Apple says it has paid $10.4B of $15.1B in back taxes to Ireland

Posted:
in General Discussion
Apple has so far made two payments of 4.5 billion euros (about $5.2 billion) into an escrow account for the 13 billion euros ($15.1 billion) in back taxes the European Commission has ordered it to pay Ireland, according to new regulatory filings.

Margrethe Vestager


"As of June 30, 2018, 4.5 billion euros of the recovery amount was funded into escrow. Subsequent to June 30, 2018, the company has funded an additional 4.5 billion euros of the recovery amount into escrow," Apple said in quarterly documents seen by Reuters.

Apple and the Irish government set up an escrow account rather that direct payments in anticipation of an appeal against the European Commission, which could begin this fall. The fight could stretch out for several years however with no guarantee of success, since the Commission has previously ruled against other multinational corporations accused of violating European tax rules.

In August 2016, the Commission ruled that Ireland had extended preferential tax deals to Apple for years, something considered illegal state aid under European law -- aid offered to one company must be extended to others as well. The E.U. argued that the Irish government had even reverse-engineered rules to appease Apple.

The iPhone maker has funneled large sums of international revenue through Ireland, using loopholes to pay minimal taxes. According to the Commission, Apple paid 1 percent on profits in 2003, and as little as 0.005 percent in 2014.

The Irish government has begun closing some loopholes, and the Commission has proposed new tax rules that would spread some of Apple's obligations around the E.U.

Comments

  • Reply 1 of 13
    Rayz2016Rayz2016 Posts: 4,556member
    So what has actually happened is completely different to what the headline says has happened.
    marklark[Deleted User]
  • Reply 2 of 13
    SpamSandwichSpamSandwich Posts: 30,748member
    Bloody blackmailers.
  • Reply 3 of 13
    nunzynunzy Posts: 662member
    Who cares? Apple made a lot more than 15 billion by doing it.

    They came out way ahead, and their stock value proves it.
  • Reply 4 of 13
    chasmchasm Posts: 1,174member
    Rayz2016 said:
    So what has actually happened is completely different to what the headline says has happened.
    No, but this should serve as a reminder not to stop reading at the headline. That's why AI writes full articles; there is more to say than can come across in ~12 words.

    I agree that "Apple deposits two-thirds of possible Ireland back taxes into escrow" or something like that would have been more accurate, but the point is that the money is available if Apple loses the appeal, which seems likely (as Apple does not, to my knowledge, have any new evidence that they didn't have before), so the headline is likely accurate if speculative at the moment.

    The part of this that rankles me is that the EU's decision amounts to retroactive taxation with the penalty on Apple, rather than the politicians who set up this illegal state aid deal. It is Ireland -- and Ireland alone -- that should be paying the penalty.
    edited August 2018 radarthekatpalominemuthuk_vanalingamwatto_cobra
  • Reply 5 of 13
    gatorguygatorguy Posts: 20,055member
    chasm said:
    Rayz2016 said:
    So what has actually happened is completely different to what the headline says has happened.


    The part of this that rankles me is that the EU's decision amounts to retroactive taxation with the penalty on Apple, rather than the politicians who set up this illegal state aid deal. It is Ireland -- and Ireland alone -- that should be paying the penalty.
    There is no penalty. It's simply taxes that should have been paid and that money goes to Ireland. Of course that's barring any other countries making a claim on it since some of it originally came from transactions that occurred in their countries
    muthuk_vanalingam
  • Reply 6 of 13
    radarthekatradarthekat Posts: 2,973moderator
    gatorguy said:
    chasm said:
    Rayz2016 said:
    So what has actually happened is completely different to what the headline says has happened.


    The part of this that rankles me is that the EU's decision amounts to retroactive taxation with the penalty on Apple, rather than the politicians who set up this illegal state aid deal. It is Ireland -- and Ireland alone -- that should be paying the penalty.
    There is no penalty. It's simply taxes that should have been paid and that money goes to Ireland. Of course that's barring any other countries making a claim on it since some of it originally came from transactions that occurred in their countries
    The only issue with the stance that it’s taxes that should have been paid is the question of whether the companies - Apple and others who take advantage of nations extending favorable tax treatment - might have acted differently.  Here in the US, states often give favorable tax treatment to businesses building stadiums, factories, office complexes, etc.  Would it be fair to later renig on those special tax incentives, by imposing back taxes after that fact?  That is in essence what the EU is forcing Ireland to do, seemingly without recognition that Ireland was at least as complicit in the structuring of the tax deals and should therefore be also liable for paying those owed taxes, not merely collecting them from the corporations.

