EU probe of Apple's Irish tax deal extended to 2016

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A European Union investigation into whether Apple's bespoke tax arrangement with the Irish government amounts to illegal state aid has been delayed again, as officials in Brussels continue to gather more information.


Source: European Commission


"We do not expect any decision until after the new year," a spokesperson for the European Commission told the Financial Times. It is the second such delay this year.

What was initially thought to be a June conclusion was first pushed back in early May.

"We will not sacrifice the rule of law or the quality of our work to speed up the process," European Commissioner for Competition Margrethe Vestager said at the time, blaming the delay on the "time consuming" process of gathering information.

While Apple has long maintained that its arrangement with Ireland is entirely legal, the company is nevertheless preparing should the decision go the other way.

"If the European Commission were to conclude against Ireland, it could require Ireland to recover from the company past taxes covering a period of up to 10 years reflective of the disallowed state aid, and such amount could be material," the company wrote in a recent quarterly report.

In addition to Apple, the Commission is also investigating similar arrangements between Amazon and Luxembourg as well as Starbucks and the Netherlands.

Comments

  • Reply 1 of 20
    entropysentropys Posts: 4,152member
    I bet the Irish, Dutch and Luxemburg denizens just love how their political masters have given up their sovereignty to Brussels. It's like the Eurocrats are now taking their contracted pound of flesh, and hey, everyone no doubt gets paid a bit more to be on the Committee doing the investigation.  Keeping it going for as long as possible is thus very important. The worst part is you just know they are suddenly interested after all these years because the cupboard has become very bare and they need extra cash to transfer to Greece, whose population generally take snouting Other Peoples' Money to such heights they make the Brussels Eurocrats look like amateurs.
    edited December 2015 tallest skil
  • Reply 2 of 20
    This type of stuff is nonsense, a Company reviews the tax codes, makes legal business decisions based on those codes for their share holder, and now EU union government wants to change laws. This sounds like bait and switch tactic.  EU lets member states  published attractive but  illegal laws; waits until it attracts businesses, businesses invest locally bringing local prosperity and then EU declare foul and taxes them.  I think share holders should should sue EU, and pull investments out of those countries.

  • Reply 3 of 20
    chris_cachris_ca Posts: 2,543member
    "We couldn't find anything amiss or illegal so we need more time to dig into this arrangement and the tax laws. "
  • Reply 4 of 20
    crowleycrowley Posts: 10,453member
    entropys said:
    I bet the Irish, Dutch and Luxemburg denizens just love how their political masters have given up their sovereignty to Brussels. It's like the Eurocrats are now taking their contracted pound of flesh, and hey, everyone no doubt gets paid a bit more to be on the Committee doing the investigation.  Keeping it going for as long as possible is thus very important. The worst part is you just know they are suddenly interested after all these years because the cupboard has become very bare and they need extra cash to transfer to Greece, whose population generally take snouting Other Peoples' Money to such heights they make the Brussels Eurocrats look like amateurs.
    "Denizen"?  Why that choice of word?  Who are you even referring to?
  • Reply 5 of 20
    entropysentropys Posts: 4,152member
    Denizen = resident.  I was not aware it had any pejorative connotations.
  • Reply 6 of 20
    cpsrocpsro Posts: 3,192member
    If the corporate tax rate wasn't so high in the U.S., Apple wouldn't have taken such measures to protect its profits. Then again, with a lower tax rate, Apple mightn't have paid as much taxes as they have either. Go ahead and change the laws if you like, but imposing penalties for past, legal practices is illegal.
  • Reply 7 of 20
    crowleycrowley Posts: 10,453member
    entropys said:
    Denizen = resident.  I was not aware it had any pejorative connotations.
    Really?  I've never heard it used to mean resident.  It's not so much a pejorative as a word used to mean foreign citizen, though occasionally used synonymously with interloper, with a negative connotation.

    Anyway, if that's a common usage then I am unaware of it, sorry for the intrusion.
  • Reply 8 of 20
    crowley said:
    entropys said:
    Denizen = resident.  I was not aware it had any pejorative connotations.
    Really?  I've never heard it used to mean resident.  It's not so much a pejorative as a word used to mean foreign citizen, though occasionally used synonymously with interloper, with a negative connotation.

