pay.
Quote:
Point 1, rubbish, if itunes want to sell to my country the better get taxed directly according to the same country rules I am getting taxed by and everyone is getting taxed by, point 2 is bs all markets within the EU are well functioning enough to have itunes operating from them and trade an e-service cross borders, point 3 is rubbish as well, this just gives apple a wider margin, it's not benefiting me, I 'd benefit from having them pay my government the same VAT every business working within my nation state has to pay.
Luxembourg might be having the time of their life in their mini tax haven over there, but when the whole of Europe is going from one recession to another with basic public sector services being cut one after the other and unemployment rates hitting 20% they have some nerve claiming they should get away with offering the lowest VAT rates to apple because they don't have any population or government expenses to support via VAT taxation to begin with. European leaders should get their act together and stop this insanity from taking place. And it's certainly not just about apple. European e-service offering businesses cannot pick and chose where they get taxed in Europe and play one against the other. It's as simple as that. If apple or any other business think it's not a viable business proposition for them to offer a service with the current VAT taxation of said country they should simply not be offering it.
All in all the most rubbish reply I 've heard in a long time.
Is this like one state in the US subsidizing Apple more than another state in the US?
Quote:
Originally Posted by myapplelove
Luxembourg might be having the time of their life in their mini tax haven over there, but when the whole of Europe is going from one recession to another with basic public sector services being cut one after the other and unemployment rates hitting 20% they have some nerve claiming they should get away with offering the lowest VAT rates to apple because they don't have any population or government expenses to support via VAT taxation to begin with. European leaders should get their act together and stop this insanity from taking place.
Most Europeans not living in countries that recklessly overspent their income for the last decade and more don't pin the blame on companies not paying enough taxes or wealthy small countries luring business away. The Czechs are getting tired of austerity measures in their own country, but they are fully convinced that Greece's problems are solely of Greece's making (and the same for Spain, Italy, Portugal, etc.). I don't know if you're European or living in Europe, but at least the people I encounter every day would disagree with your statement.
Apple sells its products everywhere in the world and directly and indirectly employs thousnad of people all over the world. They have offices all over the world. They pay taxes in countries spread around the world. Why do the Americans think they have the right to collect all of the world's taxes in USA , deprive other countries of tax revenue and risk increasing the price for us consumers everywhere else?
This is not Apple's issue. This is a geo-political issue. If other countries provide a better tax environment than USA, then Apple owes it to its shareholders and customers to take advantage of the benefits. Just as US states compete for business with tax breaks, so do countries. If America wants to attract more HQ presence than it already has, change your laws to earn it and stop bitching when you lose to the competition.
European Union is NOT a Federation, taxes are different in each country, Luxembourg is a well know fiscal off shore.. so not well seen by other European Countries, even way Luxembourg don't have any power on taxes Apple will pay in each European Country, Luxembourg wants that, but most likely Apple will have different taxes depending the country is selling, even online! And now that European Union is turning left because of the right wing austerity mesures! The 99% movement and so on
Quote:
Originally Posted by myapplelove
Point 1, rubbish, if itunes want to sell to my country the better get taxed directly according to the same country rules I am getting taxed by and everyone is getting taxed by, point 2 is bs all markets within the EU are well functioning enough to have itunes operating from them and trade an e-service cross borders, point 3 is rubbish as well, this just gives apple a wider margin, it's not benefiting me, I 'd benefit from having them pay my government the same VAT every business working within my nation state has to pay.
Luxembourg might be having the time of their life in their mini tax haven over there, but when the whole of Europe is going from one recession to another with basic public sector services being cut one after the other and unemployment rates hitting 20% they have some nerve claiming they should get away with offering the lowest VAT rates to apple because they don't have any population or government expenses to support via VAT taxation to begin with. European leaders should get their act together and stop this insanity from taking place. And it's certainly not just about apple. European e-service offering businesses cannot pick and chose where they get taxed in Europe and play one against the other. It's as simple as that. If apple or any other business think it's not a viable business proposition for them to offer a service with the current VAT taxation of said country they should simply not be offering it.
All in all the most rubbish reply I 've heard in a long time.
Well its fairly intresting I think.
A German Company-> sells via internet to eg Finland 17,5% VAT (Finland 23%). OK thjis I understand. They are physically sending their parcels from Germany.
