Apple's appeal against $14.4B EU & Ireland tax payment is this week

Posted:
in General Discussion
Apple is due to head to the European Union General Court over its tax affairs this week, with the iPhone maker set to commence arguments on Tuesday to reverse a ruling by the European Commission that caused it to pay Ireland 13 billion euros ($14.4 billion) in back taxes.

Apple's Irish headquarters
Apple's Irish headquarters


The date for the showdown between the regulator, Ireland, and Apple was set in mid August, with the appeal set to take place on Tuesday and Wednesday at the second-highest tribunal on the continent. While a final ruling on the matter may take months to arrive, the first signs of Apple's fate will be via a pair of initial rulings set for publication on September 24.

The courtroom tussle is over a 2016 ruling by the European Commission claiming Apple was provided preferential tax breaks by Ireland, including one rate as low as 1% on European profits in 2003, and as little as 0.005% in 2014. Through a financial process commonly called the "double Irish," Apple funneled its European revenue through Ireland to take advantage of the rates.

The European Commission's decision led to an order for Apple to pay 13.1 billion euro to Ireland, along with 1.2 billion extra in interest. Naturally, both Apple and Ireland opposed the ruling.

Neither Apple nor the European Commission offered a comment to Fortune ahead of the hearing, with Ireland advising it "profoundly" disagreed with the fine. Apple did however refer to comments it previously made about its tax payments, including a statement made in November 2017, insisting it complies with tax laws and that it was the largest taxpayer in the world, spending over $35 million in corporate income taxes over a three-year period.

Under EU rules, preferential tax treatment like the rates provided to Apple is forbidden, including in cases where individual member states offered companies benefits not available elsewhere in the European Union.

The total balance of 14.3 billion euros has been retained in escrow throughout the appeals process and will remain so until its completion, in case it has to be return to Apple, though so far the escrow account has lost 16 million euro in value despite it being invested in typically safe sovereign and quasi-sovereign bonds.

Regardless of the result of the hearing, it is possible the major tax battle could go on for years longer, with it potentially being sent to the EU Court of Justice, the continent's highest tribunal.

Outside of Apple, the courtroom fight has the potential to affect other multinational companies that have become targets of the European Commission for tax reasons. A win to the European Commission could embolden it to conduct further investigations, and possibly more fines to be paid.

According to European Parliament member Sven Giegold, the legal activity has "very big consequences" on a political level, suggesting "If Apple wins this case, the calls for tax harmonization in Europe will take on a different dynamic, you can count on that."

So far, individual member states like France and Austria have explored the possibility of applying extra tax measures against major tech companies, but work to produce Europe-wide tax reform is moving at a far slower pace.
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Comments

  • Reply 1 of 21
    Stand and deliver. 
  • Reply 2 of 21
    lkrupplkrupp Posts: 7,469member
    Why bother, Apple? This is a done deal. You actually think you can talk the EU out of $15B? They’re drooling at the mouth to get their hands on that cash, most of which will wind up in their  own and their friends pockets. You worked out a deal with Ireland and years later the EU is now crying foul? How convenient for them. 
    bshankequality72521
  • Reply 3 of 21
    Rayz2016Rayz2016 Posts: 4,788member
    Good luck, but with the EU as both judge and jury, I’m not holding out much hope. 
    bshankequality72521Carnage
  • Reply 4 of 21
    croprcropr Posts: 966member
    lkrupp said:
    Why bother, Apple? This is a done deal. You actually think you can talk the EU out of $15B? They’re drooling at the mouth to get their hands on that cash, most of which will wind up in their  own and their friends pockets. You worked out a deal with Ireland and years later the EU is now crying foul? How convenient for them. 
    You did not read the article.  In case the EU wins, Apple has to pay Ireland the 13.1 billion Euo, the EU is not getting a single eurocent.  I don't say that EU is without any sins, but your bashing here is pointless and off topic.

