Apple FAQ responds to investor queries about $14.5B EU tax edict

Posted:
in AAPL Investors edited August 2016
Apple has posted a series of answers to questions about the European Commission's tax ruling, and appears to be unconcerned about any potential financial fallout.




As a result of the $14.5 billion ruling doled out by the E.U. regulatory agency, Apple notes in its posting that it not expecting any impact on its financial results, or will need to alter previous results. Apple also claims that it will not see any impact on its tax rate in the future.

Apple also notes that U.S. taxes related to the income in question have already been accrued.

The E.U. tax penalty is not expected to alter Apple's cash balance for the foreseeable future. It will deposit "some amount of cash" in an escrow account to hold for the ruling, but expects that it will be listed as "restricted cash" in quarterly earnings reports.

Both Ireland and Apple have announced intentions to file an appeal against the commission's ruling. While saying that it wants a speedy resolution to the matter, Apple expects that the appeal process will take several years.

On Tuesday, the European Commission handed down a record tax penalty, ordering Apple to pay 13 billion euros ($14.5 billion) to Ireland in back taxes, offset if other E.U. countries seek part of the pay-out. In its investigation, the regulatory group claimed that tax rates on European profits were illegally low at 0.005 percent in 2014, and 1 percent in 2003.

"The European Commission has launched an effort to rewrite Apple's history in Europe, ignore Ireland's tax laws and upend the international tax system in the process," Apple said in a statement about the ruling made early Tuesday. "The Commission's case is not about how much Apple pays in taxes, it's about which government collects the money. It will have a profound and harmful effect on investment and job creation in Europe."
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Comments

  • Reply 1 of 60
    TurboPGTTurboPGT Posts: 355member
    Outright thievery and just a scaled up version of a patent troll trying to extort Apple because "they have all teh moneyz".

    This is where Tim shines. "Nope. Not paying a dime. We'll tie them up in appeals for years. We'll set aside some money, but you won't even notice it on the balance sheet."
    cwingravDeelronanantksundaramlatifbphlee1169
  • Reply 2 of 60
    lkrupplkrupp Posts: 6,961member
    Plenty of time for back room negotiations. Apple has the U.S. backing them this time and tremendous political pressure will be brought to bear. “ It will have a profound and harmful effect on investment and job creation in Europe.” No kidding. That’s only one of the leverages Apple can use.
    latifbp
  • Reply 3 of 60
    How long before Ireland is going to be out of the EU due to Brexit? If they get out of the EU before this is settled, Ireland will just drop it.
    GfiveTManantksundaramlatifbp
  • Reply 4 of 60
    The EU is an extortion racket. They've done their job screwing over the smaller countries in Europe (ask Spain and Portugal how the Euro worked out for them) and now they continue to extort money from US companies.

    What an absolute disgrace. 
    TurboPGTGfiveTManantksundaramlatifbprob55boltsfan17SpamSandwich
  • Reply 5 of 60
    TurboPGTTurboPGT Posts: 355member
    Hahaha 3 anti-EU posts in a row and all 3 with a lone Dislike. Guess one of our resident Pro-globalism whores is stalking about.
    JanNLGfiveTMmwhiteanantksundaramSpamSandwich
  • Reply 6 of 60
    blitz1blitz1 Posts: 412member
    The EU is an extortion racket. They've done their job screwing over the smaller countries in Europe (ask Spain and Portugal how the Euro worked out for them) and now they continue to extort money from US companies.

    What an absolute disgrace. 

    Check out how Spain, Portugal, Ireland, the Central european countries fared before entering the EU and look at their situation now.
    You're in complete denial or a fool if you think they were better off without the EU
    williamlondoncnocbuiaustriacusmr squidbig brother 84
  • Reply 7 of 60
    blitz1blitz1 Posts: 412member
    How long before Ireland is going to be out of the EU due to Brexit? If they get out of the EU before this is settled, Ireland will just drop it.
    You're confusing Northern Ireland with Ireland
    Like so many americans, you don't know what you're talking about
    singularitywilliamlondoncnocbuiaustriacusfastasleepmr squidbig brother 84
  • Reply 8 of 60
    blitz1 said:
    The EU is an extortion racket. They've done their job screwing over the smaller countries in Europe (ask Spain and Portugal how the Euro worked out for them) and now they continue to extort money from US companies.

    What an absolute disgrace. 

