Apple makes first payment of $15.3B disputed Irish tax bill to escrow account

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in General Discussion
Apple has started to pay off its $15.3 billion tax bill to Ireland, the country's Finance Minister has confirmed, transferring the first $1.76 billion payment to an escrow account.

Apple Ireland Cork Offices


Finance Minister Paschal Donohoe informed Reuters on Friday the first payment has made its way into the escrow account. While the amount of 1.5 billion euros ($1.76 billion) was confirmed by the minister, it is unclear exactly when Apple made the payment to the account, nor when the remainder of the due taxes will be similarly paid.

Bloomberg reports the European Commission is considering dropping its legal action against the Irish government for failing to collect the back taxes, due to the first payment. In March, the Commission advised it would be willing to withdraw from the case, originally launched due to the slow progress in recovering the taxes, but only if the full amount was paid.

"We continue to be in close contact with the Irish authorities and hope that recovery of the illegal aid is completed in full as soon as possible," the European Union advised. "That would also allow us to close the ongoing procedure before the EU Court of Justice against Ireland for not having implemented the Commission decision of August 2016."

The decision in question was an order to Ireland to collect 13 billion euros in back taxes, following an investigation into Apple's tax affairs. The Commission argued Apple had received preferential tax treatment from Ireland, constituting illegal state aid.

Apple funned large sums of revenue through Ireland, using assorted loopholes in order to pay the minimal amount of tax due. The Commission's investigation found Apple paid 1 percent on profits in 2003, and as little as 0.005 percent in 2014. The Irish government was accused of reverse-engineering tax deals it made with Apple on the fly, to ensure favorable rates.

Both Apple and Ireland have denied any wrongdoing, and are appealing the decision. On Thursday, the European Union Court of Justice blocked efforts by the U.S. government to help Apple, despite the U.S. claiming it has a vested interest in the affair, as Apple could potentially claim tax credits over the Irish funds.

The appeal for the case is likely to be heard in the fall, Donohoe suggested in April, but an exact date is unknown. As part of the ongoing legal action, the unpaid taxes are to be held in escrow by the Bank of New York Mellon, with the full amount expected to be paid by the end of the third quarter of 2018.

Outside of the courtroom, critics have accused Apple of violating the spirit of tax law, and depriving government services of badly-needed funds. In France, Apple has been met with repeated protests proclaiming a similar message.

Since the investigation, the European Commission has proposed changes to tax law that would require digital media companies to pay based on where revenue is generated, not where the company chooses to locate its European headquarters.
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Comments

  • Reply 1 of 41
    kkqd1337kkqd1337 Posts: 191member
    Tax cheating scum.
    [Deleted User]
  • Reply 2 of 41
    nunzynunzy Posts: 662member
    Why does Apple get to pay in installments? They could pay the 15 billion in a lump sum and hardly even notice.
    ceek74[Deleted User]
  • Reply 3 of 41
    ceek74ceek74 Posts: 323member
    The equivalent of loose change in Apple's carseat.
    nunzynetmagecornchip
  • Reply 4 of 41
    mknelsonmknelson Posts: 326member
    kkqd1337 said:
    Tax cheating scum.
    "Apple funned large sums of revenue through Ireland, using assorted loopholes in order to pay the minimal amount of tax due."

    They paid the amount they were legally obligated to per Ireland.

    And they had "funned" doing so!
    netmageCesar Battistini Maziero
  • Reply 5 of 41
    SpamSandwichSpamSandwich Posts: 31,010member
    EU scum blackmailing companies for following the letter of the law.
    JWSCnetmageCesar Battistini Maziero
  • Reply 6 of 41
    nunzynunzy Posts: 662member
    ceek74 said:
    The equivalent of loose change in Apple's carseat.
    15 Billion is nothing to Apple.  They are richer than any  company in the history of civilization. They probably spend more than 15 billion a year on Executive lunches.
    ceek74
  • Reply 7 of 41
    SpamSandwichSpamSandwich Posts: 31,010member
    nunzy said:
    ceek74 said:
    The equivalent of loose change in Apple's carseat.
    15 Billion is nothing to Apple.  They are richer than any  company in the history of civilization. They probably spend more than 15 billion a year on Executive lunches.
    Of course $15 billion is a significant about of money, even for Apple. Money extorted from Apple is money they cannot spend to pay suppliers, pay employees, pay investors, improve products, etc.
    macxpressnunzynetmage
  • Reply 8 of 41
    nunzynunzy Posts: 662member
    nunzy said:
    ceek74 said:
    The equivalent of loose change in Apple's carseat.
    15 Billion is nothing to Apple.  They are richer than any  company in the history of civilization. They probably spend more than 15 billion a year on Executive lunches.
    Of course $15 billion is a significant about of money, even for Apple. Money extorted from Apple is money they cannot spend to pay suppliers, pay employees, pay investors, improve products, etc.
    If anyone has extra money, it is Apple. They have hundreds of billions in cash sitting fallow. They do NOT need money to pay suppliers, pay employees, or pay anyone else. Apple has more cash than anybody except the Rothschilds and the Catholic Church.
    cornchip
  • Reply 9 of 41
    gatorguygatorguy Posts: 20,451member
    EU scum blackmailing companies for following the letter of the law.
    It wasn't the law. It was a carved-out special exception to it. The law stipulated a 12.5% tax-rate which is what smaller domestic companies were required to pay.