    And from my read on this situation, those same deals were available to other corporations; they weren’t uniquely available to Apple.  And if that’s the case, they would have been legal.  Now you might say, correctly, that those deals were available only to corporations of a certain size, not to small businesses.  But is that not common?  I can cite a current example.  Look at Cupertino, considering a head tax on businesses located in the city.  But not all businesses; just those that meet a minimum size threshold.  Meaning just Apple and possibly one or two other very large businesses having offices there.   And Cupertino is being somewhat disingenuous if it invented this tax proposal after Apple set its plans and bought the land, but I suppose they have the right to do so.  At least it’s not retroactive taxation.
    edited August 2018 chasm
  • Reply 7 of 13
    gatorguygatorguy Posts: 20,055member
    gatorguy said:
    chasm said:
    Rayz2016 said:
    So what has actually happened is completely different to what the headline says has happened.


    The part of this that rankles me is that the EU's decision amounts to retroactive taxation with the penalty on Apple, rather than the politicians who set up this illegal state aid deal. It is Ireland -- and Ireland alone -- that should be paying the penalty.
    There is no penalty. It's simply taxes that should have been paid and that money goes to Ireland. Of course that's barring any other countries making a claim on it since some of it originally came from transactions that occurred in their countries


    And from my read on this situation, those same deals were available to other corporations; they weren’t uniquely available to Apple. 
    According to the EU complaint "those same deals" were NOT available to other corporations but instead uniquely crafted for Apple. That's actually the crux of the matter. If believe you are correct and I'm the one misunderstanding the facts it's not too difficult to find the report and read it for yourself. There's some good summations too from Reuters, The Guardian, Irish Times and others if the report itself is a tad too wordy. 
    edited August 2018 [Deleted User]
  • Reply 8 of 13
    GeorgeBMacGeorgeBMac Posts: 3,900member
    gatorguy said:
    chasm said:
    Rayz2016 said:
    So what has actually happened is completely different to what the headline says has happened.


    The part of this that rankles me is that the EU's decision amounts to retroactive taxation with the penalty on Apple, rather than the politicians who set up this illegal state aid deal. It is Ireland -- and Ireland alone -- that should be paying the penalty.
    There is no penalty. It's simply taxes that should have been paid and that money goes to Ireland. Of course that's barring any other countries making a claim on it since some of it originally came from transactions that occurred in their countries
    The only issue with the stance that it’s taxes that should have been paid is the question of whether the companies - Apple and others who take advantage of nations extending favorable tax treatment - might have acted differently.  Here in the US, states often give favorable tax treatment to businesses building stadiums, factories, office complexes, etc.  Would it be fair to later renig on those special tax incentives, by imposing back taxes after that fact?  That is in essence what the EU is forcing Ireland to do, seemingly without recognition that Ireland was at least as complicit in the structuring of the tax deals and should therefore be also liable for paying those owed taxes, not merely collecting them from the corporations.

    And from my read on this situation, those same deals were available to other corporations; they weren’t uniquely available to Apple.  And if that’s the case, they would have been legal.  Now you might say, correctly, that those deals were available only to corporations of a certain size, not to small businesses.  But is that not common?  I can cite a current example.  Look at Cupertino, considering a head tax on businesses located in the city.  But not all businesses; just those that meet a minimum size threshold.  Meaning just Apple and possibly one or two other very large businesses having offices there.   And Cupertino is being somewhat disingenuous if it invented this tax proposal after Apple set its plans and bought the land, but I suppose they have the right to do so.  At least it’s not retroactive taxation.
    Well, no...  Ireland didn't "renig".  Ireland broke EU tax regulations.  They cheated.   They got caught.  The scam was corrected.