    Check out how Spain, Portugal, Ireland, the Central european countries fared before entering the EU and look at their situation now.
    You're in complete denial or a fool if you think they were better off without the EU
    I've lived in Spain and asked the Spanish personally. Have you? 
    EsquireCatslatifbp
  • Reply 9 of 60
    How long before Ireland is going to be out of the EU due to Brexit? If they get out of the EU before this is settled, Ireland will just drop it.
    Ireland (Southern Ireland) isn't part of the UK and is an EU member state in it's own right... Northern Ireland on the other hand will be Brexiting with the rest of us as and when the UK government ever get round to working out what that involves...  

    The UK is the "United Kingdom of Great Britain and Northern Ireland", with Great Britain being England, Wales and Scotland... 
    singularitycnocbuiaustriacusfastasleep
  • Reply 10 of 60
    adrayvenadrayven Posts: 460member
    How long before Ireland is going to be out of the EU due to Brexit? If they get out of the EU before this is settled, Ireland will just drop it.
    After Brexit and decisions like this effecting Ireland tax laws, they may-well decide to leave. EU has been slowly eroding individual country rights and this would be another example of why Brexit has happened and more are to come. Gets complicated when you realize that part of Ireland (North) is part of UK (Brexit) already, and its probably only a matter of time before South decides enough is enough with EU meddling and leaves as well.
    edited August 2016 anantksundaram
  • Reply 11 of 60
    Basically, for all the fulminations and epithets from a bunch of pro-Eurocrats in a prior thread, Apple is spot on. This will be appealed; it may (or may not) be reversed in a court; it will take years; it has no impact on EPS because the tax-equivalent amount owed to the US government has already been factored in; Apple may have to put some money in escrow. On top of that (not in the Apple FAQ), the US will get on EU's case.

    Put the EU pronouncement -- and all the joyous clapping -- into the category of "If wishes were horses....."

    Move along. Nothing to see here.
    edited August 2016 thewhitefalconradarthekat
  • Reply 12 of 60
    JanNLJanNL Posts: 259member
    blitz1 said:
    The EU is an extortion racket. They've done their job screwing over the smaller countries in Europe (ask Spain and Portugal how the Euro worked out for them) and now they continue to extort money from US companies.

    What an absolute disgrace. 

    Check out how Spain, Portugal, Ireland, the Central european countries fared before entering the EU and look at their situation now.
    You're in complete denial or a fool if you think they were better off without the EU
    Oh? Maybe you check out Greece... Totally bankrupt, owing too much to EU and IMF, which they can never pay back.
    No own currency, so much less tourist (main income) because no currency advantage. And in the end Germany (our schreckliches Merkel) has bought a lot of the last assets of Greece (airports / ports) for a very low price.
    anantksundaram
  • Reply 13 of 60
    jumejume Posts: 191member
    I live in a country that is a member of EU. We love Apple but I think Apple/Ireland should pay what they owe. EU laws for member countries are quite clear and I don't see why Ireland and Apple should be pardoned for that. Apple paid only 0.5 - 1% of taxes while other companies in EU need to pay WWAAAAAAY lot more... Laws in the EU are clear and valid for all EU member countries. In this case EU member countries are not allowed and cannot give any unfair tax conditions to selected companies.

    I think Apple/Ireland made lots of profit based on braking that law. Apple is rich as f**ck and I am getting sick when big corporations want more and more while the world goes to hell, rich become richer and middle class is disappearing. We are lucky for strong middle class and all the working-benefits in EU and most of that we have to thank to EU and I would like to keep that... So yes Apple you need to pay what you owe and please keep doing great products.
    edited August 2016 singularitycnocbui
  • Reply 14 of 60
    jume said:
    I live in a country that is a member of EU. We love Apple but I think Apple/Ireland should pay what they owe. EU laws for member countries are quite clear and I don't see why Ireland and Apple should be pardoned for that. Apple paid only 0.5 - 1% of taxes while other companies in EU need to pay WWAAAAAAY lot more... Laws in the EU are clear and valid for all EU member countries. In this case EU member countries are not allowed and cannot give any unfair tax conditions to selected companies.

