Does anybody have any insight into how much of Apple's foreign cash is liable for payment of taxes (eventually) in the U.S. as opposed to other countries? One would think it would be a relatively easy matter for Apple to determine how much of its product and services are sold in a particular country and how much in tax is due to that country and to pay those taxes promptly. Has this Irish-EU standoff arisen because U.S. tax law allows Apple to hold pre-tax earnings offshore and re-patriate it at a time of its choice? So, maybe the EU sees an opportunity here to grab taxes on a big chunk of Apple's pre-tax earnings that should rightly be taxed by the U.S.? If so, one would think there should be some pressure on the U.S. to amend its tax laws to prevent companies like Apple from indefinitely holding pre-tax earnings overseas for some kind of temporary tax holiday. Taxes should be paid on an annual basis, regardless of where the pre-tax cash is parked. If I tried to hold some of my pre-tax income offshore to avoid the current year's taxes and tell the government I want to pick the year in which to pay taxes in, I think I'd be risking jail time.
None of Apple's overseas cash horde is liable for tax payements in the U.S. since the money is earned overseas. Apple already pays taxes here in the U.S. for all the profit it books in the U.S. There is no tax repatriation right now. Last time was 2004 I belive. If Apple were to bring back any amount of money held overseas back into the U.S., they would get taxed 35%. The EU standoff came about because the EU feels Ireland has basically given Apple illegal state aid for alleged tax agreeements. It has nothing to do with taxes in the U.S. Not sure if you are confused at how this whole offshore thing works for large coprorations. Apple isn't moving income earned in the U.S. overseas. If you are taking income earned in the U.S. and then hiding it offshore to avoid paying taxes, that's obviously against the law. Thats not what Apple is doing. The way Apple is set up, they are booking profits overseas so they don't have to pay taxes here, which is perfectly legal.
It is a little more complicated than just an Ireland-EU spat. The US is also quite involved.
Given that the US imposes worldwide taxation upon repatriation, there are many billions potentially owed to the US Treasury should that money be ever brought back to the US by Apple. Ireland claims that all of the taxes owed to it have been paid, so nothing more is needed, owed, or wanted there. EU says no, Ireland should collect more: they used the argument that since Ireland is a net recipient of EU aid, the additional taxes that Ireland collects from companies like Apple would lower the amount of aid that EU has to provide to Ireland from its coffers.
The US view is: "hey, you're now getting your paws on the money that could/would be, under current law, owed to our treasury." So, even if the EU wins this case, that is only stage 1 of a longer process. The US (most certainly, the Trump administration) will come down on them like a ton of bricks, and it will end up back in the courts somewhere. Stage 2 will be all about where that court fight will take place. Stage 3 will be the court fight between EU and the US. Then there'll be appeals. And Stage N -- assuming the EU finally wins the case against Apple -- will be when the EU starts to go after every major US multinational with operations in Ireland. Rinse and repeat.
Things are definitely going to get pretty messy during the appeals process. The U.S. has already filed an application with the EU General Court in July to intervene in the case. I imagine this will take many years before it's all said and done. From what I read, the case won't be heard until the end of 2018.
... altho Apple rather than transferring cash out of the US is transferring the intellectual property rights behind the iPhone, developed in the US for the most part, to its Irish Apple International subsidiary.
Can you provide a good cite -- i.e., one that convinced you -- for this? Thanks.
Nearly 40 years ago Apple (parent) entered into an agreement with Irish subsidiaries to share R&D costs. Pursuant to that agreement (as updated since), the Irish subsidiaries have rights to distribute Apple products in areas of the world outside of the Americas.
So: (i) Apple has had this arrangement in place for 30 years; it started when they were small, and they've kept it the same since they're large -- in other words, it's not something that they started to do just because they became the most profitable company on earth. (ii) More than half the R&D costs are funded by Apple Ireland, even though most of the R&D is done in the US; (iii) The Irish subsidiary has, over the 30 years, shared in profits and they've shared in losses; (iv) over 60% of Apple's sales are abroad.
