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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

#511

Post by dgfitz »

AaronFriel wrote: post #480
nodamage wrote: post #471

Earlier quoted context omitted.

> Apple Italy sold iPhones for 599€s + vat (thus avoiding to pay any corporate taxes in Italy while making billions) Isn't that the whole point of the European Economic Area? That you can freely sell your goods to other countries within the EEA without having to pay corporate taxes to each individual country?

Sure, but I think it's the sort of "self-dealing" that's the problem. Suppose it were possible for a wholesaler in Ireland to purchase a product in bulk at around 1/3 of MSRP. Market equilibrium would drive the price of that product down, right? If any other company could do that, price competition would prevail and eventually the delta between the import cost (in Ireland) and the export price (to an Italian phone sh…

If proving this weren’t the issue the whole thing could have been wrapped up in a day. Good summary though.

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

#512

Post by toyg »

qwytw wrote: post #484
kranke155 wrote: post #475

Earlier quoted context omitted.

The EU does that, yes. He’s saying countries can’t do that to their own industries, however, which I am led to believe is correct.

I think it applies only to aids for specific companies? e.g. if all companies that satisfies some requirements (e.g. N number of employees/new jobs , specific geographic area, industry etc.) cam receive the aid it's legal.

Correct.

This said, if the incentives are tailored a bit too much (i.e. there is clearly only one company that satisfies the prerequisites), it could be challenged as state aid. You still need someone to start the challenge though - either a competing company or a Commissioner.

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

#513

Post by toyg »

ensignavenger wrote: post #409
mandibles wrote: post #394

Earlier quoted context omitted.

Seems like Ireland should have to pay the EU

I kind of agree, but I'm not an EU citizen and don't have any say in EU laws, so whatever :) If I were Apple, I would be a little miffed at this situation, though. It certainly makes me question whether or not I want to ever expand into the EU. But tax laws are too damn complicated in most other countries too. so maybe just budget for government incompetence?

> It certainly makes me question whether or not I want to ever expand into the EU.

Well, you are free to ignore one of the biggest markets on the planet. I'm sure your European competitors will enjoy filling your niche.

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

#514

Post by toyg »

BlackFly wrote: post #320
noirbot wrote: post #311

Earlier quoted context omitted.

It does feel a little weird then that Apple is being fined here then? It seems like Ireland did the thing that's against the rules by offering the deal, not Apple? Obviously they worked on it together, but it feels odd that Ireland has now essentially gotten all the benefits of offering this illegal deal by having Apple do business there and now also gets all the back taxes that Apple probably wouldn't have paid to I…

Sure, Ireland did wrong by insinuating to Apple that they could have special treatment when in fact EU law prohibits it, but Apple failed to pay the prevailing tax rates which can be demanded long after the fact. Ireland has sovereign immunity from tort in this case. They could legislate to waive their immunity for tax assurances which would create an interesting constitutional issue in the EU.

EU law supercedes national law. Ireland can legislate as much as they want, but if they ignore ECJ judgements stating that their laws are incompatible with EU legislation, they will be fined.

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

#515

Post by toyg »

dmitrygr wrote: post #356
noitpmeder wrote: post #343

Earlier quoted context omitted.

Presumably these laws are published publicly, and apple has more an enough resources to hire enough lawyers to ensure they are in compliance. Ignorance of the law is not an excuse.

five accountants will produce six results from the same input based on the same laws, all of which the IRS will accept. Laws are not code. They are not unambiguous and noncontradictory. And forget apple! This means that any company in existence now needs a lawyer who understands the Treaty of Lisbon! Just in case some EU country tells them to do X, they now need to know if said country can actually say so! I think yo…

> any company in existence now needs a lawyer who understands the Treaty of Lisbon!

Hyperbole makes you look hysteric. The reality is that every other company is doing just fine, paying the tax they owe. The only companies who have to worry are shady ones like Apple (abusing tax-havens since the '80s, with Braeburn etc): it's now established that secret agreements with cosy governments will not be tolerated in the EU, as it should be.