Apply itunes store -> sells via internet to eg Finland? Is the shop in Luxemburg? Why when I go to the appstore or it specifically says itunes/app store finland. When i find something intresting on the web thats not available in Finland I have to change my shop to another national shop?!?! And Apple still doesnt pay local VAT??? I wonder how they get to call it a "national shop" when it infact is not.
Sounds abit fishy to me...
This is not a non-story, this is a huge issue. As a European consumer (I live in Germany) one has to pay VAT/Sales Tax. This is almost 20% of the purchase price! Instead of this money staying in the country where I live AND make the purchase, and being used for local means, it simply goes to Luxembourg. Moreover since Apple avoids paying corporate taxes in Germany, more money is siphoned off instead of staying here locally and being put to good use. After reading the NYTimes article I am boycotting Apple and eBay and other companies who willingly take advantage of this absurd European Tax Laws. Think of it this way: it is as if a consumer in New York has to pay MORE for an iTunes purchase, so that somebody in Rhode Island has a few more pennies in their pocket, meanwhile Apple POCKETS the money that you as a consumer are paying in additional taxes. I say to Apple, DON'T BE EVIL.
This is not a non-story, this is a huge issue. As a European consumer (I live in Germany) one has to pay VAT/Sales Tax. This is almost 20% of the purchase price! Instead of this money staying in the country where I live AND make the purchase, and being used for local means, it simply goes to Luxembourg. Moreover since Apple avoids paying corporate taxes in Germany, more money is siphoned off instead of staying here locally and being put to good use. After reading the NYTimes article I am boycotting Apple and eBay and other companies who willingly take advantage of this absurd European Tax Laws. Think of it this way: it is as if a consumer in New York has to pay MORE for an iTunes purchase, so that somebody in Rhode Island has a few more pennies in their pocket, meanwhile Apple POCKETS the money that you as a consumer are paying in additional taxes. I say to Apple, DON'T BE EVIL.
it looks like you dont have to boycott Apple... Germany is already doing it for you... via the icloud patent mess etc.
Your outrage seems similiar to that German WWII dude.. (hint: that dreaded four letter 'N' word; "get rid of it instead of living with it")
No. Instead of you paying 20% VAT, you only pay 15% VAT, because of Apple's structure.
It is this way to allow businesses to freely trade across the EU. It is no different that the benefit a German company receives by only needing to collect 20% VAT in another EU nation with a 25% rate.
It does lower the tax base, and is generally similar to what Amazon does to retail operations in the US to dodge sales tax. The justifications are also the same-- market transparency.
Just understand that it isn't just Apple and Luxemborg prospering from this. It
Is the final consumer, and many other businesses operating "normally" inside the EU.
Quote:
Originally Posted by GregInPrague
Most Europeans not living in countries that recklessly overspent their income for the last decade and more don't pin the blame on companies not paying enough taxes or wealthy small countries luring business away. The Czechs are getting tired of austerity measures in their own country, but they are fully convinced that Greece's problems are solely of Greece's making (and the same for Spain, Italy, Portugal, etc.). I don't know if you're European or living in Europe, but at least the people I encounter every day would disagree with your statement.
I wouldn't want to meet the people you do everyday because I don't suffer fools gladly, and I dislike ignorance. The South of Europe are not close to financial collapse because they have been overspending collectively, are lazy, blah blah fill in the blanks. There's a systemic political and financial problem in Europe which became pronounced to the point of threatening European unity and fiscal stability ever since some bozos in the US. and elsewhere where speculating at 30 and 40 to one exposures on a world bubble and making money off of an economy they thought wouldn't and couldn't fail. It's the same story since time immaterial: Greed. Since 2008 the public of each country in the West has paid the banks many times over to avoid a financial collapse but world finance remains as unruly as ever, and the bonuses for bankers are still as high as they ever were. This crisis hurt Europe the most because unlike the states they are not a political union as well and the weakest links of course have suffered the most (not that they didn't have their own share of political and fiscal misconduct within, but that certainly isn't the main cause of the problem). If the South of Europe are so bad at handling things, how come a powerful nation as the UK with its own currency and strong allegiance to the US (i.e. another pole of financial power) are in a double dip recession currently?
Quote:
Originally Posted by Realistic
Apple pays all the taxes that they are legally obligated to pay. ff you don't like what Apple pays for taxes then work to get the laws changed. Don't blame Apple for not volunteering to pay more than the existing tax laws mandate.
