Apple must pay EU $14 billion over Ireland tax arrangement

Posted:
in General Discussion

After a decade of legal wrangling, the European Union has officially given its final ruling over Apple and Ireland's allegedly illegal tax agreement, and Apple has to pay up.

White building with a large blue Apple logo on a sign, indicating directions for Main Entrance and Deliveries. The background includes trees and a partly cloudy sky.
Apple's European headquarters, located in Cork, Ireland.



Since 2004 when the agreement was made, both Apple and Ireland have continually protested that the amount of tax being paid was legal and fair. It was an exceptionally low rate of tax, however, and moreover the sums being taxed were not just those earned by Apple in Ireland itself.

Instead, Apple effectively splits its operations into the US and the rest of the world, with all of the profits from the rest of the world going through its Ireland HQ. Consequently, in 2014, the EU investigated the agreement and concluded that the practice was not legal.

From that point, Apple has had to pay the required back taxes, but it's had to do so into an escrow account. While Apple had to pay it, neither it nor the EU could take the money until all legal procedures were complete.

During the years that this has been going on, the money has accrued interest. It is now approximately $14.6 billion.

"The Court of Justice gives final judgment in the matter and confirms the European Commission's 2016 decision," the EU has now said, according to BBC News. "Ireland granted Apple unlawful aid which Ireland is required to recover."

"The European Commission is trying to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to taxes in the US," said an Apple spokesperson. "This case has never been about how much tax we pay, but which government we are required to pay it to."

"We always pay all the taxes we owe wherever we operate and there has never been a special deal," the spokesperson continued. "Apple is proud to be an engine of growth and innovation across Europe and around the world, and to consistently be one of the largest taxpayers in the world."

"We are disappointed with today's decision as previously the General Court reviewed the facts and categorically annulled this case," Apple concluded.

It's now not clear whether Apple has any further recourse to appeals. But if it hasn't, it means that the accusation of illegal arrangements that was first made by EU Commissioner Margrethe Vestager has taken almost her entire time in office.



Read on AppleInsider

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Comments

  • Reply 1 of 53

    As I read the decision, the Court of Justice decided sua sponte to issue a final judgment such that the case won't be returning to the General Court for further considerations. Neither the appellant (i.e. the European Commission) nor the intervener (i.e. the EFTA Surveillance Authority) asked for that. They both asked for the case to be referred back to the General Court so that it could consider Ireland and Apple's other grounds from the original appeal. So I think this is a bit of a surprise - not the decisions in favor of the Commission but the decision to issue a final judgment.

    I suppose the U.S. government could again try to get involved, filing a complaint of some sort, since that's where the money that Ireland will collect will ultimately effectively be coming from. But in the current ideological environment I'd guess the likelihood of that is small.


    EDIT: For some reason the system still won’t let me quote (and post) what I’m responding to.

    edited September 10 h2pforgot usernameteejay2012watto_cobra
  • Reply 2 of 53
    croprcropr Posts: 1,140member
    The title is misleading:  Apple must not pay the amount to the EU, but to the Irish government.     The court has decided that the reduced tax rate  must be considered as illegal government aid to a private company.  This illegal aid must be reimbursed to Ireland.    

    edited September 10 muthuk_vanalingamh2psphericJFC_PALettuce
  • Reply 3 of 53
    cropr said:
    The title is misleading:  Apple must not pay the amount to the EU, but to the Irish government.     The court has decided that the reduced tax rate  must be considered as illegal government aid to a private company.  This illegal aid must be reimbursed to Ireland.    

    Ireland is on apple's side they said as much, i bet you the all the EU wanted was get its hand on all that money at least they don't get any of it.
    edited September 10 h2pgilly33watto_cobra
  • Reply 4 of 53
    gatorguygatorguy Posts: 24,599member
    strongy said:
    cropr said:
    The title is misleading:  Apple must not pay the amount to the EU, but to the Irish government.     The court has decided that the reduced tax rate  must be considered as illegal government aid to a private company.  This illegal aid must be reimbursed to Ireland.    