What exactly is at issue here? That Apple has not terminated this arrangement just because they've become larger and more successful? What is the logic for why they should do that? (@gatorguy, please feel free to explain why as well).
Seems you're using a Red Herring as no one here in this thread is saying Apple should terminate the sharing agreement. You asked for evidence of its existence indicating some doubt on your part that Apple was yet another company to make it part of their tax strategies. Since you now have the proof you asked for has it become something you feel a need to argue in support of?
Yes other companies use transfer agreements too in efforts to avoid taxation with various levels of success depending on how aggressively they wield it. Apple is not the only big multinational using these types of transfer agreements and found to evade taxes or prompt fraud investigations in some countries when used inappropriately, and won't be the last I'm sure. Google too, along with Amazon and Facebook and other rich American companies are all dealing with tax investigations of their own.
As for the EU Commission IANAL and have no firm law-based opinion either way whether they will be successful. The only thing that's clear to me is that far too many very wealthy companies are getting ever richer and more powerful by shifting tax obligations off their shoulders and onto "others", modern-day versions of the old Railroad, Cattle and Oil Baron's.
...sez you, while posting on this forum using some robber-baron's brand of computer.... Ah, the irony.
Btw, who do you think really pays the corporation's taxes?
... altho Apple rather than transferring cash out of the US is transferring the intellectual property rights behind the iPhone, developed in the US for the most part, to its Irish Apple International subsidiary.
Can you provide a good cite -- i.e., one that convinced you -- for this? Thanks.
Nearly 40 years ago Apple (parent) entered into an agreement with Irish subsidiaries to share R&D costs. Pursuant to that agreement (as updated since), the Irish subsidiaries have rights to distribute Apple products in areas of the world outside of the Americas.
So: (i) Apple has had this arrangement in place for 30 years; it started when they were small, and they've kept it the same since they're large -- in other words, it's not something that they started to do just because they became the most profitable company on earth. (ii) More than half the R&D costs are funded by Apple Ireland, even though most of the R&D is done in the US; (iii) The Irish subsidiary has, over the 30 years, shared in profits and they've shared in losses; (iv) over 60% of Apple's sales are abroad.
What exactly is at issue here? That Apple has not terminated this arrangement just because they've become larger and more successful? What is the logic for why they should do that? (@gatorguy, please feel free to explain why as well).
Seems you're using a Red Herring as no one here in this thread is saying Apple should terminate the sharing agreement. You asked for evidence of its existence indicating some doubt on your part that Apple was yet another company to make it part of their tax strategies. Since you now have the proof you asked for has it become something you feel a need to argue in support of?
Yes other companies use transfer agreements too in efforts to avoid taxation with various levels of success depending on how aggressively they wield it. Apple is not the only big multinational using these types of transfer agreements and found to evade taxes or prompt fraud investigations in some countries when used inappropriately, and won't be the last I'm sure. Google too, along with Amazon and Facebook and other rich American companies are all dealing with tax investigations of their own.
As for the EU Commission IANAL and have no firm law-based opinion either way whether they will be successful. The only thing that's clear to me is that far too many very wealthy companies are getting ever richer and more powerful by shifting tax obligations off their shoulders and onto "others", modern-day versions of the old Railroad, Cattle and Oil Baron's.
you are not at all clear on where Apple owes money. Is it the US, Ireland or where Apple sells?
... altho Apple rather than transferring cash out of the US is transferring the intellectual property rights behind the iPhone, developed in the US for the most part, to its Irish Apple International subsidiary.
Can you provide a good cite -- i.e., one that convinced you -- for this? Thanks.
Nearly 40 years ago Apple (parent) entered into an agreement with Irish subsidiaries to share R&D costs. Pursuant to that agreement (as updated since), the Irish subsidiaries have rights to distribute Apple products in areas of the world outside of the Americas.
