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

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Comments

  • Reply 41 of 78
    philboogiephilboogie Posts: 7,451member
    relic wrote: »
    Just Ireland, in general European's pay more in tax's then the US does, do to our social programs, check out how much Sweden pays it will make your head spin.

    Hungary is even 2% higher, @ 27%
    http://en.wikipedia.org/wiki/Value_added_tax#EU_countries
  • Reply 42 of 78
    hmmhmm Posts: 3,405member
    Quote:

    Originally Posted by RichL View Post

     

     

    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. 




    Blah I meant to respond to this one too. Note that a large percentage of it is around Austin, which isn't a highly "conservative" (I hate that term, but I can't think of a better word here) area. It lacks the beautiful weather and nice beaches of California, and in terms of cities I prefer San Francisco. Seattle is a very nice city with a number of tech companies and other corporate hubs, yet it has a very low tax rate. There are a lot of things that contribute to these issues. Some of California's big cities have suffered severe mismanagement at times and wasteful spending on insolvent projects. Some of San Diego's construction projects come to mind. Los Angeles suffers from being extremely spread out combined with problems in trying to improve public transportation due to lack of space for more freeways. Most of them go around the important areas, and getting into downtown for either the garment or financial districts is a mess. They're not all easily solvable problems, but California has enough debt and expenses that they lack a viable alternative. The nice things about the state keep people here, but they aren't the direct cause of its tax rates. Another part you might not know is that California has unusually low property tax rates. They cannot rise more than 2% per year unless the property changes ownership. There was also some temporary relief in that area enacted around the time of the housing crisis. That is made up elsewhere via corporate and  personal state income tax as well as the state portion of sales tax (municipalities sometimes add onto that). It's also important to note that if you own a registered business, you typically owe local tax, even though many grant things like small business exemptions under an arbitrary level of gross receipts.

     

    Blah that got pretty long, but I figured you may not be aware of all of that if you reside in the UK.

  • Reply 43 of 78
    MacProMacPro Posts: 18,352member
    Yes. Buy it, sell off the assets and shut it down.

    That was my thought too ... :D
  • Reply 44 of 78
    MacProMacPro Posts: 18,352member
    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?

    Dude, if Apple bought it Tim would be running things ... no worries. :smokey:
  • Reply 45 of 78
    gimarbazat wrote: »
    When you have so much money that you don't know what to do with and only pay 2% tax there's something wrong
    The 2% is more myth than fact.

    It is more like 0.25%.
  • Reply 46 of 78
    relicrelic Posts: 4,735member
    philboogie wrote: »

    Wow, Budapest is defiantly one of my favorite cities. Because going to the dentist is so freaken expensive here, we have what we call holiday teeth repair trips, in which you go for a three day vacation in Budapest for the sole purpose of seeing the dentist. When I was healthier I used to go twice a year with the kids.
  • Reply 47 of 78
    richlrichl Posts: 2,213member
    Quote:

    Originally Posted by hmm View Post

     

    Blah that got pretty long, but I figured you may not be aware of all of that if you reside in the UK.


     

    I wasn't so thanks!

  • Reply 48 of 78
    pbpb Posts: 4,233member
    Quote:

    Originally Posted by digitalclips View Post



    Apple should just buy the EU. image

     

    Apple does not want to choke to death. image

  • Reply 49 of 78
    pbpb Posts: 4,233member
    Quote:

    Originally Posted by Tallest Skil View Post

     

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


     

    They won't let that happen. See the example of Greece.

  • Reply 50 of 78
    pbpb Posts: 4,233member
    Quote:

    Originally Posted by Relic View Post





    Wow, Budapest is defiantly one of my favorite cities. Because going to the dentist is so freaken expensive here, we have what we call holiday teeth repair trips, in which you go for a three day vacation in Budapest for the sole purpose of seeing the dentist. When I was healthier I used to go twice a year with the kids.



    Off topic: I heard the same thing about some Balkan countries as well. Much cheaper than EU zone, but also (much?) more risky from a sanitary point of view. What about Hungary? Is it considered good enough by EU standards in this sector?

  • Reply 51 of 78
    jfanningjfanning Posts: 3,390member
    hmm wrote: »
    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.

    How is it a simplified view? Sales tax is added as a percentage of the sellers price, and the customer pays it, no matter what the price is, the customer pays the sales tax
  • Reply 52 of 78
    hmmhmm Posts: 3,405member
    Quote:

    Originally Posted by jfanning View Post





    How is it a simplified view? Sales tax is added as a percentage of the sellers price, and the customer pays it, no matter what the price is, the customer pays the sales tax



    Oh sorry I thought we were including other taxes as well given the discussion. By that I mean that people often mention that people are the ones who pay corporate tax, which is why I said it's one of many factors in determining final pricing. Anyway you are correct. Sales tax is paid for directly by the consumer, although it sometimes influences purchasing habits. I didn't mean to imply otherwise.

  • Reply 53 of 78
    herbapouherbapou Posts: 2,221member
    jfanning wrote: »
    For the hardware Apple doesn't pay tax, the customer does. Same with income tax, the employees pay that.