    The case is not about taxes, it is about Ireland giving Apple an unfair competitive advantage, which is forbidden by European law.

    avon b7hydrogennubusspheric
  • Reply 5 of 21
    cropr said:
    lkrupp said:
    Why bother, Apple? This is a done deal. You actually think you can talk the EU out of $15B? They’re drooling at the mouth to get their hands on that cash, most of which will wind up in their  own and their friends pockets. You worked out a deal with Ireland and years later the EU is now crying foul? How convenient for them. 
    You did not read the article.  In case the EU wins, Apple has to pay Ireland the 13.1 billion Euo, the EU is not getting a single eurocent.  I don't say that EU is without any sins, but your bashing here is pointless and off topic.

    The case is not about taxes, it is about Ireland giving Apple an unfair competitive advantage, which is forbidden by European law.

     :D 
    edited September 16
  • Reply 6 of 21
    Exactly, this sort of tax avoidance is morally repugnant. Local businesses pay 20% or more in corporation tax depending on the EU country. By exploiting loopholes big multinational corporations have lowered their effective tax rate to less than 1%. Apple isn’t the only guilty party here and Ireland would rather take the 1% tax on profit that was really generated elsewhere in the EU than what they are morally entitled to which is nothing, so they allow these loopholes to continue to exist.

    It really does provide an unfair advantage. It takes significant sum to set up all the relevant shell companies and accounting schemes to take advantage of such loopholes so smaller companies or those that only operate in one jurisdiction can’t do it. Even if they could it would still be morally wrong. 
    Carnage
  • Reply 7 of 21
    It is surprising that Tim Cook and C-level management at Apple are so much out of tune with ethics and politics outside US. Last week Google paid $1.1bn to France in taxes and fines. Apple paid less than competitors which is anti-competitive and against the core design of EU = not going to be tolerated at all.

    The EU commission is elected by 27 governments. If you go against the commission... well... then you mess with the governments of 27 nations. And they just agreed to ask the competition commissioner of the last 5 years to continue. It is totally unheard of, but she now has 5 more years in the job! Not only that. She got promoted to executive vice-president of the EU Commission with the added responsibility of... everything digital. Why is it that Tim Cook does his outmost to stay on her bad side? In local TV she ridiculed him for being half her height - shown with a hand gesture (sorry... no link but it was rather rude). Unlike Trump the lady is not for turning. With Apple having a focus on privacy she could be the best thing that happened to Apple. Instead she is the worst.

    Just pay the taxes and spend the same amount on wind farms from and in her home country with some words about the importance of contributing locally. And then start talking privacy... she could completely disrupt the business model of Google, Facebook etc.

    edited September 16
  • Reply 8 of 21
    “...it was the largest taxpayer in the world, spending over $35 million in corporate income taxes over a three-year period.”

    I’m assuming this is a typo. Maybe $35 billion?
  • Reply 9 of 21
    nubus said:
    It is surprising that Tim Cook and C-level management at Apple are so much out of tune with ethics and politics outside US. Last week Google paid $1.1bn to France in taxes and fines. Apple paid less than competitors which is anti-competitive and against the core design of EU = not going to be tolerated at all.

    The EU commission is elected by 27 governments. If you go against the commission... well... then you mess with the governments of 27 nations. And they just agreed to ask the competition commissioner of the last 5 years to continue. It is totally unheard of, but she now has 5 more years in the job! Not only that. She got promoted to executive vice-president of the EU Commission with the added responsibility of... everything digital. Why is it that Tim Cook does his outmost to stay on her bad side? In local TV she ridiculed him for being half her height - shown with a hand gesture (sorry... no link but it was rather rude). Unlike Trump the lady is not for turning. With Apple having a focus on privacy she could be the best thing that happened to Apple. Instead she is the worst.

    Just pay the taxes and spend the same amount on wind farms from and in her home country with some words about the importance of contributing locally. And then start talking privacy... she could completely disrupt the business model of Google, Facebook etc.
    Balderdash. A US corporation that sells products in another country is taxed in that country on the product it sells in that country. Same with other countries selling products to the US. Foreign corporations, otoh, just like US corporations, are taxed in the country of corporate ownership.