So: (i) Apple has had this arrangement in place for 30 years; it started when they were small, and they've kept it the same since they're large -- in other words, it's not something that they started to do just because they became the most profitable company on earth. (ii) More than half the R&D costs are funded by Apple Ireland, even though most of the R&D is done in the US; (iii) The Irish subsidiary has, over the 30 years, shared in profits and they've shared in losses; (iv) over 60% of Apple's sales are abroad.
What exactly is at issue here? That Apple has not terminated this arrangement just because they've become larger and more successful? What is the logic for why they should do that? (@gatorguy, please feel free to explain why as well).
Seems you're using a Red Herring as no one here in this thread is saying Apple should terminate the sharing agreement. You asked for evidence of its existence indicating some doubt on your part that Apple was yet another company to make it part of their tax strategies. Since you now have the proof you asked for has it become something you feel a need to argue in support of?
Yes other companies use transfer agreements too in efforts to avoid taxation with various levels of success depending on how aggressively they wield it. Apple is not the only big multinational using these types of transfer agreements and found to evade taxes or prompt fraud investigations in some countries when used inappropriately, and won't be the last I'm sure. Google too, along with Amazon and Facebook and other rich American companies are all dealing with tax investigations of their own.
As for the EU Commission IANAL and have no firm law-based opinion either way whether they will be successful. The only thing that's clear to me is that far too many very wealthy companies are getting ever richer and more powerful by shifting tax obligations off their shoulders and onto "others", modern-day versions of the old Railroad, Cattle and Oil Baron's.
...sez you, while posting on this forum using some robber-baron's brand of computer.... Ah, the irony.
Btw, who do you think really pays the corporation's taxes?
At the basic level, tho a bit simplistic, those who buy the company's products.
If you don't buy an Apple (or Google or Amazon or..) product why should you be responsible as an individual taxpayer to pick up the slack for the corporation reaping the rewards? Note too that it puts those companies who can avoid corporate taxes at yet another competitive advantage over some other companies, able to underprice them via those tax savings, use the additional profits from tax avoidance to increase plant and equipment investments, or pay higher salaries to attract better talent. In practice huge multinationals are assisted in maintaining their market dominance by using taxes to the disadvantage of smaller companies. Overtly aggressive tax avoidance is yet another vehicle for the rich to get ever richer while hoarding ever higher percentages of the planet's financial wealth.
Apple sells to all european countries via its Apple Distribution International business located in Ireland. So any order placed in the United Kingdom, or Spain, or whatever, are all booked through their base in Ireland. Under EU law, if a company sets up in any EU country, then they pay the corporate tax rate in that country. So this means, french cars sold in Ireland, the only tax Ireland gets is the VAT and not tax on income, as this is being paid to the French collectors.
iPhone is £1000 in the UK. UK VAT rate is 20%, Apple pay over £200 to the UK tax collectors. Done. That is £800 revenue brought back to Apple distribution International in Ireland.
But Apple distribution bought this iPhone for £700 from Apple Sales international. So that means a profit was made of £100. 12.5% of £100 is £12.50 in tax is owed to Ireland.
This is where everyone is now getting confused. Under Irish Tax law, Apple Sales international is run from Bermuda, and is not a tax resident of Ireland. So any profit made by Apple Sales international is not taxable in Ireland, it is taxed at 0% in Bermuda.
the problem EU have is that this means, Apple is not paying tax on 90% of its profits to ANY european country.
So when the EU say that Apple owes taxes to Ireland, it is doing so based on a hugely Moral and evasive way. So hence the argument of Lawfully paying taxes is true, but morally wrong knowing exactly what they are doing.
In the end, Apple on all of its European profits from the WHOLE of Europe, only paid 0.001% tax. But in reality, they paid the full 12.5% corporate rate charge in Ireland on IRISH profits. But Ireland is tiny. 5 million people, so that is expected. ireland chooses not to tax Apple on profits made in other european countries, and those countries cannot tax Apple in Ireland for Spanish profits as it cannot as Ireland has already taxed them, be it at 0%
... altho Apple rather than transferring cash out of the US is transferring the intellectual property rights behind the iPhone, developed in the US for the most part, to its Irish Apple International subsidiary.
