EU rulings against Fiat & Starbucks tax breaks could foretell Apple paying back taxes
The European Union has ruled that Fiat Chrysler and Starbucks must each pay up to 30 million euros, or about $34 million, in back taxes --?a decision that could foreshadow similar findings against Apple and Amazon.
Fiat and Starbucks were both determined to have received tax rulings from Luxembourg and the Netherlands that constituted state aid -- something illegal under EU regulations, competition commissioner Margrethe Vestager told Bloomberg. The governments of both countries must now recalculate taxes using a method provided by the European Commission, though they have expressed surprise and disappointment with the decision.
Starbucks announced its intention to appeal, claiming that there were "significant errors" in the ruling and that it followed Dutch and OECD (Organization for Economic Co-operation and Development) rules. Fiat simply insisted that it didn't receive any state aid, while dismissing the amount of taxes it might pay as "immaterial" to financial results.
Apple and Amazon are also under scrutiny for how much they might owe. Vestager commented that any back taxes likely wouldn't be "spectacular," but would still be "much much more than what has previously been paid."
Various multinational corporations, including Apple, are known to exploit tax loopholes and deals in European countries. Apple funnels much of its international revenue through Ireland for that reason, though the Irish government is planning to close some loopholes, and could face an EU ruling against state aid by the end of 2015.
Fiat and Starbucks were both determined to have received tax rulings from Luxembourg and the Netherlands that constituted state aid -- something illegal under EU regulations, competition commissioner Margrethe Vestager told Bloomberg. The governments of both countries must now recalculate taxes using a method provided by the European Commission, though they have expressed surprise and disappointment with the decision.
Starbucks announced its intention to appeal, claiming that there were "significant errors" in the ruling and that it followed Dutch and OECD (Organization for Economic Co-operation and Development) rules. Fiat simply insisted that it didn't receive any state aid, while dismissing the amount of taxes it might pay as "immaterial" to financial results.
Apple and Amazon are also under scrutiny for how much they might owe. Vestager commented that any back taxes likely wouldn't be "spectacular," but would still be "much much more than what has previously been paid."
Various multinational corporations, including Apple, are known to exploit tax loopholes and deals in European countries. Apple funnels much of its international revenue through Ireland for that reason, though the Irish government is planning to close some loopholes, and could face an EU ruling against state aid by the end of 2015.
Comments
That's stealing.
Laws didn't changed
I think there will come a time when corporate tax will have to move towards zero as a result of this being almost impossible to resolve, and the majority of taxation will need to come from consumption tax (i.e. Value Added Tax).
Laws didn't changed
Interpretation certainly is. But I guess that's what the EU loves to do; punish US companies (Fiat's moving to the US)
Interpretation also didn't changed.
And do you have any support for the claim that EU loves to punish US companies?
By the way,FIAT is not moving to the US.
Interpretation also didn't changed.
And do you have any support for the claim that EU loves to punish US companies?
By the way,FIAT is not moving to the US.
FCA's primary listing is on the NYSE; regardless of being headquartered in London and incorporated in the Netherlands, if the majority of the stock is on the US market for all intents and purposes they're a US company.
that is very logical. But will never happen.
Cause its the rich that consume the most, and they don't want to pay taxes.
I think that's a reason why it wouldn't happen in the US for sure. The political clout rich people can bring to bear here is amazing.
In Europe however, it might be different. The political system is less easily "bought" in most EU countries. The hurdle there is that moving towards a tax system primarily based on consumption taxes would require tax harmonization across the EU nation states, and there seems to be little appetite for that at the moment.
Something needs to happen though. I don't want to single Apple out here, because all the big multinationals are doing this, and it's perfectly legal, but Apple paying almost all it's European taxes in Ireland, when they sell far more stuff in, for example, the UK than they do in Ireland (I think they have more employees in the UK too, though I'm not 100% sure), just seems wrong.
In your opinion.
This is the risk companies take when they use aggressive and borderline legal tax avoidance schemes.
Exploiting but following the law is not the same as breaking the law. Seems the laws were ok when it was only oil companies, now that tech is surpassing oil it's a problem.
FCA's primary listing is on the NYSE; regardless of being headquartered in London and incorporated in the Netherlands, if the majority of the stock is on the US market for all intents and purposes they're a US company.
That's because of the Chrysler part of the company. Just don't say that out loud in the company of more than one Italian.
To them Fiat is Italian and the american bit is a minor distraction. Given the crappiness of the Chryslers that I've driven this year, they make even 1970's Fiat 500's (650cc Engine) look good.
Crappiness is - leccy windows that didn't work. PITA at highway toll booths, Boot/Trunk that wouldn't lock. A/C that would not switch off.
Took it back to Avis who just shrugged their shoulders and said, 'not uncommon'.
Failing to see how tax laws that are changed should mean a company owes money from the past.
That's stealing.
Tax laws weren't changed. That's exactly the problem: these corporations made deals with tax authorities to bypass the law. The legal status of these deals has always been murky, at best. They are potentially and unfairly damaging to others, but in the case of Starbucks economically beneficial to the host country since that deal has created jobs.
For a number of years Apple payed well below 1% EU corporation tax. Even now it is reckoned to be only 2%.
The argument here is that Ireland ignoring the actual 10%+ historic real rate gets all this classified as state aid.
... Talk about loss of sovereignty and independence. But I guess that's what they signed up for so we'll see how this grand social experiment plays out in the long term...
Ireland didn't complain when the EU was funneling billions of euros to Ireland (which still is happening), so I think they have no reason to complain when the EU forces them to follow EU laws.
Exactly. Instead of changing the laws, the EU just makes it up as they go. They are out of control.
Exactly. Instead of changing the laws, the EU just makes it up as they go. They are out of control.
This is not true, they didn't made up anything. And yes, Ireland, Luxembourg, Netherlands and other "tax heavens" are out of control. It is good that they are being stopped
Then extract the money from Ireland. The companies there are following the letter of the law.
This highlights the serious issue of the EU. No unified monetary policy and why they will need to unify it or collapse.