EU ruling against Belgian corporate tax breaks may set precedent for decision on Apple

Posted:
in General Discussion
The European Commission on Monday ruled that Belgium broke state aid rules by offering tax breaks to a number of multinational corporations, 35 of which will have to repay $765 million.

Apple's store in the Belgian capital, Brussels.
Apple's store in the Belgian capital, Brussels.


Belgium's practices hurt competition by "putting smaller competitors who are not multinational on an unequal footing," according to the Commission's competition policy head, Margrethe Vestager.

"There are many legal ways for EU countries to subsidise investment and many good reasons to invest in the EU," she added in her statement. "However, if a country gives certain multinationals illegal tax benefits that allow them to avoid paying taxes on the majority of their actual profits, it seriously harms fair competition in the EU, ultimately at the expense of EU citizens."

The names of the 35 multinationals have yet to be revealed, but may be published later on.

The Commission has been cracking down on several member states, such as Luxembourg and the Netherlands, accused of offering special breaks in order to attract multinationals. Companies that exploited the deals have included the likes of Amazon, Fiat Chrysler, and Starbucks.

The most infamous example however may be Apple, which has funneled much of its non-U.S. revenue through Ireland, exploiting loopholes to pay just 2.5 percent in taxes instead of 12.5. The country is already working to close some of the loopholes, but the Commission is nevertheless continuing with an investigation that could penalize both Apple and the Irish government.

Apple has repeatedly insisted that it simply follows the law and pays everything it owes, but today's ruling could set a precedent that makes it less likely it will escape judgement.
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Comments

  • Reply 1 of 23
    metrixmetrix Posts: 253member
    Apple should just look at this as the cost of doing business in Europe and raise prices to recoup this retroactive taxing. 
    radarthekatlatifbpteejay2012
  • Reply 2 of 23
    radarthekatradarthekat Posts: 3,130moderator
    Seems like Belgium should pay that money to the EU.  After all, they are the ones who promised tax breaks to multinationals.  Had they not, then the companies' might have made different plans, so Belgium should be held accountable for promises it made.  

    Okay, back to reality...

    Apple will be named among the list of 35 companies.  The fines will be as follows:  Apple: $764,999,966, each of the 34 other companies: $1  Justice is served.  /s
    SpamSandwichteejay2012netmagejony0
  • Reply 3 of 23
    boltsfan17boltsfan17 Posts: 2,175member
    Forcing a sovereign nation to recover taxes from companies who followed all tax laws will not end well for the EU. I guarantee you within the next few years, all the EU countries will be at each others throats. It's not going to be pretty when Europe's leaders learn once again that centralized planning does not work. 
    latifbpentropysteejay2012
  • Reply 4 of 23
    ppietrappietra Posts: 171member
    metrix said:
    Apple should just look at this as the cost of doing business in Europe and raise prices to recoup this retroactive taxing. 
    How is that? It’s about taxes over profits, with some companies not paying the same as others, which can be viewed as unfair competition, so what you say doesn’t make much sense. Ironically corporate taxes in the US are higher than in most EU countries, so according to you Apple should raise prices in the US
  • Reply 5 of 23
    Forcing a sovereign nation to recover taxes from companies who followed all tax laws will not end well for the EU. I guarantee you within the next few years, all the EU countries will be at each others throats. It's not going to be pretty when Europe's leaders learn once again that centralized planning does not work. 
    Not only that, when the overseas tax repatriation law goes flying through Congress with the new president (yes, I'm predicting a narrow Trump win) the EU will see massive losses of companies and revenue. They'll have to uniformly lower their taxes on businesses or feel some major pain.
  • Reply 6 of 23
    ppietrappietra Posts: 171member
    Forcing a sovereign nation to recover taxes from companies who followed all tax laws will not end well for the EU. I guarantee you within the next few years, all the EU countries will be at each others throats. It's not going to be pretty when Europe's leaders learn once again that centralized planning does not work. 
    I fail to see how this is centralized planning. This isn’t much different from what it has been doing for decades about illegal state aid to companies. And Belgium can contest this decision in a court if it wishes to
    singularity
  • Reply 7 of 23
    cnocbuicnocbui Posts: 3,613member
    Forcing a sovereign nation to recover taxes from companies who followed all tax laws will not end well for the EU. I guarantee you within the next few years, all the EU countries will be at each others throats. It's not going to be pretty when Europe's leaders learn once again that centralized planning does not work. 
    So, the US Federal government has no powers over the states? They are 100% independent in all respects?  States can choose to ignore whatever bits of the constitution they don't like?

