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Apple must pay 13B euros in back taxes, EU's top court rules

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Re: Apple must pay 13B euros in back taxes, EU's top court rules

#421

Post by gunapologist99 »

hinkley wrote: post #362
vasco wrote: post #357

Earlier quoted context omitted.

I think you make it seem like EU doesn't care at all about what member states do in regards to taxation but there's many limitations to what can be done by any member state in order to harmonize and prevent corruption etc. This in practice makes the EU have a lot of say in regards to taxation. Moreover the EU has special rules to limit moving funds to jurisdictions that have taxes that are deemed too low (read tax ha…

Maybe they should do it like Roth IRAs. You can move the money to a tax haven only after you’ve paid taxes on it. So if you’re building hotels or factories in the haven that’s fine. If you’re hiding money we demand our pound of flesh.

.. thus removing a significant portion of income from these so-called tax havens, which generally tend to be poorer countries. No one has accused Germany of being a tax haven, for instance.

Re: Apple must pay 13B euros in back taxes, EU's top court rules

#422

Post by carlosjobim »

NoboruWataya wrote: post #358
tiffanyh wrote: post #255

Earlier quoted context omitted.

What’s interesting is that it’s common for governments to give tax incentives to companies that will result in driving more economic value for their region. Eg Ireland might give a tax incentive if a large Fortune 500 company hires X people in Ireland. Question: does this ruling prohibit that common practice?

There is a general prohibition on EU member states granting state aid to companies, but there are exceptions to this where the aid is justified in order to promote economically underdeveloped regions. There are a lot of rules and court cases about when state aid will fall on one side or the other of that line. See eg https://competition-policy.ec.europa.eu/state-aid/legislatio...

> There is a general prohibition on EU member states granting state aid to companies

The EU hands out billions in direct aid to companies every year. Many times together with the country governments. So there's no such prohibition in practice. In the EU regions I am familiar with, at least 70% of companies live on getting subsidies from the EU mainly and income from actual customers as a secondary concern. And I'm not talking about agriculture, but every industry.

Few businesses will even start any economic activity before they've received at least a hundred thousand in subsidies and investment grants. Not loans, which is a different matter.

Just one example: https://commission.europa.eu/business-economy-euro/economic-...

Re: Apple must pay 13B euros in back taxes, EU's top court rules

#423

Post by pyrale »

tiffanyh wrote: post #397
pyrale wrote: post #371

Earlier quoted context omitted.

Because accepting a corruption bargain is as illegal as offering it.

"Corruption" is a strong word here. Tax Abatements are a long, well understood practice that's been leveraged by city/state/federal governments for decades to incentivize desired outcomes. Look at Electric Vehicles (EV's) Both California and Federal government were giving tax incentives for individuals who purchase an EV. This tax abatement was used to incentivize the adoption of EV's. Is that "corruption? Absolutely…

Apple and Ireland maintain that is no record of "a deal", yet Apple paid 1% of what the law says they owed. The only beneficiary of that favourable situation is Apple.

Let's be honest, if this happened in any "less reputable" jurisdiction, Apple would definitely be under FCPA scrutiny.

> Tax Abatements are a long, well understood practice

Yeah, the kind of "tax abatement" that is available only to a select few.

Re: Apple must pay 13B euros in back taxes, EU's top court rules

#424

Post by epolanski »

The_Colonel wrote: post #388
hinkley wrote: post #362

Earlier quoted context omitted.

Maybe they should do it like Roth IRAs. You can move the money to a tax haven only after you’ve paid taxes on it. So if you’re building hotels or factories in the haven that’s fine. If you’re hiding money we demand our pound of flesh.

It's more difficult to determine where the value in software is being created. Still, big tech has a lot of R&D offices in Ireland.

That's not what really Apple did in Europe to pay little taxes.

The scheme was essentially like this:

- Apple Ireland bought iphones for 200$ or so (talking about pre X numbers, now they're likely slightly higher)

- Apple Ireland sold iPhones to Apple Italy for 599€s

- Apple Italy sold iPhones for 599€s + vat (thus avoiding to pay any corporate taxes in Italy while making billions)

- Apple Ireland had a special agreement with Irish tax so they paid like sub 1% corporate taxes on the 400€s of profit

This way not only Apple wasn't paying any tax in the countries they were doing business with, but also paying extremely low taxes in Ireland.

On top of that, which isn't illegal per se, it happened allegedly on top of preferential treatments (but I'm not much informed on the details here).

Re: Apple must pay 13B euros in back taxes, EU's top court rules

#425

Post by jacobgkau »

panzagl wrote: post #391
jandrewrogers wrote: post #366

Earlier quoted context omitted.

> Expats aren’t double taxed but you need to file tax returns to offset taxable income that’s already been taxed. This is not correct, it is only practically true in trivial cases. Excess taxation is a very real pain point for Americans living overseas, never mind the other indefensible things the US government does to its expats like FATCA. Many types of income cannot be offset nor or they covered by tax treaties. E…

If you don't like then... uh... come back?

You can spout off "my way or the highway" as long as you think US citizenship is valuable enough that people are going to put up with it. People not expatriating is obviously the desired outcome of those rules, and the alternative is people renouncing their US citizenship (which is becoming more reasonable as the US passport gets weaker, among other factors).