    The $14.4 B in this case amounts to a power grab on potential US tax income. It will either revert to Ireland’s government or the US government. It is essentially the EU saying that Apple holding it’s corporate cash in Ireland means Apple should pay a corporate tax there.

    It beggars belief that posters here can know so little and yet post so authoritatively.
    edited September 16 bshank
  • Reply 10 of 21
    avon b7avon b7 Posts: 4,305member
    sacto joe said:
    nubus said:
    It is surprising that Tim Cook and C-level management at Apple are so much out of tune with ethics and politics outside US. Last week Google paid $1.1bn to France in taxes and fines. Apple paid less than competitors which is anti-competitive and against the core design of EU = not going to be tolerated at all.

    The EU commission is elected by 27 governments. If you go against the commission... well... then you mess with the governments of 27 nations. And they just agreed to ask the competition commissioner of the last 5 years to continue. It is totally unheard of, but she now has 5 more years in the job! Not only that. She got promoted to executive vice-president of the EU Commission with the added responsibility of... everything digital. Why is it that Tim Cook does his outmost to stay on her bad side? In local TV she ridiculed him for being half her height - shown with a hand gesture (sorry... no link but it was rather rude). Unlike Trump the lady is not for turning. With Apple having a focus on privacy she could be the best thing that happened to Apple. Instead she is the worst.

    Just pay the taxes and spend the same amount on wind farms from and in her home country with some words about the importance of contributing locally. And then start talking privacy... she could completely disrupt the business model of Google, Facebook etc.
    Balderdash. A US corporation that sells products in another country is taxed in that country on the product it sells in that country. Same with other countries selling products to the US. Foreign corporations, otoh, just like US corporations, are taxed in the country of corporate ownership.

    The $14.4 B in this case amounts to a power grab on potential US tax income. It will either revert to Ireland’s government or the US government. It is essentially the EU saying that Apple holding it’s corporate cash in Ireland means Apple should pay a corporate tax there.

    It beggars belief that posters here can know so little and yet post so authoritatively.
    It is far from a power grab. There was a three year investigation (and Apple of course wasn't the only company investigated).

    The investigation followed very clear  guidelines and a summary was made public. Now the case will be heard.

    Up to now we have known very little about the details so making broad claims about power grabs doesn't make a lot of sense because it based on nothing. The truth is there was a thorough investigation and now both sides will present their views. Further down the line we will learn the outcome but one thing should be clear the EU doesn't do power grabs.
    edited September 16
  • Reply 11 of 21
    avon b7 said:
    sacto joe said:
    nubus said:
    It is surprising that Tim Cook and C-level management at Apple are so much out of tune with ethics and politics outside US. Last week Google paid $1.1bn to France in taxes and fines. Apple paid less than competitors which is anti-competitive and against the core design of EU = not going to be tolerated at all.

    The EU commission is elected by 27 governments. If you go against the commission... well... then you mess with the governments of 27 nations. And they just agreed to ask the competition commissioner of the last 5 years to continue. It is totally unheard of, but she now has 5 more years in the job! Not only that. She got promoted to executive vice-president of the EU Commission with the added responsibility of... everything digital. Why is it that Tim Cook does his outmost to stay on her bad side? In local TV she ridiculed him for being half her height - shown with a hand gesture (sorry... no link but it was rather rude). Unlike Trump the lady is not for turning. With Apple having a focus on privacy she could be the best thing that happened to Apple. Instead she is the worst.

    Just pay the taxes and spend the same amount on wind farms from and in her home country with some words about the importance of contributing locally. And then start talking privacy... she could completely disrupt the business model of Google, Facebook etc.
    Balderdash. A US corporation that sells products in another country is taxed in that country on the product it sells in that country. Same with other countries selling products to the US. Foreign corporations, otoh, just like US corporations, are taxed in the country of corporate ownership.

    The $14.4 B in this case amounts to a power grab on potential US tax income. It will either revert to Ireland’s government or the US government. It is essentially the EU saying that Apple holding it’s corporate cash in Ireland means Apple should pay a corporate tax there.