Can you provide a good cite -- i.e., one that convinced you -- for this? Thanks.
Nearly 40 years ago Apple (parent) entered into an agreement with Irish subsidiaries to share R&D costs. Pursuant to that agreement (as updated since), the Irish subsidiaries have rights to distribute Apple products in areas of the world outside of the Americas.
So: (i) Apple has had this arrangement in place for 30 years; it started when they were small, and they've kept it the same since they're large -- in other words, it's not something that they started to do just because they became the most profitable company on earth. (ii) More than half the R&D costs are funded by Apple Ireland, even though most of the R&D is done in the US; (iii) The Irish subsidiary has, over the 30 years, shared in profits and they've shared in losses; (iv) over 60% of Apple's sales are abroad.
What exactly is at issue here? That Apple has not terminated this arrangement just because they've become larger and more successful? What is the logic for why they should do that? (@gatorguy, please feel free to explain why as well).
Seems you're using a Red Herring as no one here in this thread is saying Apple should terminate the sharing agreement. You asked for evidence of its existence indicating some doubt on your part that Apple was yet another company to make it part of their tax strategies. Since you now have the proof you asked for has it become something you feel a need to argue in support of?
Yes other companies use transfer agreements too in efforts to avoid taxation with various levels of success depending on how aggressively they wield it. Apple is not the only big multinational using these types of transfer agreements and found to evade taxes or prompt fraud investigations in some countries when used inappropriately, and won't be the last I'm sure. Google too, along with Amazon and Facebook and other rich American companies are all dealing with tax investigations of their own.
As for the EU Commission IANAL and have no firm law-based opinion either way whether they will be successful. The only thing that's clear to me is that far too many very wealthy companies are getting ever richer and more powerful by shifting tax obligations off their shoulders and onto "others", modern-day versions of the old Railroad, Cattle and Oil Baron's.
you are not at all clear on where Apple owes money. Is it the US, Ireland or where Apple sells?
Again in a simplistic level, It is Ireland they owe it to, since Ireland is where Apple distribution is Incorporated. However, Apple distribution make little to no profit since they buy the products they ares selling in the EU, from Apple Sales international which isn't a tax resident in any EU country. So all the profit is realistically routed through a Non Eu taxable company.
If that arrangement of avoidance did not exist, then they should pay the tax to Ireland since this is where the Company works from in the EU, and under EU tax law, a company pays all the profits it made in all the EU countries to one country, the country they are resident in.
Irish tax law however, allows for a company to not be tax resident as such. So Ireland is facilitating, and Apple and the likes are using the system.
Apple sells to all european countries via its Apple Distribution International business located in Ireland. So any order placed in the United Kingdom, or Spain, or whatever, are all booked through their base in Ireland. Under EU law, if a company sets up in any EU country, then they pay the corporate tax rate in that country. So this means, french cars sold in Ireland, the only tax Ireland gets is the VAT and not tax on income, as this is being paid to the French collectors.
iPhone is £1000 in the UK. UK VAT rate is 20%, Apple pay over £200 to the UK tax collectors. Done. That is £800 revenue brought back to Apple distribution International in Ireland.
But Apple distribution bought this iPhone for £700 from Apple Sales international. So that means a profit was made of £100. 12.5% of £100 is £12.50 in tax is owed to Ireland.
This is where everyone is now getting confused. Under Irish Tax law, Apple Sales international is run from Bermuda, and is not a tax resident of Ireland. So any profit made by Apple Sales international is not taxable in Ireland, it is taxed at 0% in Bermuda.
the problem EU have is that this means, Apple is not paying tax on 90% of its profits to ANY european country.
So when the EU say that Apple owes taxes to Ireland, it is doing so based on a hugely Moral and evasive way. So hence the argument of Lawfully paying taxes is true, but morally wrong knowing exactly what they are doing.