You bet I 'll blame apple and any other megaconglomerate that have the politicians in their pocket and will do whatever they can to lobby (aka bribe) them so the laws stay the way they are. If you think 40 billion a year can't buy you the laws you want you are either too naive or 10 years of age. If the politicians running Europe at the moment had any balls they would tell apple to either pay up the vat difference to each country for the time they've been trading in Europe via Luxembourg or get the **** out of the market and sell elsewhere. When the population living below the poverty line in most of Europe is at a minimum of 15 to 20 per cent, I think this might be warranted. How many jobs is apple creating in Europe anyway that it can leach on it like that via loopholes? Compared to the money they make the jobs they create are like a drop in the ocean.
Quote:
Originally Posted by aaarrrgggh
No. Instead of you paying 20% VAT, you only pay 15% VAT, because of Apple's structure.
It is this way to allow businesses to freely trade across the EU. It is no different that the benefit a German company receives by only needing to collect 20% VAT in another EU nation with a 25% rate.
It does lower the tax base, and is generally similar to what Amazon does to retail operations in the US to dodge sales tax. The justifications are also the same-- market transparency.
Just understand that it isn't just Apple and Luxemborg prospering from this. It
Is the final consumer, and many other businesses operating "normally" inside the EU.
Spare us the condescension of the "just understand" when it's you who doesn't know what you are talking about. So Luxembourg are hosting apple out of their good will and care for the European consumer? What a load of rubbish.
The point is simply apple isn't paying the full VAT to the country they are selling to because they prefer to pay a lower VAT. It's not the consumer who benefits. Apple should pay local tax, and either lower their margins or price up and I as a consumer I will decide if their proposition is worth it or not.
They can get away with paying lower VAT to Luxembourg because they are offering an e-service and Luxembourg as one of the smallest countries, by far and away, in Europe can lower the VAT pretty much at will because they don't have neither the state, nor the army, nor the schools, nor the infrastructure and public service to support as others do. It's more than insulting to tell us that it's not apple prospering from this but the final consumer who is "prospering". Oh boy, I am so glad apple is there and luxembourg too, looking after my best interests, helping me prosper because they have the european consumer so close to their heart, I feel all warm and fuzzy inside just now.
And it's not the same as in the US because Europe doesn't have, as one example, common armed forces, Luxembourg is not going to pay for the expenses for the armed forces of the South for example who are also the frontline of Europe towards Asia and Africa.
But boy this forum will try to spin the unspinable in favour on apple...
Under EU rules, what Apple is doing is perfectly legal. If EU countries don't like it, they should change the rules.
It's akin to the tax situation with U.S. states. It's easy for someone like Amazon to gain a competitive edge over local retailers because they don't charge sales tax. That's perfectly legal. However, there is growing pressure for sales tax to apply to all merchants, whether they have a presence in the state or not. That would level the playing field.
If EU is concerned enough about the amount of tax revenue that Luxembourg is receiving, they should change the rules. Attacking a company for following the rules properly doesn't make any sense.
Have to reply:
to myapplelove: Although I agree in a part with your analysis of current financial problems, your understanding of VAT is a bit backwards. It's always the customer who pays VAT, Apple sets the price and the country where the sale is registered adds the VAT. The VAT difference between the 15% and 21 for example (Belgium) does not stay in apple's pockets. It stays in mine!
I agree that there is a moral problem with paying VAT in an other country than your own. Apple itself, only recently changed their policies concerning cross national sells in their online apple store (hardware). It used to be possible to buy a mac in France with a Belgian billing address. This is not possible anymore. If I go to amazon.fr or amazon.co.uk I still can order an item and pay the VAT in France or UK.
Concluding, the free transfer of goods is a very good thing in Europe, I hate the border control when I travel to let's say Switzerland and has been very good for businesses across all borders. However the European government should revise the legislation regarding to internet sales. However paying the VAT in your country of residence will mean no more 0.99 or 1.29 euro songs across European markets and will probably mean prices will go up for most consumers.
I think a cross national VAT for internet purchases in Europe would be the only good solution, paid in country of residence.
Cheers,
Mz
Quote:
Originally Posted by sflocal
So the blame still falls solely on the world governments. This has nothing to do with Apple or any other company for that matter. They should not have to pay any more tax than they are legally obligated to pay.
This is true only to the extent that the government and corporations are separate. In the US, companies pay the way for legislators and actually provide text for legislation they want passed. There is a revolving door between legislators and their aides and paid corporate lobbyists. Therefore, blame for laws which benefit corporations at the expense of the public may be placed on corporations sometimes.