Apple facing record bill for Irish tax

http://www.bbc.co.uk/news/business-37216176

by shazzy • 10 years ago

88 124 10 years ago

bbc.co.uk

nxzero• 10 years ago

Interesting that the US is backing Apple's tax shelter scheme, which isn't to say that EC isn't grasping way beyond any reasonable measure of where it should go.

r00fus• 10 years ago

If you think of Apple as simply a bellweather, and assume that the government is coopted by regulatory capture [1], it makes a lot more sense - they're just doing their masters' bidding.

Most US-based corporations who benefit from this scheme don't want their Double Irish with a Dutch Sandwich going away anytime soon [2].

[1] https://en.wikipedia.org/wiki/Regulatory_capture [2] http://www.investopedia.com/terms/d/double-irish-with-a-dutc...

numbsafari• 10 years ago

Harder for the US to get its hands on the money if the EC has already taken it, no?

ChuckMcM• 10 years ago

I think it is hilariously hypocritical coming from a tax authority that wants to collect taxes on income their citizens earned while working outside of their borders. Talk about trying to be a 'supra-national tax authority'.

In some ways there is a fight going on with national governments telling corporations to start putting their hoarded cash to work in the various economies or else we'll take it and put it to work in the economies. In a number of dystopian futures there is an event in the past called the "corporate wars" and this kinda feels a bit like something you might call a corporate war.

[1] "Do I Owe Taxes On My Foreign Income?

U.S. citizens and resident aliens earning over a certain amount of income from foreign sources may have to pay income taxes on the foreign income." -- http://www.efile.com/foreign-earned-income-and-income-exclus...

rtkwe3• 10 years ago

Not too surprising. One interpretation of the government's role is to get the best deals for the citizens and companies under it's control. Also if the US ever wants to get that money back into the US via repatriation or by imposing taxes on overseas profits it's hard to do when it's already in the EU coffers.

J0-nas• 10 years ago

I think it's quite amusing how Apple(+other companies) and their tax avoidance scheme earned them a fortune in "tax heavens" and now both the EU and the USA are trying their best to get some of the money back.

Here is to hoping EU politicians fix the tax system and force companies to pay a meaningful tax in the countries where they sell their products.

Personally, I'm not very optimistic considering J.C. Juncker is still one of the most influential EU politicians.

https://en.wikipedia.org/wiki/Jean-Claude_Juncker#Controvers...

cloudjacker3• 10 years ago

funny thing to say since the US Treasury is criticizing the EU over this abuse of tax law

The US and Ireland both signed off on the arrangement that apple and other companies use to avoid tax.

Now, a government that didn't exist at the time, is using new case law it has created, to retroactively change the tax laws of the governments underneath it.

Think of it as Europe's Marbury v Madison moment

icebraining4• 10 years ago

It's not the EU's fault if Ireland signed incompatible treaties.

rtkwe3• 10 years ago

Now, a government that didn't exist at the time, is using new case law it has created, to retroactively change the tax laws of the governments underneath it.

It's kind of tricky because though the EU as it is today is relatively new Ireland joined the European Economic Community which essentially became the EU. Also whenever that rule came into effect the special rules Ireland gave Apple should have been reevaluated and removed. They've always been against the state aid rule it's just not been tried until now. As for "changing the tax laws of governments underneath it" that's part of being in the EU you give up parts of your national sovereignty in a number of areas for the benefits of being in the open market.

bluecalm• 10 years ago

>Here is to hoping EU politicians fix the tax system and force companies to pay a meaningful tax in the countries where they sell their products.

They already did. The tax is VAT and recent changes on electronic services had exactly the goal you mentioned in mind. It's just that the idea of income tax for companies is silly as it requires the tax authority to verify valuations of transactions (for brands, services etc.) and that will never be doable. The fixing would be to get rid of income tax for companies and substitute it with different taxes (like VAT for example).

JoshTriplett4• 10 years ago

The tax is VAT and recent changes on electronic services had exactly the goal you mentioned in mind.

Those changes on electronic services make similarly little sense, as they require a service to apply taxes in the jurisdiction of the consumer rather than in the jurisdiction of the business. (And such regulations disadvantage EU companies, as a non-EU company with no legal nexus in the EU has no obligation to charge such taxes.)

adwhit3• 10 years ago

Amusing that Ireland are going to appeal a decision which results in their receiving billions of dollars. They accurately calculate that a few billion is scant compensation if the Masters of the Universe then choose to go elsewhere for their tax-avoiding needs.

nacs• 10 years ago

Not just the "Masters" but any other foreign company that incorporates in Ireland that have incorporated there and may do so in the future. Its a smart move for Ireland to appeal it.

adwhit3• 10 years ago

Perhaps I should have been more explicit - "Masters of the Universe" is a phrase used to refer to financial capital in general.

Oletros6• 10 years ago

No, the deals were offered to just some companies

anonymousDan5• 10 years ago

Not really. Apple have been in Ireland since the eighties and are one of the biggest private sector employers in Cork. There are a lot of jobs on the line, it's not like they are some kind of brass plate company with no actual presence here.

adwhit3• 10 years ago

Obviously the tax-evadee can expect some reward from the tax-evader. Throwing a few thousand jobs Ireland's way is the least Apple could do.

revelation2• 10 years ago

The eighties are about when that Ireland tax heaven thing began..