In the end, Apple on all of its European profits from the WHOLE of Europe, only paid 0.001% tax. But in reality, they paid the full 12.5% corporate rate charge in Ireland on IRISH profits. But Ireland is tiny. 5 million people, so that is expected. ireland chooses not to tax Apple on profits made in other european countries, and those countries cannot tax Apple in Ireland for Spanish profits as it cannot as Ireland has already taxed them, be it at 0%
No sir there is no Bermuda connection. Also VAT has nothing to do with corporate taxes. It's similar to a sales tax paid by the end-consumer and not something Apple would pay from it's profits. Only other issue is the Irish taxes Apple actually paid were not based on actual Irish product sales AFAIK but instead a set agreed upon amount that Apple and the Irish taxing authorities arrived at as "fair" in private meetings.
Apple sells to all european countries via its Apple Distribution International business located in Ireland. So any order placed in the United Kingdom, or Spain, or whatever, are all booked through their base in Ireland. Under EU law, if a company sets up in any EU country, then they pay the corporate tax rate in that country. So this means, french cars sold in Ireland, the only tax Ireland gets is the VAT and not tax on income, as this is being paid to the French collectors.
iPhone is £1000 in the UK. UK VAT rate is 20%, Apple pay over £200 to the UK tax collectors. Done. That is £800 revenue brought back to Apple distribution International in Ireland.
But Apple distribution bought this iPhone for £700 from Apple Sales international. So that means a profit was made of £100. 12.5% of £100 is £12.50 in tax is owed to Ireland.
This is where everyone is now getting confused. Under Irish Tax law, Apple Sales international is run from Bermuda, and is not a tax resident of Ireland. So any profit made by Apple Sales international is not taxable in Ireland, it is taxed at 0% in Bermuda.
the problem EU have is that this means, Apple is not paying tax on 90% of its profits to ANY european country.
So when the EU say that Apple owes taxes to Ireland, it is doing so based on a hugely Moral and evasive way. So hence the argument of Lawfully paying taxes is true, but morally wrong knowing exactly what they are doing.
In the end, Apple on all of its European profits from the WHOLE of Europe, only paid 0.001% tax. But in reality, they paid the full 12.5% corporate rate charge in Ireland on IRISH profits. But Ireland is tiny. 5 million people, so that is expected. ireland chooses not to tax Apple on profits made in other european countries, and those countries cannot tax Apple in Ireland for Spanish profits as it cannot as Ireland has already taxed them, be it at 0%
No sir there is no Bermuda connection. Also VAT has nothing to do with corporate taxes. It's similar to a sales tax paid by the end-consumer and not something Apple would pay from it's profits. Only other issue is the Irish taxes Apple actually paid were not based on actual Irish product sales AFAIK but instead a set agreed upon amount that Apple and the Irish taxing authorities arrived at as "fair" in private meetings.
I should have been clearer. Instead of Bermuda I meant a Tax haven. ( having recently studied the Amazon system I presumed the Apple system would be the same there)
Again should have been clearer on the VAT rate. Apple collects the Vat rate from all orders made int he EU and hands the VAT back to the retrospective governments in each country. I was making that clear for anyone getting confused on this.
The last point is not really true and I happen to be close to that area. Apple has no choice but to pay 12.5% of corporate profit rate made on Irish Sales. Obviously this is little to nothing, in fact, in some cases, there is a loss, as they claim every expense under the sun to reduce the profit by the taxable Apple distribution in Ireland.The problem is Ireland chooses not to tax the profit Apple made on sales everywhere else in Europe. And every other country cannot claim any tax on that profit as the company is located in Ireland, which is in the EU, which means under existing laws and treaties, they cannot claim fortune to.
Think of it this way. If Ireland chose to Tax Apples subsidiaries equally as a tax resident, then the EU wouldn't have an arguement. The reason why EU are a bit miffed at this is big corporations are not paying tax anywhere. Ireland could tax at 5% and the EU then wouldn't have a leg to stand on in their argument.
