Irish government recalculation of Apple's EU tax bill close to $14 billion estimate

AppleInsider

The 13 billion euros ($14 billion) Apple is requested to pay Ireland as part a European Commission ruling over tax is likely to be an accurate figure, with the Irish finance minister advising the amount calculated by government officials is in a similar ballpark to the Commission's number.

Under the August ruling, the Commission ordered Apple to pay Ireland back taxes over "illegal tax benefits" granted by the country. These benefits involved extremely low tax rates, such as a rate of 0.005 percent in 2014 and 1 percent in 2003, as well as the claim the tax deals were "reverse engineered" to minimize Apple's overall bill.

While the European Commission's ruling was an estimate of 13 billion euros, plus interest, Reuters reports the Commission required Ireland to calculate the exact sum owed, and defined the methodology as part of the ruling. According to Irish Finance Minister Michael Noonan, reports Reuters, the final amount due may turn out to be quite close to what the Commission initially expected.

"So far my officials haven't indicated to me that it's going to seriously overrun the 13 (billion euros) or come seriously short of the 13, but there are other years to be assessed and so on," Noonan advised to a parliamentary committee.

Apple has already missed the deadline to return the owed taxes. Despite the delay, EU Competition Commissioner Margarethe Vestager has accepted the payment is still taking place, and is satisfied with the progress that has been made so far.

Noonan also told the committee that officials are still negotiating the terms of a ring-fenced escrow the Apple payments will be held, while appeals from both Apple and the Irish government process through the European legal system. The minister recently advised the government's appeal has been placed, which will head to a lower European court before another appeal from the losing party takes the case to the European Court of Justice.

Apple has also issued its appeal against the ruling, claiming the European Union "took unilateral action and changed the rules, disregarding decades of Irish tax law, U.S. tax law, as well as the global consensus on tax policy."

It is believed by Noonan that the the entire appeals process will take around four to five years to complete, after which the ring-fenced funds will be either absorbed by the Irish government or passed back to Apple, depending on the result.

According to Irish tax advisor Feargal O'Rourke, it is likely the European Court of Justice would overturn the Commission's tax order, provided the ruling isn't politicized. O'Rourke declared the Commission's decision a "land grab" that moves beyond its remit, and insisted that no-one who was familiar with the details of the case could believe the funds actually belong to Ireland.

zimmermann

Lets see what Trump will tweet... He will probably be his usual nuanced self!

SpamSandwich

Oh, the hell with the EU and their blackmail.

gatorguy

I'm surprised the Irish tax authorities came up with essentially the same tax bill. I would have expected something much lower based on all the earlier bluster from Noonan. 

chadbag

gatorguy said:

I'm surprised the Irish tax authorities came up with essentially the same tax bill. I would have expected something much lower based on all the earlier bluster from Noonan. 

I think you missed the part  where it said that the EU commission told the Irish tax authority what method and formulas to use to calculate the amount.  If would be expected to be about the same.

gatorguy

chadbag said:

gatorguy said:

I'm surprised the Irish tax authorities came up with essentially the same tax bill. I would have expected something much lower based on all the earlier bluster from Noonan. 

I think you missed the part  where it said that the EU commission told the Irish tax authority what method and formulas to use to calculate the amount.  If would be expected to be about the same.

EDIT: Thanks for the note. I miss a sentence too every so often.
Still surprised (tho not as much now) that the EU estimate is going to be pretty accurate compared to real numbers from the Irish.  

EDIT 2: This AI article is the only one I've found that claims the Irish had to calculate taxes by the same methodology. I was able to see an article at one other site that said the Irish were required to calculate the shortage and explain how they arrived at it which is somewhat different than the EU stipulating the method to be used.  Are we sure the AI article is accurate? 

.... aaand Edit 3: Found it. The methodology the AI article refers to is the EU saying, quote:
"Ireland must allocate to each branch all profits from sales previously indirectly allocated to the "head office" of Apple Sales International and Apple Operations Europe, respectively, and apply the normal corporation tax in Ireland on these re-allocated profits. The decision does not ask for the reallocation of any interest income of the two companies that can be associated with the activities of the "head office".
http://europa.eu/rapid/press-release_IP-16-2923_en.htm

So in essence not so much the detailed method as requiring the Irish to properly attribute reported Apple revenues and in accordance with standard Irish corporate tax rates applicable to all Irish companies rather than allowing it to be considered special-case "non-taxable" revenues earned by a technically non-resident entity.

anantksundaram

gatorguy said:

chadbag said:

gatorguy said:

I'm surprised the Irish tax authorities came up with essentially the same tax bill. I would have expected something much lower based on all the earlier bluster from Noonan. 

I think you missed the part  where it said that the EU commission told the Irish tax authority what method and formulas to use to calculate the amount.  If would be expected to be about the same.

EDIT: Thanks for the note. I miss a sentence too every so often.
Still surprised (tho not as much now) that the EU estimate is going to be pretty accurate compared to real numbers from the Irish.  