Notice that these jobs were always mandatory part of the tax breaks. They'll likely disappear with the tax break, given that Ireland has since dramatically elevated it's living standard on the basis of low corporate tax (and special tax) and wages are no longer competitive for something like support jobs.

Graphon1• 10 years ago

one of the biggest private sector employers in Cork.

What do all those people do? do you know? I'm interested.

euyyn• 10 years ago

Ireland will become the only (native) English-speaking country in the EU after Brexit, so they'll have that to leverage, for what it's worth.

peteretep5• 10 years ago

There's Malta, too

djrogers• 10 years ago

Seems kinda crazy to retroactively assess taxes/fines on a company that was doing something completely legal in the country it was operating in. If you don't like the rules, change them - but to go backward in time and say what was clearly legal shouldn't have been is crazy.

That'd be like re-scoring the 1890 World Series based on today's MLB rulebook.

Marazan4• 10 years ago

It wasn't legal though, it was illegal state aid in contravention to the laws of the single market Ireland was signed up too.

cloudjacker3• 10 years ago

using case law that didn't even exist at the time

You know its bad when the US Treasury department even disagrees with the EU commission

jpollock• 10 years ago

Then fine Ireland.

JoshTriplett4• 10 years ago

That depends heavily on whether Apple received clarifications and information about the existing tax code, or whether they received special-case tax breaks that didn't apply to everyone. The latter might violate EU requirements.

hkmurakami• 10 years ago

This also happened for California state income taxes very recently.

cryptoz• 10 years ago

I still don't understand why companies avoid local taxes. It doesn't make any sense to me. Their fiduciary duty is to act in the best interests of their investors. Unless the investors all consider their best-case-scenario to live in a world of anarchy and lawlessness, it is obviously in everyone's best interest (financially and otherwise) to pay taxes as expected. Anything else is an affront to the structure of modern civilization.

It is not in the best interest of Apple shareholders for the quality of life in the US/California/etc to deteriorate due to missing tax dollars. Long-term, stable societies are much more useful for making money than a few billion in secret stash tax havens.

zyxley• 10 years ago

https://en.wikipedia.org/wiki/Tragedy_of_the_commons

s_m_t• 10 years ago

You are assuming that the government is going to use those resources better than the company avoiding the taxes. Not everyone agrees with this. From this point of view everyone is acting rationally, they only might disagree about one specific assumption.

kartan2• 10 years ago

Maybe government is not as efficient providing citizens with firefighters, teachers, and other services.

Maybe that companies are extremely efficient giving money to their shareholders.

But I don't see your point.

aianus4• 10 years ago

I'd rather pay taxes to Apple, Tesla, and Google than the US government. At least they're competent.

oconnore• 10 years ago

So, in case anyone else hadn't noticed, we have reached peak libertarian techie madness.

jamroom• 10 years ago

Really? At least with taxes your money is likely to stay local (whether you agree with how it is spent or not), whereas with a multinational corp like Apple, Tesla or Google your money is just as likely to go somewhere outside the country.

legulere• 10 years ago

You just hear less about their fuckups, because they're less transparent than governments.

spriggan3• 10 years ago

I'd rather pay taxes to Apple, Tesla, and Google than the US government. At least they're competent.

Welcome to the Cyberpunk era, where nations are private entities ... I can't wait to play CD Project game by the way.

rrggrr• 10 years ago

Here is an amazingly well written explanation as to why, how and whats likely to come of it.

http://www.cumber.com/the-euro-dollar-riot/

Excerpt: The US has peculiarities in its income tax code that create these incentives for companies to avoid repatriation. The last time those peculiarities were lifted was in 2004 when then-President Bush allowed a one-year repatriation tax break. Over $300 billion flowed back into the US. Discussions about repeating that tax break are stymied in the current administration. Estimates are that as much as $1 trillion in repatriation would potentially occur if the Congress and the White House could agree on this issue.

With the election approaching this is one issue on which Trump speaks eloquently.

omegaworks• 10 years ago

The last time those peculiarities were lifted was in 2004 when then-President Bush allowed a one-year repatriation tax break.

What a disastrous moral hazard. The Bush family truly failed this country; they've left scars that will be felt for generations.

balls1872• 10 years ago

With the election approaching this is one issue on which Trump speaks eloquently.

For those curious.

http://www.bloomberg.com/news/articles/2016-08-24/trump-s-of...

jasode3• 10 years ago

a few billion in secret stash tax havens.

Fyi, Apple's stash of billions in foreign corporate structures is not "secret".[1] The IRS, the California State government, and all the Wall Street analysts know the money is over there in Ireland. In any case, Apple is complying with the law and paying the relevant foreign taxes (which are lower than the USA rates).

Since their revenue shuffling is not illegal, the more accurate criticism is if Apple is abusing legal loopholes. A lot of people feel they are.