    EU states gave up certain elements of their sovereignty willingly.  They knew what they were signing up for.  I live in Ireland and I disapprove of the actions of the Irish Government in this matter. 
    edited January 2016
  • Reply 8 of 23
    cnocbuicnocbui Posts: 3,613member
    Forcing a sovereign nation to recover taxes from companies who followed all tax laws will not end well for the EU. I guarantee you within the next few years, all the EU countries will be at each others throats. It's not going to be pretty when Europe's leaders learn once again that centralized planning does not work. 
    Not only that, when the overseas tax repatriation law goes flying through Congress with the new president (yes, I'm predicting a narrow Trump win) the EU will see massive losses of companies and revenue. They'll have to uniformly lower their taxes on businesses or feel some major pain.
    We are still having to deal with fallout caused by your last Republican presidency - ISIS, refugees, etc.  I don't think Europe could survive a Trump Presidency.

    Our corporation taxes are lower than they are in the US - try again.
  • Reply 9 of 23
    gatorguygatorguy Posts: 21,096member
    cnocbui said:
    Forcing a sovereign nation to recover taxes from companies who followed all tax laws will not end well for the EU. I guarantee you within the next few years, all the EU countries will be at each others throats. It's not going to be pretty when Europe's leaders learn once again that centralized planning does not work. 
    Not only that, when the overseas tax repatriation law goes flying through Congress with the new president (yes, I'm predicting a narrow Trump win) the EU will see massive losses of companies and revenue. They'll have to uniformly lower their taxes on businesses or feel some major pain.
    We are still having to deal with fallout caused by your last Republican presidency - ISIS, refugees, etc.  I don't think Europe could survive a Trump Presidency.

    Our corporation taxes are lower than they are in the US - try again.
    ISIS rose to be a regional power because of the Bush presidency?? Wellll. . .  ok then. . . (???)
  • Reply 10 of 23
    ppietrappietra Posts: 171member
    sog35 said:
    exactly.

    These idiots on EU don't realize that Apple will just pass the costs to the consumer. And then Apple will move their jobs to somewhere else. Thus the citizens would gain exactly ZERO benefit from this ruling. 
    Do you realize that corporate taxes are significantly higher in the US, and that Apple is paying very little in the EU? EU operations are actually much more profitable for Apple than in the US?
  • Reply 11 of 23
    plovellplovell Posts: 804member
    cnocbui said:
    Our corporation taxes are lower than they are in the US - try again.
    The rates are lower but few U.S. companies pay anything near the nominal rate. Especially the bigger ones. I don't have hard data but I expect that actual, effective corporate tax rates are lower in the U.S.
  • Reply 12 of 23
    The companies involved may try the defence that they were following the law but they weren't. That is the point of the fines,  they are being forced to pay the rate they should have been paying and not the rate the "sweetheart" deals gave them.  A rate of tax that gives them an economic advantage over others is against TFEU article 107 and iirc 101. 
  • Reply 13 of 23
    croprcropr Posts: 961member
    Seems like Belgium should pay that money to the EU.  After all, they are the ones who promised tax breaks to multinationals.  Had they not, then the companies' might have made different plans, so Belgium should be held accountable for promises it made.  

    Okay, back to reality...

    Apple will be named among the list of 35 companies.  The fines will be as follows:  Apple: $764,999,966, each of the 34 other companies: $1  Justice is served.  /s
    You got it wrong.  The biggest one is AB Inbev.  Apple is not involved in the Belgian case., but if the Belgian case is a good predictor for the Irish case, Apple wil suffer there.
  • Reply 14 of 23
    The companies involved may try the defence that they were following the law but they weren't. That is the point of the fines,  they are being forced to pay the rate they should have been paying and not the rate the "sweetheart" deals gave them.  A rate of tax that gives them an economic advantage over others is against TFEU article 107 and iirc 101. 
    That is so confusing... A company should figure out what taxes it needs to pay, irregardless of country laws and pay that amount???  And just which GOD decides what that amount is???   Here, the IRS tells me what I have to pay based on its rules.  I pay that amount.  If I follow the rules, they can not come back years later and retroactively change the rules. !!!

    This is what is going now in Europe.  If a member country is breaking the rules, the member country needs to be punished not companies that are following the rules of that company.   

    Also, we have to understand if we are talking taxes at point of sale or taxes on profits after all hardware taxes are paid.    Hmmm, lets tax the tax on the tax of the unit sale price, cause you know we need the money,,, right??
  • Reply 15 of 23
    ppietrappietra Posts: 171member
    plovell said:
    cnocbui said:
    Our corporation taxes are lower than they are in the US - try again.
    The rates are lower but few U.S. companies pay anything near the nominal rate. Especially the bigger ones. I don't have hard data but I expect that actual, effective corporate tax rates are lower in the U.S.
    Apple declares that it pays globally 26% corporate tax, which means it pays more than 26% in the US. Ireland corporate tax is 12.5%
  • Reply 16 of 23
    ppietrappietra Posts: 171member
    That is so confusing... A company should figure out what taxes it needs to pay, irregardless of country laws and pay that amount???  And just which GOD decides what that amount is???   Here, the IRS tells me what I have to pay based on its rules.  I pay that amount.  If I follow the rules, they can not come back years later and retroactively change the rules. !!!