    To be clear I am not personally judging that the special exception made for a very wealthy international corporation was ILLEGAL tho. One of the few entities whose opinion matters made that judgement. 
    cornchipGeorgeBMac[Deleted User]
  • Reply 10 of 41
    linkmanlinkman Posts: 903member
    Some royalty in a foreign country recently emailed me that he has several hundred million dollars in escrow waiting for disbursement. All I have to do for one percent of it is pay the escrow agent a fee of $50. It sounds like Apple is working with the same guy.
  • Reply 11 of 41
    volcanvolcan Posts: 1,782member
    EU scum blackmailing companies for following the letter of the law.
    The real scum are the lawyers, politicians and accountants who think up these devious schemes to facilitate the wealthy avoiding taxes.
    [Deleted User]
  • Reply 12 of 41
    JWSCJWSC Posts: 384member
    EU scum blackmailing companies for following the letter of the law.
    My thoughts exactly.  Because I’m quite confused about all this.  If the European Commission is sure Apple violated the tax law, then why do they feel the need change the tax law to say that taxes should be paid where the revenue is generated versus where a company is headquartered?  Seems to me that Apple was following the law and the European Commission simply didn’t like the results.  It’s OK to change the law.  It’s not OK to retroactively punish companies for following an unpopular law.
    netmage
  • Reply 13 of 41
    JWSCJWSC Posts: 384member
    volcan said:
    The real scum are the lawyers, politicians and accountants who think up these devious schemes to facilitate the wealthy avoiding taxes.
    Damn straight!  That is if you consider that companies are people, which they are clearly not... unless you are an accountant.

    Most of you know the mantra.  Say it with me.  “Companies don’t pay taxes.  People pay taxes.”  ‘Cause ya know, when your company pays taxes it ultimately comes out of your pocket as an employee or out of the collective pocket of your company’s customers.
    netmage
  • Reply 14 of 41
    nunzynunzy Posts: 662member
    JWSC said:
    volcan said:
    The real scum are the lawyers, politicians and accountants who think up these devious schemes to facilitate the wealthy avoiding taxes.
    Damn straight!  That is if you consider that companies are people, which they are clearly not... unless you are an accountant.

    Most of you know the mantra.  Say it with me.  “Companies don’t pay taxes.  People pay taxes.”  ‘Cause ya know, when your company pays taxes it ultimately comes out of your pocket as an employee or out of the collective pocket of your company’s customers.
    It never comes out of the owner's pockets though. That wouldn't fit what you're saying.
  • Reply 15 of 41
    chasmchasm Posts: 1,414member
    To clarify for people who are perhaps just arriving to this story, Apple is appealing this tax bill -- but is paying into the escrow account in the meantime. Should they win their appeal, they will get some or all of that money back (a full victory is extremely unlikely). I'm not sure why Apple is the one having to pay, since it was the government of Ireland that offered the company the "illegal" tax discount. As far as i've been able to discover, there's no evidence Apple coerced a special tax deal out of the Irish government, so not sure why they're on the hook for the whole amount. That said, I'm in favour of multinationals paying their fair share of taxes generally, so I'm hoping that Amazon will be next in the cross-hairs ...
  • Reply 16 of 41
    gatorguygatorguy Posts: 20,451member
    chasm said:
    To clarify for people who are perhaps just arriving to this story, Apple is appealing this tax bill -- but is paying into the escrow account in the meantime. Should they win their appeal, they will get some or all of that money back (a full victory is extremely unlikely). I'm not sure why Apple is the one having to pay, since it was the government of Ireland that offered the company the "illegal" tax discount. As far as i've been able to discover, there's no evidence Apple coerced a special tax deal out of the Irish government, so not sure why they're on the hook for the whole amount. That said, I'm in favour of multinationals paying their fair share of taxes generally, so I'm hoping that Amazon will be next in the cross-hairs ...
    Like Ireland, Luxembourg doesn't like being told by the EU commission to recover taxes from Amazon under the same rules applied to Apple, that the deal the government made with them amounted to illegal state assistance. So they're appealing too just as aIreland is. 