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

#516

Post by toyg »

yunohn wrote: post #494
nodamage wrote: post #491

An important point that seems to have been missed by most of the comments: the reason Apple lost this case is not because of the profit shifting scheme itself, but rather than they did not set up the scheme correctly: > ASI's 2014 structure was an adaptation of a Double Irish scheme, an Irish IP–based BEPS tool used by many US multinationals. Apple did not follow the traditional Double Irish structure of using two se…

What a timeline we live in where the EU is basically telling Apple that they weren’t smart enough with their tax evasion - “see if you did it like other FAANG you could’ve gotten away with it!”

It should be said that loophole was supposedly closed in 2015, after prolonged pressure on Ireland and the Netherlands.

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

#517

Post by vasco »

jrnx wrote: post #498
GeekyBear wrote: post #440

Earlier quoted context omitted.

> avoiding to pay any corporate taxes in Italy This us a fairly common strategy not limited to tech. For instance, Starbucks in the UK: > Starbucks Coffee Company (UK) made a £149m “gross profit” in the year to October 2023, up from £129m the year before. But after “administrative expenses” of £127m, its pre-tax profits were reduced to £16.9m, on which it paid £7.2m tax... In 2012, it was revealed that Starbucks had…

you're ignoring the 20% VAT on those 3bn sales, which provided 600m tax revenue. Why is it so important that they paid 7m in corporate tax instead of any other amount? Their business apparently has high cost of sales (like stores, personnel etc.), where by the way also taxes occur, e.g. for wages... So I suggest to think twice if you want to paint the picture that Starbucks does not contribute it's fair share to taxe…

VAT is paid by the consumer, not the business. The business merely collects it in behalf of the tax office. Starbucks contributes 0 taxes by collecting VAT. Look up the definition of consumption taxes as opposed to corporate income taxes.

If you want to give other examples of ways companies contribute you can mention property taxes on owned properties, or jobs created which usually also have some part of pension etc contributed by the business, vehicles paying excise tax and fuel taxes, but I don't think VAT is a correct one to use.

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

#518

Post by epolanski »

nodamage wrote: post #471
epolanski wrote: post #424

Earlier quoted context omitted.

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…

> Apple Italy sold iPhones for 599€s + vat (thus avoiding to pay any corporate taxes in Italy while making billions) Isn't that the whole point of the European Economic Area? That you can freely sell your goods to other countries within the EEA without having to pay corporate taxes to each individual country?

Yes, there's nothing wrong with that.

The issue arises from Apple allegedly getting a preferential treatment in Irish taxes on top of that, thus paying extremely low taxes overall for their entire European business.

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

#519

Post by cpill »

sparrc wrote: post #501
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…

On the other hand, I know someone from the UK who moved away and lived in places like Qatar and Oman for 20-30 years, keeping their UK citizenship and paying zero taxes to the UK (and extremely low taxes in the gulf countries). Then they retired, returned to the UK, sent their kids to subsidized state universities (in the UK), receive free healthcare on the NHS, and receive state benefits for retirees. They receive a…

it's not, but it's not the general case and also you realise this is the very opposite of the US: you get taxed when overseas (unless your a large corporation) and then get no benefits when returning because that would be communism.

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

#520

Post by martinald »

b112 wrote: post #404
woah wrote: post #389

Earlier quoted context omitted.

Let's say a city builds a bridge that doubles its tax income by opening up a lot of economic opportunities. It pays for this with a 35 year bond. During these 35 years, the entire additional income that the bridge generated goes towards paying off the bond. After the 35 years the bond is paid off and the city enjoys permanently raised tax income (not to mention better economy for residents). Was there a problem that…

Yes. I could go into a lot of reasons, but I'll keep it simple. It is incredibly rare for governments to break that cycle. This has been demonstrated over and over. Thus, there is no end in 35 years. There is just perpetual 50% taxes to interest on debt. This means that as it is a persistent state, not perpetually losing 50% tax revenue would make an enormous difference. It's just not helpful.

Think of it the other extreme though. Imagine governments never borrowed and only used actual 'cash' to build things. I suspect that virtually nothing would have been built over the past 200 years and the world economy would be 1% the size it currently is.

I think you are right in that governments (probably?) shouldn't be funding day to day spending anywhere near as much as they do with debt. This has been a more recent (post WW2) phenomenon with huge expansions of social security programs. But capital expenditure virtually has to be paid with debt.

It's easy to say with trillions of dollars of debt funded infrastructure debt is too high, but imagine the counterfactual - would you be happy with virtually no infrastructure but no debt?

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