... altho Apple rather than transferring cash out of the US is transferring the intellectual property rights behind the iPhone, developed in the US for the most part, to its Irish Apple International subsidiary.
Can you provide a good cite -- i.e., one that convinced you -- for this? Thanks.
Nearly 40 years ago Apple (parent) entered into an agreement with Irish subsidiaries to share R&D costs. Pursuant to that agreement (as updated since), the Irish subsidiaries have rights to distribute Apple products in areas of the world outside of the Americas.
So: (i) Apple has had this arrangement in place for 30 years; it started when they were small, and they've kept it the same since they're large -- in other words, it's not something that they started to do just because they became the most profitable company on earth. (ii) More than half the R&D costs are funded by Apple Ireland, even though most of the R&D is done in the US; (iii) The Irish subsidiary has, over the 30 years, shared in profits and they've shared in losses; (iv) over 60% of Apple's sales are abroad.
What exactly is at issue here? That Apple has not terminated this arrangement just because they've become larger and more successful? What is the logic for why they should do that? (@gatorguy, please feel free to explain why as well).
Seems you're using a Red Herring as no one here in this thread is saying Apple should terminate the sharing agreement. You asked for evidence of its existence indicating some doubt on your part that Apple was yet another company to make it part of their tax strategies. Since you now have the proof you asked for has it become something you feel a need to argue in support of?
Yes other companies use transfer agreements too in efforts to avoid taxation with various levels of success depending on how aggressively they wield it. Apple is not the only big multinational using these types of transfer agreements and found to evade taxes or prompt fraud investigations in some countries when used inappropriately, and won't be the last I'm sure. Google too, along with Amazon and Facebook and other rich American companies are all dealing with tax investigations of their own.
As for the EU Commission IANAL and have no firm law-based opinion either way whether they will be successful. The only thing that's clear to me is that far too many very wealthy companies are getting ever richer and more powerful by shifting tax obligations off their shoulders and onto "others", modern-day versions of the old Railroad, Cattle and Oil Baron's.
you are not at all clear on where Apple owes money. Is it the US, Ireland or where Apple sells?
Apple would say they owe taxes to no one on the majority of profits. In their financial reports they state most of it to be permanently invested overseas, so they don't owe it to the US.
ASI owns the product rights for international sales, invoices Apple distributors in the various international markets to include markups for royalty payments owed to ASI from the US transferred IP, and uses those invoices to move revenue from Japan sales, Aussie sales, German sales, Spanish sales, Norwegian sales etc. to ASI accounts. So Apple says they don't owe corporate taxes in the international markets where the products were sold because they didn't realize much if any profit from selling Apple products in those markets. Yes, it is hard to believe Apple Australia doesn't profit from selling an iPhone in Perth, or that Apple Stores in Germany (Apple Retail Germany) can say they actually operate at a significant loss country-wide despite what we know to be industry leading profit-margins on Apple products and thus owe no German corporate taxes.
ASI claims not to owe taxes to any country, period. The Apple subsidiaries in Ireland were designed not to be be answerable to any taxing authority on the planet. It's tax-free profits for the most part which is tough trick for smaller companies and individuals to pull off. But many of the huge multinationals have it down pat.
So who should collect corporate taxes on Apple product sales in your opinion? No one like Apple would claim? Country where the sale took place? The US? The same question could be asked about Google ad revenue. Is much of it actually not taxable as Google would like to claim or is tax trickery something that needs to be addressed and dealt with rather than passing it on to individual taxpayers in all income categories from poor to wealthy.
Apple sells to all european countries via its Apple Distribution International business located in Ireland. So any order placed in the United Kingdom, or Spain, or whatever, are all booked through their base in Ireland. Under EU law, if a company sets up in any EU country, then they pay the corporate tax rate in that country. So this means, french cars sold in Ireland, the only tax Ireland gets is the VAT and not tax on income, as this is being paid to the French collectors.
iPhone is £1000 in the UK. UK VAT rate is 20%, Apple pay over £200 to the UK tax collectors. Done. That is £800 revenue brought back to Apple distribution International in Ireland.