    I think Apple/Ireland made lots of profit based on braking that law. Apple is reach as f**ck and I am getting sick when big corporations want more and more while the world goes to hell, rich become richer and middle class is disappearing. We are lucky for strong middle class and all the working-benefits in EU and most of that we have to thank to EU and I would like to keep that... So yes Apple you need to pay what you owe and please keep doing great products.
    LOL. This has to be the funniest post of the day! "..reach as f**ck.."!? Yikes.
    latifbphlee1169
  • Reply 15 of 60
    blitz1blitz1 Posts: 412member
    blitz1 said:
    The EU is an extortion racket. They've done their job screwing over the smaller countries in Europe (ask Spain and Portugal how the Euro worked out for them) and now they continue to extort money from US companies.

    What an absolute disgrace. 

    Check out how Spain, Portugal, Ireland, the Central european countries fared before entering the EU and look at their situation now.
    You're in complete denial or a fool if you think they were better off without the EU
    I've lived in Spain and asked the Spanish personally. Have you? 
    I do business with them on a daily basis
  • Reply 16 of 60
    xbitxbit Posts: 234member
    "It will have a profound and harmful effect on investment and job creation in Europe."

    Does anyone believe this statement? The truth is that Apple needs Ireland as much as Ireland needs Apple. Apple don't reside in Ireland out of the goodness of their hearts. They do so because it's a great base to make money out of the European market.
    singularity
  • Reply 17 of 60
    gatorguygatorguy Posts: 20,451member
    lkrupp said:
    Plenty of time for back room negotiations. Apple has the U.S. backing them this time and tremendous political pressure will be brought to bear. “ It will have a profound and harmful effect on investment and job creation in Europe.” No kidding. That’s only one of the leverages Apple can use.
    The larger discussion at Apple IMHO should be at what cost? Apple biggest asset is not in the engineering department. It's not in the executive boardroom. It's not sitting in bank vaults. It's Apple's image.

    If this is handled in a way that leaves the impression of Apple doing a money grab at any cost there will no doubt be even some long-time dedicated Apple consumers who modify their views on Apple. Then there are those who dislike Apple for whatever reason handled ammunition supporting claims of greed, perhaps increasing the number of "Apple-haters". What will Joe and Minnie think about it?  Will the voices be loud enough to make any impact? I wouldn't have a clue, but the possibility of saving a penny to lose a pound should certainly be considered. It could be wiser in the long run just to pay up. 

    In any event this is going to be a balancing act, and the gymnasts better be really good. 
    edited August 2016
  • Reply 18 of 60
    blitz1blitz1 Posts: 412member
    Read TC's response to the EU.

    The guy clearly doesn't control the situation, juggling with issues, creating non-existant amalgams, ...

    quote
    Taxes for multinational companies are complex, yet a fundamental principle is recognized around the world: A company’s profits should be taxed in the country where the value is created. Apple, Ireland and the United States all agree on this principle.
    unquote

    The US may agree on the principle but still, but they also want to tax Apple when repatriating money earned and taxed in other parts of the world than the US

    quote
    In Apple’s case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States. European companies doing business in the U.S. are taxed according to the same principle. But the Commission is now calling to retroactively change those rules.
    unquote

    Value does not only come from R&D. In any case, Apple was not taxed on R&D but on some imaginary cost
    Specifically, it's interersting to  ltice that depending on the tax breaks that patents are taxed differently. In that case the EU is right to claim that tailored taxing has been ruled.
    They always favor larger corporations which creates an unfair advantage over the smaller companies


    In short: 0,005% is not 12,5%.
    How about explaining that, in full, Mister Cook
  • Reply 19 of 60
    Despite the EU's position here they must be aware of the damage such movements make to the European Union?

    What wealthy country, in their right mind, would want to stay in the EU if businesses operated in their country may suddenly be slammed with gigantic, retroactively calculated tax bills? I can't imagine any of the large EU economies feeling safe to take on foreign investment.

    This doesn't even get into the precedent of large European firms that have a significant bases in the USA. Imagine if the USA levied such tax bills against BMW, Airbus or any number of significant european businesses with massive investments in the USA.
    latifbp
  • Reply 20 of 60
    jume said:
    We are lucky for strong middle class and all the working-benefits in EU and most of that we have to thank to EU and I would like to keep that... So yes Apple you need to pay what you owe and please keep doing great products.
    LOL this is my favorite part. The EU has done more to destroy Europe's economies than any other action. The only country that has benefitted has been Germany (or should I say Germoney?).
    edited August 2016 latifbp
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