    While Apple was following Irish rules, Ireland was not following EU rules.   Some people think that the EU shouldn't have rules.   That's stupid.  Ireland is free to participate or not.   But, if they participate and enjoy the privileges, then they should also follow the rules... 
    [Deleted User]
  • Reply 9 of 13
    Right. And for not following the EU rules, Ireland was able to capture ALL the benefits of their "deal" with Apple. As "punishment", they get to collect back those incentives! Way to go, Ireland! Well done! What possible deterrent is there?!!
  • Reply 10 of 13
    cornchipcornchip Posts: 1,198member
    Right. And for not following the EU rules, Ireland was able to capture ALL the benefits of their "deal" with Apple. As "punishment", they get to collect back those incentives! Way to go, Ireland! Well done! What possible deterrent is there?!!
    Having to pay it all back into EU? 

    And how how much are all the other companies taking advantage of Ireland tax breaks paying back? 
  • Reply 11 of 13
    crowleycrowley Posts: 5,743member
    cornchip said:
    Right. And for not following the EU rules, Ireland was able to capture ALL the benefits of their "deal" with Apple. As "punishment", they get to collect back those incentives! Way to go, Ireland! Well done! What possible deterrent is there?!!
    Having to pay it all back into EU? 
    What's this?  The money isn't going to the EU, it's going to Ireland.  Ireland are (I believe still) a net beneficiary from the EU.

    In answer to slimpotato, the deterrant is reputational risk.  Any company that sees a tax discount in Ireland is going to be very wary of taking it now.  In addition, there's little point in fining Ireland, the money that's been reclaimed is public money that services have been deprived of for years, so chipping away at that would be counterproductive.  I do agree that the brunt of the pain has fallen on Apple, and that maybe a stronger censure of Ireland might have be in order, but then again, I imagine the EU has put the whole country under a lot more scrutiny, so the tax authorities are being appropriately pinched.  Sometimes the punishment is unseen to the public.
    GeorgeBMac[Deleted User]
  • Reply 12 of 13
    gatorguy said:
    chasm said:
    Rayz2016 said:
    So what has actually happened is completely different to what the headline says has happened.


    The part of this that rankles me is that the EU's decision amounts to retroactive taxation with the penalty on Apple, rather than the politicians who set up this illegal state aid deal. It is Ireland -- and Ireland alone -- that should be paying the penalty.
    There is no penalty. It's simply taxes that should have been paid and that money goes to Ireland. Of course that's barring any other countries making a claim on it since some of it originally came from transactions that occurred in their countries
    The only issue with the stance that it’s taxes that should have been paid is the question of whether the companies - Apple and others who take advantage of nations extending favorable tax treatment - might have acted differently.  Here in the US, states often give favorable tax treatment to businesses building stadiums, factories, office complexes, etc.  Would it be fair to later renig on those special tax incentives, by imposing back taxes after that fact?  That is in essence what the EU is forcing Ireland to do, seemingly without recognition that Ireland was at least as complicit in the structuring of the tax deals and should therefore be also liable for paying those owed taxes, not merely collecting them from the corporations.
    Big difference, you would have to compare it to a individual state doing something that was illegal at national (federal?) level. The EU has also said all along that Ireland did wrong in offering what amounted to illegal state aid, there may likely be punishment (or has been already, unreported) from the EU upon Ireland itself but the tax that Apple is paying is simply the tax they should have paid already over the past decade or so. It's worth noting that the tax is calculated on Apple's operations in Europe so I fully expect some more bean counters to fathom out where the tax really should have been paid (France, Germany, UK, Holland, etc. etc.) as Ireland itself doesn't even have an Apple Store!
  • Reply 13 of 13
    crowleycrowley Posts: 5,743member
    The only issue with the stance that it’s taxes that should have been paid is the question of whether the companies - Apple and others who take advantage of nations extending favorable tax treatment - might have acted differently.  
    Hard to argue when Apple themselves claim that tax isn't the reason they're in Ireland:
    https://appleinsider.com/articles/18/06/21/apple-came-to-ireland-to-build-a-community-not-skirt-taxes-tim-cook-says

    I find that dubious, but it's Apple's own claim from the mouth of their CEO, and gives them little leeway to cry foul.
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