But Apple distribution bought this iPhone for £700 from Apple Sales international. So that means a profit was made of £100. 12.5% of £100 is £12.50 in tax is owed to Ireland.
This is where everyone is now getting confused. Under Irish Tax law, Apple Sales international is run from Bermuda, and is not a tax resident of Ireland. So any profit made by Apple Sales international is not taxable in Ireland, it is taxed at 0% in Bermuda.
the problem EU have is that this means, Apple is not paying tax on 90% of its profits to ANY european country.
So when the EU say that Apple owes taxes to Ireland, it is doing so based on a hugely Moral and evasive way. So hence the argument of Lawfully paying taxes is true, but morally wrong knowing exactly what they are doing.
In the end, Apple on all of its European profits from the WHOLE of Europe, only paid 0.001% tax. But in reality, they paid the full 12.5% corporate rate charge in Ireland on IRISH profits. But Ireland is tiny. 5 million people, so that is expected. ireland chooses not to tax Apple on profits made in other european countries, and those countries cannot tax Apple in Ireland for Spanish profits as it cannot as Ireland has already taxed them, be it at 0%
No sir there is no Bermuda connection. Also VAT has nothing to do with corporate taxes. It's similar to a sales tax paid by the end-consumer and not something Apple would pay from it's profits. Only other issue is the Irish taxes Apple actually paid were not based on actual Irish product sales AFAIK but instead a set agreed upon amount that Apple and the Irish taxing authorities arrived at as "fair" in private meetings.
The last point is not really true and I happen to be close to that area. Apple has no choice but to pay 12.5% of corporate profit rate made on Irish Sales. Obviously this is little to nothing, in fact, in some cases, there is a loss, as they claim every expense under the sun to reduce the profit by the taxable Apple distribution in Ireland.The problem is Ireland chooses not to tax the profit Apple made on sales everywhere else in Europe. And every other country cannot claim any tax on that profit as the company is located in Ireland, which is in the EU, which means under existing laws and treaties, they cannot claim fortune to.
Think of it this way. If Ireland chose to Tax Apples subsidiaries equally as a tax resident, then the EU wouldn't have an arguement. The reason why EU are a bit miffed at this is big corporations are not paying tax anywhere. Ireland could tax at 5% and the EU then wouldn't have a leg to stand on in their argument.
You would be forgiven for thinking that's the case. It is not. Apple was the recipient of two specially-negotiated tax arrangements thru private meetings with Irish tax authorities. Those agreements reduced Apple's tax-rate from the standard Irish 12.5% corporate rate that most every other company is required to pay. https://qz.com/273631/how-apple-got-its-2-tax-rate-in-ireland/
Comments
Btw, who do you think really pays the corporation's taxes?
If you don't buy an Apple (or Google or Amazon or..) product why should you be responsible as an individual taxpayer to pick up the slack for the corporation reaping the rewards? Note too that it puts those companies who can avoid corporate taxes at yet another competitive advantage over some other companies, able to underprice them via those tax savings, use the additional profits from tax avoidance to increase plant and equipment investments, or pay higher salaries to attract better talent. In practice huge multinationals are assisted in maintaining their market dominance by using taxes to the disadvantage of smaller companies. Overtly aggressive tax avoidance is yet another vehicle for the rich to get ever richer while hoarding ever higher percentages of the planet's financial wealth.
good summary there.
Ok so here is pretty much what is going on.
Apple sales international
Apple Sales
Apple Distribution International
Apple sells to all european countries via its Apple Distribution International business located in Ireland. So any order placed in the United Kingdom, or Spain, or whatever, are all booked through their base in Ireland. Under EU law, if a company sets up in any EU country, then they pay the corporate tax rate in that country. So this means, french cars sold in Ireland, the only tax Ireland gets is the VAT and not tax on income, as this is being paid to the French collectors.
iPhone is £1000 in the UK. UK VAT rate is 20%, Apple pay over £200 to the UK tax collectors. Done. That is £800 revenue brought back to Apple distribution International in Ireland.