    Ireland is on apple's side they said as much, i bet you the all the EU wanted was get its hand on all that money at least they don't get any of it.
    A large part of Ireland's governing body was never on board with assisting in Apple's tax battle. Read some articles in the Irish Times today for how the government really feels now that the final word is in. 

    If you hit a paywall, try this article:
    https://www.rte.ie/news/business/2024/0910/1469297-apple-tax-decision-a-big-blow-to-ireland/
    edited September 10 ctt_zhforgot usernameronn
  • Reply 5 of 53
    croprcropr Posts: 1,140member
    strongy said:
    cropr said:
    The title is misleading:  Apple must not pay the amount to the EU, but to the Irish government.     The court has decided that the reduced tax rate  must be considered as illegal government aid to a private company.  This illegal aid must be reimbursed to Ireland.    

    Ireland is on apple's side they said as much, i bet you the all the EU wanted was get its hand on all that money at least they don't get any of it.
    Ireland was in competition with other European countries to become Apple's EU headquarter.   The EU commisioner Vestager said from the start that reduced tax rate should be considered as Irish government aid and that Ireland should apply the "nomal" tax rate.    The court just confirmed the position Vestager held all these years.



    muthuk_vanalingamh2pctt_zhforgot usernamesphericLettuceronn
  • Reply 6 of 53
    carnegie said:

    I suppose the U.S. government could again try to get involved, filing a complaint of some sort, since that's where the money that Ireland will collect will ultimately effectively be coming from. 

    How is the money effectively coming from the US government and not from Apple?
    Lettuceronnwatto_cobra
  • Reply 7 of 53
    I’m curious to see how this pans out. The Irish government has consistently stated that Apple did not get a special tax deal (the same terms & arrangements were available to other businesses — and were transparently so) and that Apple paid all relevant taxes over the years. If there are no more grounds for appeal then the €13 billion should go to the Irish government. However, other EU governments have expressed interest in the portion of that tax which relates to purchases made in those countries. Interesting times ahead!

    😎🇮🇪☘️ 
    h2pforgot usernameronnwatto_cobra
  • Reply 8 of 53
    gatorguygatorguy Posts: 24,599member
    carnegie said:

    I suppose the U.S. government could again try to get involved, filing a complaint of some sort, since that's where the money that Ireland will collect will ultimately effectively be coming from. 

    How is the money effectively coming from the US government and not from Apple?
    He probably wasn't as clear as he intended to be.

    Be that as it may, the way Apple devised this, the money in that escrow account never belonged to Apple the US corporation. It was wholly under the control of Apple Sales International, a distinct corporation unto itself, not formed under the laws of the United States and beyond US control. Even if much of the profit from Apple's overseas operations may have been parked in US banks, it was still owned by a foreign company. That's why the scheme was so good.

    So the escrow account isn't Apple US money anyway, at least as Apple planned it.

    By the way, Google is generally credited with figuring out the tax avoidance scheme. Bad Google. Apple grabbed the basic idea, refined it, added their unique twist, worldwide profit shifting, and a friendly government, and, Voilà, it was nearly perfected before the EU Commission stepped in. 
    edited September 10 ctt_zhmuthuk_vanalingamforgot usernamesphericradarthekatronn
  • Reply 9 of 53
    eriamjheriamjh Posts: 1,731member
    I heard Ireland is going to use the money to build a monorail. 

    Mono meaning one 
    Rail meaning rail. 
    gilly33watto_cobra
  • Reply 10 of 53
    carnegiecarnegie Posts: 1,082member
    carnegie said:

    I suppose the U.S. government could again try to get involved, filing a complaint of some sort, since that's where the money that Ireland will collect will ultimately effectively be coming from. 

    How is the money effectively coming from the US government and not from Apple?

    In order to avoid double taxation (and in the case of corporations, essentially triple taxation when earnings are further distributed to shareholders), U.S. tax law generally provides for credits against U.S. income tax liability for foreign taxes paid on given earnings.