    Anyway, if that's a common usage then I am unaware of it, sorry for the intrusion.

    in the US ive only read it used to mean resident (which is diff than a citizen).

    https://www.google.com/search?q=denizen&oq=denizen
  • Reply 9 of 20
    crowleycrowley Posts: 10,453member
    crowley said:
    entropys said:
    Denizen = resident.  I was not aware it had any pejorative connotations.
    Really?  I've never heard it used to mean resident.  It's not so much a pejorative as a word used to mean foreign citizen, though occasionally used synonymously with interloper, with a negative connotation.

    Anyway, if that's a common usage then I am unaware of it, sorry for the intrusion.

    in the US ive only read it used to mean resident (which is diff than a citizen).

    https://www.google.com/search?q=denizen&oq=denizen
    https://en.wikipedia.org/wiki/Denizen_(film)

    I'll take a pulp horror recommendation anywhere I can find it :)
  • Reply 10 of 20
    They did it and everybody knows the question should be why they did it and not how we're going to punish them for that, because, in the end, Ireland will be ''forced'' to tax them retrospectively and we all know they won't. 
    So what's the point really ?
  • Reply 11 of 20
    entropysentropys Posts: 4,152member
    "So what's the point really ?" 

    a
    Asking why a Eurocrat does things is like the fox asking the scorpion why it stung him, leaving them both to drown. It's in their nature.
  • Reply 12 of 20
    quinneyquinney Posts: 2,528member
    This looks like a job for BROMWICH
  • Reply 13 of 20
    cnocbuicnocbui Posts: 3,613member
    entropys said:
    I bet the Irish, Dutch and Luxemburg denizens just love how their political masters have given up their sovereignty to Brussels. It's like the Eurocrats are now taking their contracted pound of flesh, and hey, everyone no doubt gets paid a bit more to be on the Committee doing the investigation.  Keeping it going for as long as possible is thus very important. The worst part is you just know they are suddenly interested after all these years because the cupboard has become very bare and they need extra cash to transfer to Greece, whose population generally take snouting Other Peoples' Money to such heights they make the Brussels Eurocrats look like amateurs.
    I rather wish we had given up all sovereignty to Brussels, then at least the shower of bleeps who run this country wouldn't be able to hide their misdeeds, and those of their business pals, from scrutiny, as they are doing with the banking enquiry 'supposedly' looking into how and why this country was financially crippled.
    edited December 2015
  • Reply 14 of 20
    This is one of those cases where the European Union has a real point and will probably prevail.  The facts of the case are well known and the tradition of EU countries undercutting the EU by selling tax "deals" to large corporations to allow them inexpensive access to the EU market without paying the corporate taxes that are common to most members of the EU.  Apple has been paying lots of taxes in the EU especially excise, sales, and employment taxes.  The real question is corporate taxes that they are avoided by the double dutch with irish cream system of tax evasion.  


    I would love to see reform of US corporate taxes to reduce the cost of bringing back funds earned overseas.  First I would allow any taxes paid overseas to be used as tax credits for corporations repatriating funds to the United States.  So if Apple paid a 3% tax rate in Ireland, then the taxes owed in the United States would be what ever the taxes due in the United States minus the amount already paid to Ireland.  Second I would reduce the top tax bracket in the US to 15% and I would raise the minimum Corporate tax rate to 7% except in cases of natural disasters.  3rd I would reduce the loop holes in the corporate tax system by at least half.  The effective tax paid in the US by corporations is much lower than the stated top rate of 35%.  It is really frustrating that our system has become so corrupt that it is necessary to explain the importance of honesty in business dealings.  With less complexity in the tax code we could have a much more transparent, honest and business friendly system.    Businesses who simply  took care of their responsibilities would be the ones who benefit the most.  
  • Reply 15 of 20
    croprcropr Posts: 1,122member
    chris_ca said:
    "We couldn't find anything amiss or illegal so we need more time to dig into this arrangement and the tax laws. "
    I think it is more like:  the financial construction set up by Apple and the Irish government is so complex that we need more time and manpower to reach to the right conclusion.
    A company can decide in which EU member state it puts its headquarters, and all the profits made in the EU are taxed in that member state.  Member state can define their own corporate tax levels and rules, but they cannot give individual companies special conditions, as the latter is justly seen as illegal competition.
    There definitely something fishy with the Apple construction.  The normal corporate tax level in Ireland is 12,5% or 25% depending on the type of business.  Apple has been paying less than 2 % on its EU profits.  At the moment Apple made the deal with the Irish tax administration, Apple was well aware that the deal might be judged as illegal by the EU Commission. They took then the risk and no one should now complain about it.

    singularity
  • Reply 16 of 20
    cnocbuicnocbui Posts: 3,613member
    This is one of those cases where the European Union has a real point and will probably prevail.  The facts of the case are well known and the tradition of EU countries undercutting the EU by selling tax "deals" to large corporations to allow them inexpensive access to the EU market without paying the corporate taxes that are common to most members of the EU.  Apple has been paying lots of taxes in the EU especially excise, sales, and employment taxes.  The real question is corporate taxes that they are avoided by the double dutch with irish cream system of tax evasion.  