EDIT 2: Thsi AI article is the only one I've found that claims the Irish had to calculate taxes by the same methodology. I was able to see an article at one other site that said the Irish were required to calculate the shortage and explain how they arrived at it which is somewhat different than the EU stipulating the method to be used.  Are we sure the AI article is accurate? 

.... aaand Edit 3: Found it. The methodology the AI article refers to is the EU saying, quote:
"Ireland must allocate to each branch all profits from sales previously indirectly allocated to the "head office" of Apple Sales International and Apple Operations Europe, respectively, and apply the normal corporation tax in Ireland on these re-allocated profits. The decision does not ask for the reallocation of any interest income of the two companies that can be associated with the activities of the "head office".
http://europa.eu/rapid/press-release_IP-16-2923_en.htm

So in essence not so much the detailed method as requiring the Irish to properly attribute reported Apple revenues and in accordance with standard Irish corporate tax rates applicable to all Irish companies rather than allowing it to be considered special-case "non-taxable" revenues earned by a technically non-resident entity.

Um...what?

[Deleted User]

anantksundaram said:

gatorguy said:

chadbag said:

gatorguy said:

I'm surprised the Irish tax authorities came up with essentially the same tax bill. I would have expected something much lower based on all the earlier bluster from Noonan. 

I think you missed the part  where it said that the EU commission told the Irish tax authority what method and formulas to use to calculate the amount.  If would be expected to be about the same.

EDIT: Thanks for the note. I miss a sentence too every so often.
Still surprised (tho not as much now) that the EU estimate is going to be pretty accurate compared to real numbers from the Irish.  

EDIT 2: Thsi AI article is the only one I've found that claims the Irish had to calculate taxes by the same methodology. I was able to see an article at one other site that said the Irish were required to calculate the shortage and explain how they arrived at it which is somewhat different than the EU stipulating the method to be used.  Are we sure the AI article is accurate? 

.... aaand Edit 3: Found it. The methodology the AI article refers to is the EU saying, quote:
"Ireland must allocate to each branch all profits from sales previously indirectly allocated to the "head office" of Apple Sales International and Apple Operations Europe, respectively, and apply the normal corporation tax in Ireland on these re-allocated profits. The decision does not ask for the reallocation of any interest income of the two companies that can be associated with the activities of the "head office".
http://europa.eu/rapid/press-release_IP-16-2923_en.htm

So in essence not so much the detailed method as requiring the Irish to properly attribute reported Apple revenues and in accordance with standard Irish corporate tax rates applicable to all Irish companies rather than allowing it to be considered special-case "non-taxable" revenues earned by a technically non-resident entity.

Um...what?

seemed pretty clear to me, the EU basically asked Ireland to calculate the taxes the company WOULD have paid had it not had a special tax-haven type deal. You know, the way any smaller business has to do it and also the way the average joe on the street has to pay his taxes.

Wording it the way AI has, led me to believe the EU had some crazy formula for punishing certain companies. Quite the opposite.

ziolith

This 14 Billion is on EU profits over 10 years, why are they telling Ireland to collect all EU taxes?

If 14b = 12.5% over the 10 years, then 120b = 100%...
I could understand the population of the EU spending 12b per year on Apple but not just the Irish.

Given their population the 12b would mean everyone on the island would spend around 3k per year every year for 10 years on Apple (about 10% of the average net income)...

So this isn't tax due to Ireland because of Irish people buying Apple products. It's because other EU countries didn't take Apple tax that was due to their people's spending in their country.

austriacus

They are telling them to collect EU taxes because (I assume as it is usual in this kind of thing) all EU profits were funneled through ireland to take advantage of the "special" set up they had. It's like Switzerland which has Canton Zug with a corporate tax rate of 13 %

ziolith said:

This 14 Billion is on EU profits over 10 years, why are they telling Ireland to collect all EU taxes?

If 14b = 12.5% over the 10 years, then 120b = 100%...
I could understand the population of the EU spending 12b per year on Apple but not just the Irish.

Given their population the 12b would mean everyone on the island would spend around 3k per year every year for 10 years on Apple (about 10% of the average net income)...

So this isn't tax due to Ireland because of Irish people buying Apple products. It's because other EU countries didn't take Apple tax that was due to their people's spending in their country.

copeland

Because of corporation payed tax legislation Apple can funnel all profits from Europe through Ireland --> taxes for Apple's European business have be collected in Ireland.
And Ireland has aggreed to penalize its own companies by demanding 12,5% tax (which is already very low for Europe) and giving Apple (and other global players) a spezial sweet deal reduzing their tax burdon to almost nothing.
The EU comission is not objecting the 12.5% tax rate but these sweet deals that are only available to very few and that are prohibited by European law.