[1]https://en.wikipedia.org/wiki/Double_Irish_arrangement

justincormack3• 10 years ago

The money is not in Ireland. It goes to Bermuda.

The shuffling was illegal, that is why they are going to be made to repay billions. It was illegal for the Irish to not charge them the standard rate, not illegal for Apple to try to do a deal.

peteretep5• 10 years ago

    > Apple is abusing legal
    > loopholes

Which they have a legal obligation to do, or be sued by shareholders, right?

alexbecker• 10 years ago

This is precisely the tragedy of the commons. Apple's share of the tax base, while enormous compared to say mine, is still small. Furthermore, Apple's investors are a very small portion of the population, so only see a small part of the benefit of tax spending. So it's clearly worth saving a giant pile of money in exchange for very slightly worse gov't services.

eridius3• 10 years ago

By your logic, everybody should pay far more than the taxes they owe.

The honorable judge Learned Hand (yes, really) once said

There is nothing sinister in so arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.

As long as companies are staying within the bounds of the law, it's perfectly reasonable for them to keep their tax bill as low as possible, and one might even argue that (for public companies) they're required to do so in order to perform their fiduciary duty to their shareholders. If you have a problem with the "loopholes" that companies use to lower their tax bill, you should take it up with the people who make the law, not the companies that follow the law.

Analemma_3• 10 years ago

Stop posting this damn quote. Just stop it. It's disingenuous and dishonest in the extreme, and whatever relevance it may once have had is long gone. I'm so sick of hearing it in every Hacker News discussion of corporate tax, by ostensibly intelligent people.

Here's why: for tax regulations created through a transparent democratic process and a popular mandate, this quote might be proper, but that's not what happens. The kinds of tax loopholes that allow for companies like Apple to dodge their obligations are created through corruption and regulatory capture, and would be choked off in a heartbeat if the general public actually had any say in the matter. Worse, they're simply not available to schlubs like you and me, so it's not a level playing field. To set up these loopholes in a corrupt way, and then use this quote (and the broader attitude of "It's legal, so it's OK!") to gag people from complaining about it, is despicable.

balls1872• 10 years ago

I still don't understand why companies avoid local taxes.

I would invite you to sit in local legislation and see how local taxes are enacted.

Specific to this scenario, you have a Sovereign nation (Ireland) that has it's tax laws, which Apple (presumably) is complying with. Then comes a bigger body, the EU, challenging Ireland's original tax laws.

If you're Apple, what do you do? You're doing business in Ireland, so why not follow their tax laws which have obvious benefits.

Their fiduciary duty is to act in the best interests of their investors.

And if you paid every bill collector who came up with their hand out without first doing due diligence, you would be in breach of that duty.

Apple specifically did business in Ireland because of tax break incentives.

Apple, You, Me, and anyone else have no obligation to pay anymore than the barest minimum taxes legally allowed.

rdtsc• 10 years ago

US warning The investigation into Apple and similar probes into other US firms have been criticised by US authorities.

Ha! I like it. US all of the sudden is defending Apple. Not because it loves Apple, but because it was hoping it would get its hands on those billions ... somehow.

EU here is basically saying, "ok Uncle Sam, fish or cut bait, do something. If not get out of the way, we'll take that money". So Uncle Sam is a bit upset at that, he doesn't like to be handled that way.

They will probably be various threats of sanctions from US and EU will buckle eventually. Maybe some scheme to divide the tax penalty between US and EU eventually.

Ireland's position is understandable. It could lose those companies overnight basically if this goes through.

justincormack3• 10 years ago

Ireland is still the lowest taxed place in Europe, although the UK is pretty good and Luxembourg was a good option (overall, exemptions matter too). As the money that flows into Ireland is profits form European sales, it will be taxed somewhere in the EU, at some rate.

peteretep5• 10 years ago

I like the EU slowly becoming a friendly and peaceful counterpoint to the US. Two democratic superpowers of about the same size is better than one.

Oletros6• 10 years ago

Here are the allegations

http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELE...

matt_wulfeck• 10 years ago

Isn't it Ireland's prerogative if they want to collect taxes on corporations or not? It's bringing in excessive amounts of jobs (and payroll taxes) and investments to their country.

This whole tax avoidance criticism just boggles my mind. There's a sale in China. One person pays money to another person in their country for a phone created in China that never left China. Yet somehow US citizens believe they are entitled to 30-40% of the money that exchanged hands there or it's "tax avoidance".

Oletros6• 10 years ago

Isn't it Ireland's prerogative if they want to collect taxes on corporations or not?

What is not a member of the UE prerogative is giving unfair deals to just some companies. This is what the case is about.

fffernan• 10 years ago

Apple (with backing of the US government) vs EU. My money is on Apple winning this battle. I'm sick of these lawsuits against Apple/MSFT. Europe is just jealous that US/Korea/Japan can create global tech brands that anyone cares about.

singularity2001• 10 years ago

Or people in the EU get angry that it's hard to compete against US monopolists 'tech brands' who pay 10000 times less tax percentually.

Apple facing record bill for Irish tax

Related Stories