    This is what is going now in Europe.  If a member country is breaking the rules, the member country needs to be punished not companies that are following the rules of that company.   

    Also, we have to understand if we are talking taxes at point of sale or taxes on profits after all hardware taxes are paid.    Hmmm, lets tax the tax on the tax of the unit sale price, cause you know we need the money,,, right??
    What is argued is that those companies benefited from a special deal with belgian authorities, giving benefits not available to other companies in Belgium, reducing corporate tax by as much as 90%. 
    This is about taxes on profits. Sales taxes in the EU are paid by consumers not companies, but companies are required to collect and declare that money - it is never theirs.

  • Reply 17 of 23
    maestro64maestro64 Posts: 4,656member

    I have said this before. The Apple/Ireland deal predates the EU and their rules. Apple had specific deal set up back in the 80's, Apple was one of the first Companies to set up a deal with Ireland. I suspect that some or most of the Apple revenue will be grandfather due to deal pre-dating the existence of the EU rules on government supported business.

    With Apple by far the largest of the group, I was curious why the EU did not go directly after Apple, they decided to go after companies who set up deal in the last 90's and early 2000's.


    trustnoone00
  • Reply 18 of 23
    cnocbuicnocbui Posts: 3,613member
    gatorguy said:
    cnocbui said:
    We are still having to deal with fallout caused by your last Republican presidency - ISIS, refugees, etc.  I don't think Europe could survive a Trump Presidency.

    Our corporation taxes are lower than they are in the US - try again.
    ISIS rose to be a regional power because of the Bush presidency?? Wellll. . .  ok then. . . (???)
    Er - yes!

    ISIS Atrocities in Iraq Represent the Catastrophic Failure of Bush Doctrine and Neoconservative Foreign Policy
    http://www.huffingtonpost.com/h-a-goodman/isis-atrocities-in-iraq-r_b_5661346.html

    Saddam Hussein's Old Party Is Behind A Lot Of The Chaos In Iraq ... Among the more noteworthy of the parties aligned with ISIS is the Army of the Men of the Naqshbandi Order. The Naqshbandis, located primarily in Mosul, were formed in 2007 by former members of Saddam Hussein's Baath party.
    http://www.businessinsider.com/saddam-husseins-old-party-is-behind-iraq-chaos-2014-6?op=1&IR=T

    Rand Paul Is Right: Republican Neocons Created ISIS
    http://www.huffingtonpost.com/bruce-fein/rand-paul-is-right-republ_b_7552956.html

    The Paris bombings, the million plus refugees flooding into Europe, The rapes and assaults on women in Cologne, can all be traced back to the neo-conns and their puppet president.


    Donald Trump praises Kim Jong-un for his firm hand with executed uncle

    I am absolutely terrified this ... thing ... might actually become President.
    edited January 2016 [Deleted User]
  • Reply 19 of 23
    maestro64 said:

    I have said this before. The Apple/Ireland deal predates the EU and their rules. Apple had specific deal set up back in the 80's, Apple was one of the first Companies to set up a deal with Ireland. I suspect that some or most of the Apple revenue will be grandfather due to deal pre-dating the existence of the EU rules on government supported business.

    With Apple by far the largest of the group, I was curious why the EU did not go directly after Apple, they decided to go after companies who set up deal in the last 90's and early 2000's.


    If Apple and Ireland lose the case they are contesting back tax will only be backdated to 2003 which could cost them 19 billion dollars (considered to be a worse case scenario).
    As Apple wasn't the behemoth it is now taxes before that are basically neglable.
  • Reply 20 of 23
    maestro64 said:

    I have said this before. The Apple/Ireland deal predates the EU and their rules. Apple had specific deal set up back in the 80's, Apple was one of the first Companies to set up a deal with Ireland. I suspect that some or most of the Apple revenue will be grandfather due to deal pre-dating the existence of the EU rules on government supported business.

    With Apple by far the largest of the group, I was curious why the EU did not go directly after Apple, they decided to go after companies who set up deal in the last 90's and early 2000's.


    The 80s deal is no longer in effect, there have been 2 deals since then. And I sincerely doubt that an agreement with tax authorities would supersede changes in legislation. 
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