If Ireland taxed any company with a 0.005% tax rate the EU comission couldn't do a thing about it.

spice-boy

Why does everyone think "tax havens" or a good thing in the first place. Nobody has ever given me a break come tax time. Huge corporation like Apple are taking advantage of laws that exist that I understand but this is a scam concocted by big companies and pushed through governments into law. Trickle down does not work it never has done anything for the majority while the rich keep profits, hide it away or invest elsewhere. Apple is no better than the rest of them. 

gatorguy

ziolith said:

This 14 Billion is on EU profits over 10 years, why are they telling Ireland to collect all EU taxes?

If 14b = 12.5% over the 10 years, then 120b = 100%...
I could understand the population of the EU spending 12b per year on Apple but not just the Irish.

Given their population the 12b would mean everyone on the island would spend around 3k per year every year for 10 years on Apple (about 10% of the average net income)...

So this isn't tax due to Ireland because of Irish people buying Apple products. It's because other EU countries didn't take Apple tax that was due to their people's spending in their country.

You should be glad the Irish are tasked with it. Their 12.5% is lower than the rest of Europe. The French for instance would have taken over 30% so had Apple paid taxes in the countries where the buyer lived the tax bill could be several $Billions more. 

crowley

ziolith said:

This 14 Billion is on EU profits over 10 years, why are they telling Ireland to collect all EU taxes?

Because that's how Apple has structured itself, with its EU regional operations headquarters in Ireland.  Corporation tax is paid where the corporation is, not where the sale is.

steven n.

gatorguy said:

I'm surprised the Irish tax authorities came up with essentially the same tax bill. I would have expected something much lower based on all the earlier bluster from Noonan. 

The EC basically told them what number to come up with. Imagine the EC out of control. From the right to whitewash history to this, 95% of what the EC does is a travesty and accounts to little more than blackmail to bolster their failing industries.

steven n.

spice-boy said:

Why does everyone think "tax havens" or a good thing in the first place. Nobody has ever given me a break come tax time. Huge corporation like Apple are taking advantage of laws that exist that I understand but this is a scam concocted by big companies and pushed through governments into law. Trickle down does not work it never has done anything for the majority while the rich keep profits, hide it away or invest elsewhere. Apple is no better than the rest of them. 

So you do everything to maximize the taxes you pay. You don't deduct any child dependency credits, mortgage or any other single deduction. You take you gross wages, look up in the table and pay it?

I'm impressed.

crowley

steven n. said:

spice-boy said:

Why does everyone think "tax havens" or a good thing in the first place. Nobody has ever given me a break come tax time. Huge corporation like Apple are taking advantage of laws that exist that I understand but this is a scam concocted by big companies and pushed through governments into law. Trickle down does not work it never has done anything for the majority while the rich keep profits, hide it away or invest elsewhere. Apple is no better than the rest of them. 

So you do everything to maximize the taxes you pay. You don't deduct any child dependency credits, mortgage or any other single deduction. You take you gross wages, look up in the table and pay it?

I'm impressed.

Corporate capture of secrecy jurisdictions to misrepresent economic activity and achieve near-zero liability to contribute back to the societies that enrich them is exactly the same as personal tax planning.  

No one actually believes this.

avon b7

Tax avoidance is fine but tax evasion isn't. The EU, in a roundabout way, is basically saying that Apple has been evading tax.

crowley

avon b7 said:

Tax avoidance is fine but tax evasion isn't. The EU, in a roundabout way, is basically saying that Apple has been evading tax.

No they aren't.  The EU isn't saying much about Apple at all, the problem is with Ireland.

And tax avoidance isn't fine, just legal.

Naiyas

crowley said:

ziolith said:

This 14 Billion is on EU profits over 10 years, why are they telling Ireland to collect all EU taxes?

Because that's how Apple has structured itself, with its EU regional operations headquarters in Ireland.  Corporation tax is paid where the corporation is, not where the sale is.

Actually, the fact that there is a sale in a country where the corporation is based may actually create what is known as a "permanent establishment" in the country of sale resulting in all revenues (and costs) associated with sales in that country to be subject to corporation tax in that country. This applies whether within the EU or not, so it is a valid question to ask why Ireland is being asked to collect all EU taxes.

I would guess there may be more to this over the coming years as more countries within the EU decide to take a closer look at the business activities of non-resident corporations within their jurisdictions... Apple may just be the tip of the iceberg.

avon b7

crowley said:

avon b7 said:

Tax avoidance is fine but tax evasion isn't. The EU, in a roundabout way, is basically saying that Apple has been evading tax.

No they aren't.  The EU isn't saying much about Apple at all, the problem is with Ireland.

And tax avoidance isn't fine, just legal.

The EU is saying a whole lot about Apple. It was Apple that was subject to the investigation. The reclamation is to the Irish government though. That's why I said 'roundabout way'.

Tax avoidance is fine. The government doesn't know many of your circumstances until you formally declare them. If you want to take advantage of any tax breaks and avoid paying unnecessary taxes, it is up to you to make the necessary deductions, claims etc. It's all part of good accounting.

That is one thing and something completely different is to decide for yourself how much is taxable in the first place.