    It beggars belief that posters here can know so little and yet post so authoritatively.
    It is far from a power grab. There was a three year investigation (and Apple of course wasn't the only company investigated).

    The investigation followed very clear  guidelines and a summary was made public. Now the case will be heard.

    Up to now we have known very little about the details so making broad claims about power grabs doesn't make a lot of sense because it based on nothing. The truth is there was a thorough investigation and now both sides will present their views. Further down the line we will learn the outcome but one thing should be clear the EU doesn't do power grabs.
    We know enough, so yes, I can claim power grab. That $14.4 B is on Apple corporate income, which is adjusted on a US tax basis after writing off foreign taxes paid. Increase the amount of foreign tax and you decrease the amount of US tax. This was literally designed to pick the pocket of the US government.
    edited September 16 bshank
  • Reply 12 of 21
    I do have to clarify one thing, though. This EU action was done before the US changed it’s tax policies. Now, if I understand the tax circumstances correctly (and it’s complicated!), there is a lower corporate tax base but less opportunity to write off foreign taxes. Instead, there’s a sort of guaranteed minimum US tax.

    Which is why I say this EU maneuver WAS designed to pick the US Treasury’s pocket....

    So now, it’s possible that the money might come directly out of the hide of Apple investors. Or largely accrue to investors if Apple wins.

    Which means, if they lose, it’s important for Apple to get to cash neutral ASAP. You can’t tax zero net cash.
  • Reply 13 of 21
    gatorguygatorguy Posts: 21,300member
    sacto joe said:
    I do have to clarify one thing, though. This EU action was done before the US changed it’s tax policies. Now, if I understand the tax circumstances correctly (and it’s complicated!), there is a lower corporate tax base but less opportunity to write off foreign taxes. Instead, there’s a sort of guaranteed minimum US tax.

    Which is why I say this EU maneuver WAS designed to pick the US Treasury’s pocket....

    So now, it’s possible that the money might come directly out of the hide of Apple investors. Or largely accrue to investors if Apple wins.

    Which means, if they lose, it’s important for Apple to get to cash neutral ASAP. You can’t tax zero net cash.
    Companies don't pay taxes based on how much cash they have. How will cash neutral affect the corporate taxes Apple would owe?
  • Reply 14 of 21
    gatorguy said:
    sacto joe said:
    I do have to clarify one thing, though. This EU action was done before the US changed it’s tax policies. Now, if I understand the tax circumstances correctly (and it’s complicated!), there is a lower corporate tax base but less opportunity to write off foreign taxes. Instead, there’s a sort of guaranteed minimum US tax.

    Which is why I say this EU maneuver WAS designed to pick the US Treasury’s pocket....

    So now, it’s possible that the money might come directly out of the hide of Apple investors. Or largely accrue to investors if Apple wins.

    Which means, if they lose, it’s important for Apple to get to cash neutral ASAP. You can’t tax zero net cash.
    Companies don't pay taxes based on how much cash they have. How will cash neutral affect the corporate taxes Apple would owe?
    Don’t they? The Ireland operation was essentially a holding company for Apple’s international cash/net profit. What the heck DO you think they’re taxing if not net profit?
    edited September 17 spheric
  • Reply 15 of 21
    sacto joe said:
    nubus said:
    It is surprising that Tim Cook and C-level management at Apple are so much out of tune with ethics and politics outside US. Last week Google paid $1.1bn to France in taxes and fines. Apple paid less than competitors which is anti-competitive and against the core design of EU = not going to be tolerated at all.

    The EU commission is elected by 27 governments. If you go against the commission... well... then you mess with the governments of 27 nations. And they just agreed to ask the competition commissioner of the last 5 years to continue. It is totally unheard of, but she now has 5 more years in the job! Not only that. She got promoted to executive vice-president of the EU Commission with the added responsibility of... everything digital. Why is it that Tim Cook does his outmost to stay on her bad side? In local TV she ridiculed him for being half her height - shown with a hand gesture (sorry... no link but it was rather rude). Unlike Trump the lady is not for turning. With Apple having a focus on privacy she could be the best thing that happened to Apple. Instead she is the worst.