    Under the Tax Cuts and Jobs Act of 2017, the earnings on which this new Irish tax liability is largely based are deemed repatriated to the parent Apple and U.S. taxes are owed on those earnings. IIRC Apple had previously estimated a tax liability of $30-40 billion-ish based on the TCJA. Because Apple will now have to pay Ireland more taxes on those earnings, it should get a credit against that U.S. tax liability. Apple’s SEC filings reflect that expectation. In essence, the largest effect of this ruling should be that Apple will pay a portion of its taxes to Ireland rather than to the United States.

    ssfe11mongobongoforgot usernameradarthekatwatto_cobra
  • Reply 11 of 53
    Europe 5 - Apple 0
    22july2013ronn
  • Reply 12 of 53
    nubusnubus Posts: 577member
    I suggest a modern Nelson statue of Vestager with 3 names on the pedestal: Cupertino • Mountain View • Redmond.
    Lettuce
  • Reply 13 of 53
    avon b7avon b7 Posts: 7,972member
    "We always pay all the taxes we owe wherever we operate and there has never been a special deal"

    Part of the investigation suggesed that Apple was effectively deciding for itself how much to make available and then paying what Apple itself said it, ehem, 'owed'.

    That resulted in the 0,005% for one particular year. 

    Then Tim Cook came out and said "Apple has values". It's a shame no one bothered ask him to define them with regards to taxation. 

    And then, according to him, it was "political crap". 

    That begs the question "what kind of crap was it when you paid 0.005% in the EU and funnelled taxation away from the countries that generated the income?" 

    As for there never being a special deal, we know that Apple has admitted one in the past but claimed it was so long ago that no one remembered the details. 

    Not dissimilar to when high ranking executives get hauled before Congress and suddenly 'lose' their memories. 

    Apple has changed its ways over the years but only under pressure. 

    In fact, there was a cut-off point for the investigation that led to this situation which meant it could not consider some of those earlier years. 

    Of course way back then, Apple was a smaller company and that it why things didn't pop up on the radar for so long. 



    ctt_zhmuthuk_vanalingamforgot usernamenubussphericLettuceronnHedware
  • Reply 14 of 53
    danoxdanox Posts: 3,284member
    Companies (Slippery Eels) do not pay taxes we like to believe they do. They are just clearing houses. The customers pay the tax and the cost is passed down to the citizens (lowest level). Example Uber, and Airbnb, pay nothing but their drivers and customers certainly do.

    Mizrahi Developments, Walmart, Trump enterprises, the Guess company are other examples in a more evil sense. Don’t ever be a subcontractor/worker involved with these companies you will pay them.

    The Hudson Bay Company never paid taxes in their existence but the minions underneath certainly did.

    How does Ireland compare to continental Luxembourg, Switzerland, or Monaco, These countries are aristocratic tax havens, Ireland is an upstart blue collar country how dare they go above their station?

    Hopefully the money will actually be used to benefit the actual citizens of Ireland, but the way government works across the world I wouldn’t hold my breath, 1 billion or so Euros in the escrow account have already been lost in bad investments so far.
    edited September 10 Lettuceronnwatto_cobra
  • Reply 15 of 53
    avon b7avon b7 Posts: 7,972member
    carnegie said:
    I’ve been trying to make a post and it won’t go through, it seems the system is trying to verify if I’m human.

    Edit: I was finally able to make a post from my iPad rather than my Mac. If someone could delete this post, that would be great.
    I had the same problem a for a few days (Cloudfare was stepping in with a human verification step which didn't wait for the 'I am human' button to appear. It seems to have corrected itself. 

    Try prepping the text elsewhere and copy/paste it in to the forum web editor (at least you won't lose the text on submitting in that scenario). 

    You could try saving your message with the 'save draft' button and then post. 

    I cleared cookies in Chrome and logged in and put a few times but I'm convinced that wasn't the remedy. 

    Hard to know for sure though. 


    ronn
  • Reply 16 of 53
    hexclockhexclock Posts: 1,305member
    danox said:
    Companies (Slippery Eels) do not pay taxes we like to believe they do. They are just clearing houses. The customers pay the tax and the cost is passed down to the citizens (lowest level). Example Uber, and Airbnb, pay nothing but their drivers and customers certainly do.

    Mizrahi Developments, Walmart, Trump enterprises, the Guess company are other examples in a more evil sense. Don’t ever be a subcontractor/worker involved with these companies you will pay them.

