Apple's international iTunes business moves to Ireland on Feb. 5

Posted:
in iPod + iTunes + AppleTV
Apple has assigned a definitive date to the planned relocation of its international iTunes assets, saying the iTunes Store, Apple Music, the App Store and iBooks Store businesses will make the transition to Cork, Ireland, in early February.


Apple's European headquarters in Cork, Ireland.


The official relocation timeline was disclosed in a note sent out to developers on Thursday. Apple Distribution International will conduct the transfer of its international iTunes business, which serves more than 100 countries, from Luxembourg to Cork on Feb. 5, Apple says.

After managing Apple's overseas operations since 2004, the Luxembourg branch will cease to be on Feb. 4.

The company is making the transition as seamless as possible for content owners. For example, developer contracts were automatically transferred to Apple Distribution International in September. In addition, customers looking to buy apps made by developers based in Ireland can do so free of Irish VAT thanks to Apple's special exporter status.

Apple informed developers of the forthcoming move in September, with reports at the time estimating the transfer to be worth some $9 billion in assets.

The transfer comes amid rising tensions between Apple, Ireland and the European Union. Last August, the European Commission concluded a years-long investigation into Apple's Irish business, slamming the company with a $14.5 billion bill for back taxes.

According to investigators, the sweetheart tax deals Apple from which Apple benefits are in breach of regional regulations and amount to illegal state aid.

Ireland is one stop in the infamous -- but legal -- "Double Irish with a Dutch Sandwich" strategy multinational corporations like Apple leverage to save billions of dollars in taxes each year. At its most basic level, the "Double Irish" provision allows companies with operations in Ireland to route profits to another Irish subsidiary. This subsidiary claims tax residency in a tax-free nation. Companies like Apple and Google assign patents to these secondary subsidiaries to funnel profit on royalties to tax havens such as the Caribbean.

Apple adds a wrinkle to the process by first piping international profits through yet another subsidiary in the Netherlands before routing the funds through the Irish subsidiary. Ireland and the Netherlands hold treaties that allow money to cross borders tax free.

Beyond bouncing income around the world, Apple enjoys an incredibly low tax rate in Ireland. In 2014, for example, the company paid 0.005 percent on its European profits, much lower than Ireland's standard corporate tax rate.

For its part, Apple contends its tax practices are above board. To that end, both Apple and Ireland are appealing the EU ruling.
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Comments

  • Reply 1 of 26
    1/2%??? That would be nice. Nothing against Apple but I would hardly call that its fair share. Well done though.
  • Reply 2 of 26
    davendaven Posts: 611member
    Ok, I'm an Apple fan and stockholder but 0.005% on profits is rediculus. 
  • Reply 3 of 26
    daven said:
    Ok, I'm an Apple fan and stockholder but 0.005% on profits is rediculus. 
    Rediculus you say?
    Silly spelling aside, the matter is more complex than the EU presents and that figure is in much dispute.
    mike1daven
  • Reply 4 of 26

    This is really going to liven up the party. Tim Cook and the rest of the Apple board and it’s legal department are no dopes, and they’re not in this just for laughs. Coming right at this time, they’re clearly calling out both the EU and Trump. "Waddaya gonna do about it?!?!?!!!" It’ll be very interesting to see the results when the dust settles.

  • Reply 5 of 26
    daven said:
    Ok, I'm an Apple fan and stockholder but 0.005% on profits is rediculus. 
    If you're an AAPL stockholder, then ZERO taxes is the goal.
    pscooter63[Deleted User]mike1
  • Reply 6 of 26
    jbdragonjbdragon Posts: 2,244member
    daven said:
    Ok, I'm an Apple fan and stockholder but 0.005% on profits is rediculus. 
    If it's legal. These are Government created loopholes!!! If only I could find a way to have the same tax rate.
    [Deleted User]waltg
  • Reply 7 of 26
    coolfactorcoolfactor Posts: 1,790member
    How is Ireland *harmed* by offering Apple a super-low tax rate? The truth is that they are not.
  • Reply 8 of 26
    SoliSoli Posts: 10,029member
    1/2%??? That would be nice. Nothing against Apple but I would hardly call that its fair share. Well done though.
    How did you get 1/2%? I'm seeing 0.005% or 5/1000th%, which I think comes to $500 in taxes for every $1M in profits.
    edited January 2017
  • Reply 9 of 26
     customers looking to buy apps made by developers based in Ireland can do so free of Irish VAT thanks to Apple's special exporter status. 

    ?

    Since 01/01/2015, the VAT (on digital services/downloads) applied has been applicable to the country of purchase (and not supply). If I buy an itunes app in the UK, I will pay 20% VAT regardless of where the developer is based.

     https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-businesses-supplying-digital-services-to-private-consumers#eu-vat-rule-change

    Mind you, i could never understand how iTunes (SARL) used to justify charging all EU customers the higher Irish VAT rate of 23% given that iTunes was based in a country where  the VAT on digital content was as low as 6% at the time. 

    Oh, according to Apple-.

    The VAT rate for products classified as services under EU VAT law will be 23% as VAT is charged at the rate payable in the country where Apple Distribution International supplies such products, which is the Republic of Ireland. 

    Can anyone confirm that itunes purchases are charged the VAT applicable in the country of purchase?


  • Reply 10 of 26
    How is Ireland *harmed* by offering Apple a super-low tax rate? The truth is that they are not.
    Of course Ireland isn't "harmed", 0.005% is better than 0% if Apple went to another country. The problem centres around EU legislation which each member state has to adhere to, regardless of each individual country's own laws.