But Apple distribution bought this iPhone for £700 from Apple Sales international. So that means a profit was made of £100. 12.5% of £100 is £12.50 in tax is owed to Ireland.
This is where everyone is now getting confused. Under Irish Tax law, Apple Sales international is run from Bermuda, and is not a tax resident of Ireland. So any profit made by Apple Sales international is not taxable in Ireland, it is taxed at 0% in Bermuda.
the problem EU have is that this means, Apple is not paying tax on 90% of its profits to ANY european country.
So when the EU say that Apple owes taxes to Ireland, it is doing so based on a hugely Moral and evasive way. So hence the argument of Lawfully paying taxes is true, but morally wrong knowing exactly what they are doing.
In the end, Apple on all of its European profits from the WHOLE of Europe, only paid 0.001% tax. But in reality, they paid the full 12.5% corporate rate charge in Ireland on IRISH profits. But Ireland is tiny. 5 million people, so that is expected. ireland chooses not to tax Apple on profits made in other european countries, and those countries cannot tax Apple in Ireland for Spanish profits as it cannot as Ireland has already taxed them, be it at 0%
If that arrangement of avoidance did not exist, then they should pay the tax to Ireland since this is where the Company works from in the EU, and under EU tax law, a company pays all the profits it made in all the EU countries to one country, the country they are resident in.
Irish tax law however, allows for a company to not be tax resident as such. So Ireland is facilitating, and Apple and the likes are using the system.
I should have been clearer. Instead of Bermuda I meant a Tax haven. ( having recently studied the Amazon system I presumed the Apple system would be the same there)
Again should have been clearer on the VAT rate. Apple collects the Vat rate from all orders made int he EU and hands the VAT back to the retrospective governments in each country. I was making that clear for anyone getting confused on this.
The last point is not really true and I happen to be close to that area. Apple has no choice but to pay 12.5% of corporate profit rate made on Irish Sales. Obviously this is little to nothing, in fact, in some cases, there is a loss, as they claim every expense under the sun to reduce the profit by the taxable Apple distribution in Ireland.The problem is Ireland chooses not to tax the profit Apple made on sales everywhere else in Europe. And every other country cannot claim any tax on that profit as the company is located in Ireland, which is in the EU, which means under existing laws and treaties, they cannot claim fortune to.
ASI owns the product rights for international sales, invoices Apple distributors in the various international markets to include markups for royalty payments owed to ASI from the US transferred IP, and uses those invoices to move revenue from Japan sales, Aussie sales, German sales, Spanish sales, Norwegian sales etc. to ASI accounts. So Apple says they don't owe corporate taxes in the international markets where the products were sold because they didn't realize much if any profit from selling Apple products in those markets. Yes, it is hard to believe Apple Australia doesn't profit from selling an iPhone in Perth, or that Apple Stores in Germany (Apple Retail Germany) can say they actually operate at a significant loss country-wide despite what we know to be industry leading profit-margins on Apple products and thus owe no German corporate taxes.
ASI claims not to owe taxes to any country, period. The Apple subsidiaries in Ireland were designed not to be be answerable to any taxing authority on the planet. It's tax-free profits for the most part which is tough trick for smaller companies and individuals to pull off. But many of the huge multinationals have it down pat.
So who should collect corporate taxes on Apple product sales in your opinion? No one like Apple would claim? Country where the sale took place? The US? The same question could be asked about Google ad revenue. Is much of it actually not taxable as Google would like to claim or is tax trickery something that needs to be addressed and dealt with rather than passing it on to individual taxpayers in all income categories from poor to wealthy.
https://qz.com/273631/how-apple-got-its-2-tax-rate-in-ireland/
As for how the overall tax avoidance efforts of some of the big techs is played this article offers a good basic explanation without getting into too many mind-numbing technical details.
https://www.reuters.com/article/us-apple-tax-loophole-idUSBRE94K0MH20130521