    Just pay the taxes and spend the same amount on wind farms from and in her home country with some words about the importance of contributing locally. And then start talking privacy... she could completely disrupt the business model of Google, Facebook etc.
    Balderdash. A US corporation that sells products in another country is taxed in that country on the product it sells in that country. Same with other countries selling products to the US. Foreign corporations, otoh, just like US corporations, are taxed in the country of corporate ownership.

    The $14.4 B in this case amounts to a power grab on potential US tax income. It will either revert to Ireland’s government or the US government. It is essentially the EU saying that Apple holding it’s corporate cash in Ireland means Apple should pay a corporate tax there.

    It beggars belief that posters here can know so little and yet post so authoritatively.
    I would say it (to use your wording) beggars believe that you do not try to understand the real issue. While it is true that corporate tax is on the product sold in a specific country it is irrelevant here. As you should know Ireland was being used to channel the profits of most European countries through an (illegal) tax haven called Ireland. So the argument you are making is not applicable. I would venure a guess that they also make creative use of IP transfer to reduce their profits in high tax countries. As to the often used argument that this is retroactively and unfair - a multi billion dollar company should have attorneys/tax accountants that are smart enough to know that what Ireland offered was not legal. They decided to take the risk and see if it works out. In the end this is (while morally repugnant) smart corporate behavior. They did not even get a fine - just have to pay back what they own. Imagine what would happen if you and I would do our taxes that way...
    hydrogen
  • Reply 16 of 21
    Imagine what would happen if you and I would do our taxes that way...
    Imagine you do your taxes and your country's laws say that you have to pay $xxxx. Then, more than a decade later the U.N. comes and tells you that you have to, in fact, pay $xxxxxx.

    Imagine if every tax payer in every country had to deal with retroactive tax collection enforcement from a foreign source years after the fact.
  • Reply 17 of 21
    gatorguygatorguy Posts: 21,300member
    sacto joe said:
    gatorguy said:
    sacto joe said:
    I do have to clarify one thing, though. This EU action was done before the US changed it’s tax policies. Now, if I understand the tax circumstances correctly (and it’s complicated!), there is a lower corporate tax base but less opportunity to write off foreign taxes. Instead, there’s a sort of guaranteed minimum US tax.

    Which is why I say this EU maneuver WAS designed to pick the US Treasury’s pocket....

    So now, it’s possible that the money might come directly out of the hide of Apple investors. Or largely accrue to investors if Apple wins.

    Which means, if they lose, it’s important for Apple to get to cash neutral ASAP. You can’t tax zero net cash.
    Companies don't pay taxes based on how much cash they have. How will cash neutral affect the corporate taxes Apple would owe?
    Don’t they? The Ireland operation was essentially a holding company for Apple’s international cash/net profit. What the heck DO you think they’re taxing if not net profit?
    Is your tax bill based on how much cash you have in the bank? Gosh I wish mine was! 
  • Reply 18 of 21
    nubus said:
    It is surprising that Tim Cook and C-level management at Apple are so much out of tune with ethics and politics outside US. Last week Google paid $1.1bn to France in taxes and fines. Apple paid less than competitors which is anti-competitive and against the core design of EU = not going to be tolerated at all.

    The EU commission is elected by 27 governments. If you go against the commission... well... then you mess with the governments of 27 nations. And they just agreed to ask the competition commissioner of the last 5 years to continue. It is totally unheard of, but she now has 5 more years in the job! Not only that. She got promoted to executive vice-president of the EU Commission with the added responsibility of... everything digital. Why is it that Tim Cook does his outmost to stay on her bad side? In local TV she ridiculed him for being half her height - shown with a hand gesture (sorry... no link but it was rather rude). Unlike Trump the lady is not for turning. With Apple having a focus on privacy she could be the best thing that happened to Apple. Instead she is the worst.