    On the move to Ireland tho, I wonder if this means the store prices will be based on the EURO now since they're based in Europe? Right now they're based on fluctuating rates against the dollar.
  • Reply 11 of 26
    hungover said:
     customers looking to buy apps made by developers based in Ireland can do so free of Irish VAT thanks to Apple's special exporter status. 

    ?

    Since 01/01/2015, the VAT (on digital services/downloads) applied has been applicable to the country of purchase (and not supply). If I buy an itunes app in the UK, I will pay 20% VAT regardless of where the developer is based.

     https://www.gov.uk/government/publications/vat-supplying-digital-services-to-private-consumers/vat-businesses-supplying-digital-services-to-private-consumers#eu-vat-rule-change

    Mind you, i could never understand how iTunes (SARL) used to justify charging all EU customers the higher Irish VAT rate of 23% given that iTunes was based in a country where  the VAT on digital content was as low as 6% at the time. 

    Oh, according to Apple-.

    The VAT rate for products classified as services under EU VAT law will be 23% as VAT is charged at the rate payable in the country where Apple Distribution International supplies such products, which is the Republic of Ireland. 

    Can anyone confirm that itunes purchases are charged the VAT applicable in the country of purchase?


    Just looked back at a few receipts... my iCloud subscription, app store purchases (apps), itunes store purchases (tv series) all said "inclusive of 20% vat" on the invoices. UK btw.
  • Reply 12 of 26
    thanks for checking.

    cheers
  • Reply 13 of 26
    xbitxbit Posts: 276member
    daven said:
    Ok, I'm an Apple fan and stockholder but 0.005% on profits is rediculus. 
    If you're an AAPL stockholder, then ZERO taxes is the goal.
    As a APPL shareholder, I want the next generation of Apple workers in Ireland to get a good education first. That's not going to happen if corporations use loopholes to pay virtually zero tax. I want APPL to succeed through being the best technology company on the planet rather than through financial trickery.
    GeorgeBMactokyojimudavenhungover
  • Reply 14 of 26
    1/2%??? That would be nice. Nothing against Apple but I would hardly call that its fair share. Well done though.

    The notion of a tax implies some sort of service. What service is Ireland providing to Apple?

    I don't believe in just paying any tax levied cause you happen to put a foot down there. This very concept works in different ways for US state income taxes. Some people pay taxes in their home state as well as the state where the company the work for. Some also have state sales tax in lieu of an income tax.

    Some companies create jobs that produce income for the people that live and pay taxes on the money earned/spent there. Seems like it is pretty nice benefit for Ireland (the people, not the gov).
    hungover
  • Reply 15 of 26
    xbit said:
    daven said:
    Ok, I'm an Apple fan and stockholder but 0.005% on profits is rediculus. 
    If you're an AAPL stockholder, then ZERO taxes is the goal.
    As a APPL shareholder, I want the next generation of Apple workers in Ireland to get a good education first. That's not going to happen if corporations use loopholes to pay virtually zero tax. I want APPL to succeed through being the best technology company on the planet rather than through financial trickery.
    Since I don't know where you are located I can't say for sure but most US states rely primarily on state and local taxes for education, not US federal dollars. True there are federally funded programs (free lunch & breakfast to needy, No Child Left Behind,...) but the primary source of funding is the State and local taxes.
    hungover
  • Reply 16 of 26
    GeorgeBMacGeorgeBMac Posts: 8,996member
    1/2%??? That would be nice. Nothing against Apple but I would hardly call that its fair share. Well done though.

    The notion of a tax implies some sort of service. What service is Ireland providing to Apple?

    I don't believe in just paying any tax levied cause you happen to put a foot down there. This very concept works in different ways for US state income taxes. Some people pay taxes in their home state as well as the state where the company the work for. Some also have state sales tax in lieu of an income tax.

    Some companies create jobs that produce income for the people that live and pay taxes on the money earned/spent there. Seems like it is pretty nice benefit for Ireland (the people, not the gov).
    Ireland provides a stable society with educated workers and necessary infrastructure...
    ... This "I built it myself" bullshit is bullshit.
    hungover
  • Reply 17 of 26
  • Reply 18 of 26
    gatorguygatorguy Posts: 22,811member
    1/2%??? That would be nice. Nothing against Apple but I would hardly call that its fair share. Well done though.

    The notion of a tax implies some sort of service. What service is Ireland providing to Apple?

    I don't believe in just paying any tax levied cause you happen to put a foot down there. This very concept works in different ways for US state income taxes. Some people pay taxes in their home state as well as the state where the company the work for. Some also have state sales tax in lieu of an income tax.

    Some companies create jobs that produce income for the people that live and pay taxes on the money earned/spent there. Seems like it is pretty nice benefit for Ireland (the people, not the gov).
    Roads, electricity and other infrastructure. Police and other first responders. General security and legal cover. There's more but that's off the top of my head. Those are all services that work to Apple's benefit aren't they? 
    hungover
  • Reply 19 of 26
    MplsPMplsP Posts: 2,883member
    How is Ireland *harmed* by offering Apple a super-low tax rate? The truth is that they are not.
    One could argue that the rest of Ireland is harmed since everyone else is forced to pay more when Apple pays less, but from what I've read about the EU lawsuit, Ireland actually isn't the one pushing it; the EU is.
    hungover
  • Reply 20 of 26
    crowleycrowley Posts: 7,444member
    1/2%??? That would be nice. Nothing against Apple but I would hardly call that its fair share. Well done though.
    The notion of a tax implies some sort of service. What service is Ireland providing to Apple?
    Limited liability.  A service of incredible value to businesses.
    hungover
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