You're missing part of the point, though. Almost no other country in the world has rules like this. The US government provides among the lowest level of services for its citizens out of any first-world government, so there's no reason it needs to be that much more strict. You should be asking why it's necessary if only from a competitive standpoint-- why are other countries able to treat their expats so much more respectfully?

Re: Apple must pay 13B euros in back taxes, EU's top court rules

#426

Post by hinkley »

epolanski wrote: post #424
The_Colonel wrote: post #388

Earlier quoted context omitted.

It's more difficult to determine where the value in software is being created. Still, big tech has a lot of R&D offices in Ireland.

That's not what really Apple did in Europe to pay little taxes. The scheme was essentially like this: - Apple Ireland bought iphones for 200$ or so (talking about pre X numbers, now they're likely slightly higher) - Apple Ireland sold iPhones to Apple Italy for 599€s - Apple Italy sold iPhones for 599€s + vat (thus avoiding to pay any corporate taxes in Italy while making billions) - Apple Ireland had a special agree…

That sounds like something Hollywood does when they want to cut out profit sharing with the cast.

One of their affiliate companies makes an absolute killing on services rendered and the studio itself takes a bath on the movie.

Re: Apple must pay 13B euros in back taxes, EU's top court rules

#427

Post by hnbad »

nine_k wrote: post #392
ensignavenger wrote: post #370

Earlier quoted context omitted.

I read through the first part of the ruling to get a better idea of what happened. Apparently, Apple wrote to the Irish tax authorities, and said "this is how we plan to calculate our taxes" and the Irish tax authority said "okay, no problem, that works for us" and the EU commission investigated some years later, and said "wait, was that method of calculating taxes available to all Irish companies? We don't think so,…

> you can't retroactively change rules ... yes we can Hence, fewer US companies will have significant production in the EU in general, and possibly Ireland in particular. Let's hope it will help native European industries flourish %)

They didn't retroactively change the rules. They retroactively found a contract invalid. I'd file this under "play stupid games, win stupid prizes" as it sounds like Apple tried to talk Ireland into giving it special treatment that wasn't actually legally possible under EU law and the EU found out and told them they can't actually do that after Ireland agreed.

If I get a tax agency worker to sign me a piece of paper that says I don't ever have to pay any taxes, I can insist that they said so all I want but I'll still owe the back taxes when someone finds out because that person had no authority to say I don't.

Also capital flight doesn't actually work like that no matter how often people parrot it. Ireland is the European HQ for US tech companies because they need a European HQ to access the extremely lucrative market and Ireland is willing to go to great lengths (clearly including "agreeing to conditions they can't legally agree to) to attract them to go there in particular. If Ireland becomes less attractive that means they will be more likely to go elsewhere but their European HQ will still be in the EU/EEA because that's what it's for. This wasn't a case of Ireland competing for Europe where Ireland losing is a loss to all of the EU, it was Ireland competing against other EU countries.

Re: Apple must pay 13B euros in back taxes, EU's top court rules

#428

Post by jacobgkau »

oblio wrote: post #406
chrismcb wrote: post #307

I don't understand why this is Apple's fine and not Ireland's?

It's not a fine. The EU is saying: "You know those taxes you didn't pay and Ireland looked the other way because it benefitted them? Ireland couldn't look the other way because they signed an agreement with 25+ other countries to not do that, so be a good sport and pay all those taxes we told you to".

"I'm not making you pay me. My boss is making you pay me. So don't be mad at me, be mad at my boss while I get your money."

Re: Apple must pay 13B euros in back taxes, EU's top court rules

#429

Post by pchristensen »

systemtest wrote: post #399
NoboruWataya wrote: post #358

Earlier quoted context omitted.

There is a general prohibition on EU member states granting state aid to companies, but there are exceptions to this where the aid is justified in order to promote economically underdeveloped regions. There are a lot of rules and court cases about when state aid will fall on one side or the other of that line. See eg https://competition-policy.ec.europa.eu/state-aid/legislatio...

The Dutch government is spending billions to keep ASML in The Netherlands. To circumvent these prohibitions, the money doesn't go directly to ASML but is invested in better infrastructure, housing and education in the local area. More trains and busses to bring people to the company, better energy grid to power all the ASML offices, more money towards STEM studies of the local universities so they are creating the ne…

This seems like a pretty fair way to do it - the government invests in being a place worth staying in, rather than just subsidizing or lining the profits of the target business. If ASML left, it might blow up the economic model of tax + investment, but the constructed infrastructure and social assets would remain.

Re: Apple must pay 13B euros in back taxes, EU's top court rules

#430

Post by okwhateverdude »

TillE wrote: post #398
panzagl wrote: post #391

Earlier quoted context omitted.

If you don't like then... uh... come back?

You're free to renounce American citizenship to escape future tax obligations. Anyway it's not an issue for non-rich expats, you just have to file a tax return which shows you owe $0.

> You're free to renounce American citizenship to escape future tax obligations.

The hilarious thing about this statement is that it costs a few thousand dollars to renounce (as in a fee, paid to the embassy) and they reserve the right to come get you up to ten years later in tax cases.

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