    Just pay the taxes and spend the same amount on wind farms from and in her home country with some words about the importance of contributing locally. And then start talking privacy... she could completely disrupt the business model of Google, Facebook etc.
    Sounds like a shakedown, when you put it like that.
  • Reply 19 of 21
    sphericspheric Posts: 1,799member
    gatorguy said:
    sacto joe said:
    gatorguy said:
    sacto joe said:
    I do have to clarify one thing, though. This EU action was done before the US changed it’s tax policies. Now, if I understand the tax circumstances correctly (and it’s complicated!), there is a lower corporate tax base but less opportunity to write off foreign taxes. Instead, there’s a sort of guaranteed minimum US tax.

    Which is why I say this EU maneuver WAS designed to pick the US Treasury’s pocket....

    So now, it’s possible that the money might come directly out of the hide of Apple investors. Or largely accrue to investors if Apple wins.

    Which means, if they lose, it’s important for Apple to get to cash neutral ASAP. You can’t tax zero net cash.
    Companies don't pay taxes based on how much cash they have. How will cash neutral affect the corporate taxes Apple would owe?
    Don’t they? The Ireland operation was essentially a holding company for Apple’s international cash/net profit. What the heck DO you think they’re taxing if not net profit?
    Is your tax bill based on how much cash you have in the bank? Gosh I wish mine was! 
    Absolutely it is, if that cash is profit you made abroad, hoarded there, and now need/intend to repatriate it. 

    That's the thing.
  • Reply 20 of 21
    sphericspheric Posts: 1,799member

    sacto joe said:
    nubus said:
    It is surprising that Tim Cook and C-level management at Apple are so much out of tune with ethics and politics outside US. Last week Google paid $1.1bn to France in taxes and fines. Apple paid less than competitors which is anti-competitive and against the core design of EU = not going to be tolerated at all.

    The EU commission is elected by 27 governments. If you go against the commission... well... then you mess with the governments of 27 nations. And they just agreed to ask the competition commissioner of the last 5 years to continue. It is totally unheard of, but she now has 5 more years in the job! Not only that. She got promoted to executive vice-president of the EU Commission with the added responsibility of... everything digital. Why is it that Tim Cook does his outmost to stay on her bad side? In local TV she ridiculed him for being half her height - shown with a hand gesture (sorry... no link but it was rather rude). Unlike Trump the lady is not for turning. With Apple having a focus on privacy she could be the best thing that happened to Apple. Instead she is the worst.

    Just pay the taxes and spend the same amount on wind farms from and in her home country with some words about the importance of contributing locally. And then start talking privacy... she could completely disrupt the business model of Google, Facebook etc.
    Balderdash. A US corporation that sells products in another country is taxed in that country on the product it sells in that country. Same with other countries selling products to the US. Foreign corporations, otoh, just like US corporations, are taxed in the country of corporate ownership.

    The $14.4 B in this case amounts to a power grab on potential US tax income. It will either revert to Ireland’s government or the US government. It is essentially the EU saying that Apple holding it’s corporate cash in Ireland means Apple should pay a corporate tax there.

    It beggars belief that posters here can know so little and yet post so authoritatively.
    I would say it (to use your wording) beggars believe that you do not try to understand the real issue. While it is true that corporate tax is on the product sold in a specific country it is irrelevant here. As you should know Ireland was being used to channel the profits of most European countries through an (illegal) tax haven called Ireland. So the argument you are making is not applicable. I would venure a guess that they also make creative use of IP transfer to reduce their profits in high tax countries. As to the often used argument that this is retroactively and unfair - a multi billion dollar company should have attorneys/tax accountants that are smart enough to know that what Ireland offered was not legal. 
    But…it was by definition "legal". There were tax laws that applied to the place of business, and Apple followed them to the letter. 

    These tax laws were designed to encourage multinationals to settle in Ireland, boosting the dead local economy, and they were very effective. 

    The bone of contention at this point is merely whether Apple should have to pay for following the letter of the law, or whether Ireland covers the cost for having created laws that were apparently in violation of EU tax policy. (You can tell from my wording where I think the onus falls.) 
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