    The Hudson Bay Company never paid taxes in their existence but the minions underneath certainly did.

    How does Ireland compare to continental Luxembourg, Switzerland, or Monaco, These countries are aristocratic tax havens, Ireland is an upstart blue collar country how dare they go above their station?

    Hopefully the money will actually be used to benefit the actual citizens of Ireland, but the way government works across the world I wouldn’t hold my breath, 1 billion or so Euros in the escrow account have already been lost in bad investments so far.
    Companies simply take advantage of tax laws to their benefit, just as anyone would. Do you pay more tax than you have too? I be you take every tax break you can, as I would. Doesn’t make them evil. We are all overtaxed, business included. 
    radarthekatwatto_cobra
  • Reply 17 of 53
    danoxdanox Posts: 3,284member
    hexclock said:
    danox said:
    Companies (Slippery Eels) do not pay taxes we like to believe they do. They are just clearing houses. The customers pay the tax and the cost is passed down to the citizens (lowest level). Example Uber, and Airbnb, pay nothing but their drivers and customers certainly do.

    Mizrahi Developments, Walmart, Trump enterprises, the Guess company are other examples in a more evil sense. Don’t ever be a subcontractor/worker involved with these companies you will pay them.

    The Hudson Bay Company never paid taxes in their existence but the minions underneath certainly did.

    How does Ireland compare to continental Luxembourg, Switzerland, or Monaco, These countries are aristocratic tax havens, Ireland is an upstart blue collar country how dare they go above their station?

    Hopefully the money will actually be used to benefit the actual citizens of Ireland, but the way government works across the world I wouldn’t hold my breath, 1 billion or so Euros in the escrow account have already been lost in bad investments so far.
    Companies simply take advantage of tax laws to their benefit, just as anyone would. Do you pay more tax than you have too? I be you take every tax break you can, as I would. Doesn’t make them evil. We are all overtaxed, business included. 
    i’m retired, retired people do not get any significant tax breaks, at least not without a catch, lucky to have Prop 13 which had nothing to do with the grace of the politicians. most of the taxes I pay these days are use taxes and you can’t get out of them.
    watto_cobra
  • Reply 18 of 53
    Ireland must be feeling like this line from ABBA says, "I feel like I win when I lose."
    nubusronnwatto_cobra
  • Reply 19 of 53
    danox said:
    hexclock said:
    danox said:
    Companies (Slippery Eels) do not pay taxes we like to believe they do. They are just clearing houses. The customers pay the tax and the cost is passed down to the citizens (lowest level). Example Uber, and Airbnb, pay nothing but their drivers and customers certainly do.

    Mizrahi Developments, Walmart, Trump enterprises, the Guess company are other examples in a more evil sense. Don’t ever be a subcontractor/worker involved with these companies you will pay them.

    The Hudson Bay Company never paid taxes in their existence but the minions underneath certainly did.

    How does Ireland compare to continental Luxembourg, Switzerland, or Monaco, These countries are aristocratic tax havens, Ireland is an upstart blue collar country how dare they go above their station?

    Hopefully the money will actually be used to benefit the actual citizens of Ireland, but the way government works across the world I wouldn’t hold my breath, 1 billion or so Euros in the escrow account have already been lost in bad investments so far.
    Companies simply take advantage of tax laws to their benefit, just as anyone would. Do you pay more tax than you have too? I be you take every tax break you can, as I would. Doesn’t make them evil. We are all overtaxed, business included. 
    i’m retired, retired people do not get any significant tax breaks, at least not without a catch, lucky to have Prop 13 which had nothing to do with the grace of the politicians. most of the taxes I pay these days are use taxes and you can’t get out of them.
    It’s intriguing that you criticize companies for taking advantage of special treatment while simultaneously benefiting from Proposition 13, which shifts your tax burden onto new property owners and negatively impacts public school children.
    freeassociate2radarthekatronnMplsP
  • Reply 20 of 53
    mac_dogmac_dog Posts: 1,083member
    Fine with me.
    a) apple can afford it;
    b) it’s going to a country that’s on the right side of history with regard to the genocide. 
    freeassociate2Lettuce
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