latifbp

asdasd said:

latifbp said:

adm1 said:

Calling the move "unprecedented," Cook portrayed the Commission's decision as potentially dangerous, with "serious, wide-reaching implications." 

EC previously ruled against Starbucks's tax deal in Holland and Fiat's tax deal in Luxembourg. Not unprecedented.

"In Apple's case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States," he wrote. "European companies doing business in the U.S. are taxed according to the same principle. But the Commission is now calling to retroactively change those rules."

There is no law that states you should only be taxed where your R&D offices are located. There ARE laws however that say you pay tax where you operate and sell products. On top of that, funnelling profits from those sales to other countries while not technically illegal, is morally questionable. Similar to those with offshore accounts (cayman islands, panama etc.) albeit nowhere near as shady.

$14.5 billion is unprecedented as well as is the recent attempts to gouge U.S. companies for extra. In the U.S. European companies do not face a corporation tax, but simple sales and VAT. Maybe we'll retroactively apply a new law and start vouching your companies. BMW... want to keep selling your cars here now you gotta pay an extra 12.5% on your profits here even though you're based in Europe. Too bad, so sad. Same tax deal since 1980. Apple never asked for anything different. 

Yes. Charging corporation tax where sales occur is beyond absurd as a principle.  

cnocbui said:

Well I said it would be billions rather than SOG's ludicrous millions.

I hope the final outcome is that Apple eventually have to cough up.  They have over $200 Billion in the bank because they are worlds biggest and most effective tax avoider.  I hope this is just the start of all the other multinational tax dodgers finally getting what's coming to them.

Of course the situation Apple finds itself in is all the fault of the US government, not Ireland or the EU as it is US tax legislation that allows US companies to indefinitely defer tax repatriation while pretending to their host countries their tax is payable in the US.

singularity said:

The original case http://ec.europa.eu/competition/state_aid/cases/253200/253200_1582634_87_2.pdf


the ruling http://europa.eu/rapid/press-release_IP-16-2923_en.htm

Summary from the ruling

Tax rulings as such are perfectly legal. They are comfort letters issued by tax authorities to give a company clarity on how its corporate tax will be calculated or on the use of special tax provisions.
The role of EU state aid control is to ensure Member States do not give selected companies a better tax treatment than others, via tax rulings or otherwise. More specifically, profits must be allocated between companies in a corporate group, and between different parts of the same company, in a way that reflects economic reality. This means that the allocation should be in line with arrangements that take place under commercial conditions between independent businesses (so-called "arm's length principle").
In particular, the Commission's state aid investigation concerned two consecutive tax rulings issued by Ireland, which endorsed a method to internally allocate profits within Apple Sales International and Apple Operations Europe,two Irish incorporated companies. It assessed whether this endorsed method to calculate the taxable profits of each company in Ireland gave Apple an undue advantage that is illegal under EU state aid rules.
The Commission's investigation has shown that the tax rulings issued by Ireland endorsed an artificial internal allocation of profits within Apple Sales International and Apple Operations Europe,which has no factual or economic justification. As a result of the tax rulings, most sales profits of Apple Sales International were allocated to its "head office" when this "head office" had no operating capacity to handle and manage the distribution business, or any other substantive business for that matter. Only the Irish branch of Apple Sales International had the capacity to generate any income from trading, i.e. from the distribution of Apple products. Therefore, the sales profits of Apple Sales International should have been recorded with the Irish branch and taxed there.
The "head office" did not have any employees or own premises. The only activities that can be associated with the "head offices" are limited decisions taken by its directors (many of which were at the same time working full-time as executives for Apple Inc.) on the distribution of dividends, administrative arrangements and cash management. These activities generated profits in terms of interest that, based on the Commission's assessment, are the only profits which can be attributed to the "head offices".
Similarly, only the Irish branch of Apple Operations Europe had the capacity to generate any income from trading, i.e. from the production of certain lines of computers for the Apple group. Therefore, sales profits of Apple Operation Europe should have been recorded with the Irish branch and taxed there.
On this basis, the Commission concluded that the tax rulings issued by Ireland endorsed an artificial allocation of Apple Sales International and Apple Operations Europe's sales profits to their "head offices", where they were not taxed. As a result, the tax rulings enabled Apple to pay substantially less tax than other companies, which is illegal under EU state aid rules.
This decision does not call into question Ireland's general tax system or its corporate tax rate.Furthermore, Apple's tax structure in Europe as such, and whether profits could have been recorded in the countries where the sales effectively took place, are not issues covered by EU state aid rules.

adm1 said:

"The European Commission has launched an effort to rewrite Apple's history in Europe, ignore Ireland's tax laws..."

EU Law supercedes that of individual country member laws, Ireland signed up to this by joining the EU. To make it easier for US folks, think of the EU as the united states and Ireland as a state within the USA. Federal law > state law.

"The law that applies to situations where state and federal laws disagree is called the supremacy clause, which is part of article VI of the Constitution. The supremacy clause contains what's known as the doctrine of pre-emption, which says that the federal government wins in the case of conflicting legislation"

similar case here.

adm1 said:

Calling the move "unprecedented," Cook portrayed the Commission's decision as potentially dangerous, with "serious, wide-reaching implications." 

EC previously ruled against Starbucks's tax deal in Holland and Fiat's tax deal in Luxembourg. Not unprecedented.

"In Apple's case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States," he wrote. "European companies doing business in the U.S. are taxed according to the same principle. But the Commission is now calling to retroactively change those rules."

There is no law that states you should only be taxed where your R&D offices are located. There ARE laws however that say you pay tax where you operate and sell products. On top of that, funnelling profits from those sales to other countries while not technically illegal, is morally questionable. Similar to those with offshore accounts (cayman islands, panama etc.) albeit nowhere near as shady.