    To help you understand why the money will come from the taxpayer (Apple or Amazon or whoever) should be easy. The EU is not levying a fine on anyone. What they've determined is that making a special tax arrangement was not permissible in the first place. Just like other taxpayers Apple (and Amazon) must pay the statutory corporate tax-rate. No fine. It's taxes due the Irish or Luxembourg government as representatives of their people.
    edited May 2018
  • Reply 17 of 41
    carnegiecarnegie Posts: 720member
    nunzy said:
    Why does Apple get to pay in installments? They could pay the 15 billion in a lump sum and hardly even notice.
    Because, when it comes to Ireland collecting these funds from Apple, Apple has more leverage. What Ireland is being required by the European Commission to do is, in effect, contrary to Irish law and policy. Ireland, at the Commission's direction, is trying to collect money from Apple which Apple, by Ireland's laws, doesn't owe Ireland - money which the appropriate Irish authority had told Apple that it wouldn't owe.

    If Ireland and Apple win their appeal(s), the money will need to be returned to Apple. In the meantime, Ireland doesn't want to be in a situation where there might be losses on the funds held in escrow (or, if not losses, insufficient gains) such that Ireland would have to make up the difference if and when the money was returned to Apple. So it needed Apple to agree on how the funds would be managed in escrow and agree to accept whatever funds were there if and when they won their appeal(s). So Apple had significant leverage when it came to negotiating the terms of payments and how the funds would be managed.
    nunzy
  • Reply 18 of 41
    carnegiecarnegie Posts: 720member
    EU scum blackmailing companies for following the letter of the law.
    It isn't even that Apple only followed the letter of, rather than the spirit of, the law. Apple did both. It wasn't some secret loophole in Irish law that Apple found and exploited. Ireland, for a long time, intentionally had tax laws which allowed Irish corporations to not pay Irish income taxes on profits attributable to foreign branches. That's how Ireland wanted it to work, not just for Apple but for other companies which might (in part thusly) be lured to set up operations in Ireland and in so doing help its economy and contribute something (more than they might have otherwise) to Irish tax revenues.
    SpamSandwich
  • Reply 19 of 41
    carnegiecarnegie Posts: 720member
    nunzy said:
    ceek74 said:
    The equivalent of loose change in Apple's carseat.
    15 Billion is nothing to Apple.  They are richer than any  company in the history of civilization. They probably spend more than 15 billion a year on Executive lunches.
    Of course $15 billion is a significant about of money, even for Apple. Money extorted from Apple is money they cannot spend to pay suppliers, pay employees, pay investors, improve products, etc.
    If Apple does ultimately loss its appeal, the money it has to pay to Ireland as a result will, in effect, come largely from the U.S. Treasury. Apple believes that whatever it has to pay Ireland as a result of the Commission's decision will be creditable against what it would otherwise have to pay in U.S. income taxes (for the deemed-repatriated income from the relevant years).
  • Reply 20 of 41
    carnegiecarnegie Posts: 720member
    gatorguy said:
    EU scum blackmailing companies for following the letter of the law.
    It wasn't the law. It was a carved-out special exception to it. The law stipulated a 12.5% tax-rate which is what smaller domestic companies were required to pay.

    To be clear I am not personally judging that the special exception made for a very wealthy international corporation was ILLEGAL tho. One of the few entities whose opinion matters made that judgement. 
    I'll ask the same question of you that I've asked others who have claimed that Apple got a special exception to Irish tax policy, and which no one (to include the European Commission in its decision) has yet been able to answer: If that's true, then what was that special exception?

    What was Apple allowed to do that other similarly situated entities were told they couldn't do? Or that other entities weren't allowed to do? Or that was contrary to Irish tax law and policy?

    The issue isn't that Apple didn't pay the generally applicable tax rate. It isn't claimed (i.e. by the European Commission) that Apple didn't pay the proper rate. The issue is how is the taxable base to which that rate is applied determined? On that front, what that Apple was allowed to do was inconsistent with more generally-applicable Irish tax policy? Was it that profits attributed to foreign branches of Irish corporations weren't taxable (as income) by Ireland? Was it using a percentage-of-expenses method to determine the profits which should be allocated to the domestic branch of an Irish corporation?

    I'm asking sincerely. What is it that you believe Apple was allowed to do, in determining how much income was taxable in Ireland, which conflicted with Irish tax law or policy?
    tallest skil
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