    I meant corporate income tax. Of course they give sale tax back to the appropriate gov.
  • Reply 54 of 78
    djsherlydjsherly Posts: 1,022member
    Maybe the better way is for nation states to sell access to its consumers, like apple does to its developers. Charge, say 30% for each transaction executed by an organisation against one of its citizens and be done with it.
  • Reply 55 of 78
    greatrixgreatrix Posts: 95member

    It could become a problem for such companies in the UK. A well known coffee chain recently had to give in over this in response to public opinion, once their tax evasion 'scam' was given publicity in the press. As 'gimarbazat' says, it's not as if Apple is short of cash.

  • Reply 56 of 78
    krabbelenkrabbelen Posts: 243member
    Quote: @herbapou

     


    "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."


     

    It's not about hardware vs. software, nor is it "dodging" ...It's about physical location of sales. As far as VAT anyway, the following holds true (and I would imagine that other taxes would be similar) :

     

    If the location of sales is a physical store within an EU country -- ie, a brick-and-mortar Apple Store or reseller, then the sale is booked in that country. If the sale is online, then it doesn't matter what country the buyer is in: the sale is made where the vendor has set up for the region (in this case, Ireland -- and the product is shipped from Ireland, anyway). It is not "dodging" to say that your online sales mechanism is based in and originates in Ireland. And of course, most of Apple's EU sales will be online sales, not made at physical stores.

     

    I have a business in the Netherlands. I offer web services, and my business is conducted online. I have customers around the globe. If my customer is based in the EU, then I am obligated, as a Dutch resident, to charge him VAT -- at the Netherlands rate, for the Netherlands, not at my customer's national rate. My UK customer is contributing to VAT for the Netherlands. If my customer is outside EU, I do not add VAT. Just because Apple has an /nl online store doesn't mean it has anything to do with the Netherlands physically; whereas my "UK" services are subject to NL tax, because that is where I reside. Likewise, I file and pay corporate tax in NL, not in UK, even if I have customers there... because I do my work in the Netherlands, (even if I host a site in the UK -- in which case the host is subject to UK tax).

     

    As an EU resident, you pay the VAT in the vendor's location. This is an EU wide agreement. Likewise, wouldn't the vendor pay corporate tax only in his location? It seems very simple.

  • Reply 57 of 78
    croprcropr Posts: 954member
    Quote:
    Originally Posted by Misa View Post





    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.

    It isn't that simple.  Legally the iTunes Store for the EU is in Luxembourg, because in Luxembourg the VAT is the lowest in the EU.  Everybody is the EU buys from the same iTunes Store in Luxembourg.  But in order to minimize taxes on the profits made, Apple Luxembourg is not the "owner" of the iTunes Store, it is a reseller with minimal margin from Apple Ireland.  So the profit is made in Apple Ireland. Ireland has a loophole in its tax laws for non tangible goods, saying the profits are only taxed in the country of production, which is the US.  But because the profit never is booked in the US, no US taxes are imposed.

     

    Conclusion: Apple (and other companies), evade on a legal manner taxes on the profit of Software goods sold in the EU.  Apple is perfectly allowed to do this, but whether this is morally acceptable or not, is another matter.

  • Reply 58 of 78
    crowleycrowley Posts: 5,989member
    Quote:
    Originally Posted by cropr View Post

     

    Conclusion: Apple (and other companies), evade on a legal manner taxes on the profit of Software goods sold in the EU.  Apple is perfectly allowed to do this, but whether this is morally acceptable or not, is another matter.


     

    Avoid, not evade.  A linguistically subtle, but semantically important difference.

  • Reply 59 of 78
    jungmarkjungmark Posts: 6,709member
    cropr wrote: »
    It isn't that simple.  Legally the iTunes Store for the EU is in Luxembourg, because in Luxembourg the VAT is the lowest in the EU.  Everybody is the EU buys from the same iTunes Store in Luxembourg.  But in order to minimize taxes on the profits made, Apple Luxembourg is not the "owner" of the iTunes Store, it is a reseller with minimal margin from Apple Ireland.  So the profit is made in Apple Ireland. Ireland has a loophole in its tax laws for non tangible goods, saying the profits are only taxed in the country of production, which is the US.  But because the profit never is booked in the US, no US taxes are imposed.

    Conclusion: Apple (and other companies), evade on a legal manner taxes on the profit of Software goods sold in the EU.  Apple is perfectly allowed to do this, but whether this is morally acceptable or not, is another matter.

    According to whose morals?
  • Reply 60 of 78
    tallest skiltallest skil Posts: 43,399member
    Originally Posted by gimarbazat View Post

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

     

    Yes, with you, and your comprehension of the situation.

     

    Originally Posted by PB View Post

    They won't let that happen. See the example of Greece.


     

    It’s not a question of “letting” it happen. There will be no stopping it. Greece and Spain have fallen. If Italy falls, Germany and France won’t be ABLE to stop it.

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