    I would love to see reform of US corporate taxes to reduce the cost of bringing back funds earned overseas.  First I would allow any taxes paid overseas to be used as tax credits for corporations repatriating funds to the United States.  So if Apple paid a 3% tax rate in Ireland, then the taxes owed in the United States would be what ever the taxes due in the United States minus the amount already paid to Ireland.  Second I would reduce the top tax bracket in the US to 15% and I would raise the minimum Corporate tax rate to 7% except in cases of natural disasters.  3rd I would reduce the loop holes in the corporate tax system by at least half.  The effective tax paid in the US by corporations is much lower than the stated top rate of 35%.  It is really frustrating that our system has become so corrupt that it is necessary to explain the importance of honesty in business dealings.  With less complexity in the tax code we could have a much more transparent, honest and business friendly system.    Businesses who simply  took care of their responsibilities would be the ones who benefit the most.  
    I agree wholeheartedly with your first paragraph.  The OECD confirmed my suspicion that a significant part of the problem with western governments levels of debt was corporations avoiding tax on a huge scale through clever schemes and that this has also resulted in increasing tax burdens on individuals.

    There is a credit for tax paid overseas.  It's not 35% on top of taxes already paid, it's 35% less taxes paid overseas.  Some analysies suggest Apple is paying less than 5% on it's overseas earnings through it's various shell games, which would be why they are so reticent on repatriating funds and would go a good way to explaining how their pile of cash is so gargantuan.
  • Reply 17 of 20
    crowleycrowley Posts: 10,453member

    I would love to see reform of US corporate taxes to reduce the cost of bringing back funds earned overseas.  First I would allow any taxes paid overseas to be used as tax credits for corporations repatriating funds to the United States.  So if Apple paid a 3% tax rate in Ireland, then the taxes owed in the United States would be what ever the taxes due in the United States minus the amount already paid to Ireland. 
    I'm pretty sure this is already the case.


    Second I would reduce the top tax bracket in the US to 15% and I would raise the minimum Corporate tax rate to 7% except in cases of natural disasters.  
    I'm not sure where this idea of top tax bracket and minimum tax has come from.  Corporation/company tax is levied at a flat rate on profits, is it not?  It's deductions that can vary.

    Though, on the subject of minimums, since these annual taxes seem to be subject to manipulation via deferrals, re-positing of income, strategic abuse of deductions, and combinations thereof, I'm in favour of a tax validation that acts on the total profits posted over a longer period, 5 or 10 years, or possibly even at the ad-hoc discretion (with limits) of the tax authority that can review and apply additional tax on profits accumulated over that period to ensure a minimum level of tax on profit is paid, that does not allow for any deductions at all.  Doubt that'd ever happen though, tax authorities are becoming ever more toothless.


    3rd I would reduce the loop holes in the corporate tax system by at least half.
    Easy to say.
  • Reply 18 of 20
    h2ph2p Posts: 329member
    cnocbui said:
    Some analysies suggest Apple is paying less than 5% on it's overseas earnings through it's various shell games, which would be why they are so reticent on repatriating funds and would go a good way to explaining how their pile of cash is so gargantuan.
    The 35% "repatriating" fee is hefty enough to discourage investing overseas profits in the US -- also the funds were never "patriated" in the first place.

    Re: paying 5%... how could the EU let this go for 10 years or more?
  • Reply 19 of 20
    h2ph2p Posts: 329member
    The Irish government helped set up at least a portion this scheme apparently. Does anyone know if they will pay the EU a fine? Perhaps 10 years of fines for their complicity in this tax arrangement?
  • Reply 20 of 20
    h2p said:
    The Irish government helped set up at least a portion this scheme apparently. Does anyone know if they will pay the EU a fine? Perhaps 10 years of fines for their complicity in this tax arrangement?
    No. Apple will have to stump up the cash owed.
    h2p
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