back to article EU verdict: Apple received €13bn in illegal tax benefits from Ireland

The European Commission has ruled that tax arrangements between Ireland and Apple were in breach of the EU's state aid laws, and said the American corporation needs to cough up €13bn in back taxes, plus interest. Delivering her judgment in Brussels this morning, the EU's competition commissioner, Margrethe Vestager, said: …

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Dear El Reg...

You might want to update the '1 beeellion' article to refer to this updated article... Especially given that the tax ruling is 10 times the amount you quote (as given by Reuters) in the other. :-)

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how'd you like them apples

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This doesn't cost Apple anything in the long run

Foreign taxes paid are a direct credit against US taxes. All this means is that Apple will (assuming the ruling holds) pay the €13 billion sooner, rather than being able to delay it for an arbitrary length of time by choosing not to bring the money home.

Apple is already carrying a deferred taxes item on their balance sheet that's several times this amount, to reflect the US taxes owed on money they are holding overseas that will become due when it is brought back. When they pay the €13 billion their deferred taxes will drop an identical amount so the net effect on their market cap / stock price is zero.

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Re: This doesn't cost Apple anything in the long run

While the market cap / stock price piece is a wash, expect the US to chime in. If those taxes are paid in the EU, it reduces the amount the US can expect to claim if the money is ever repatriated. (Never mind that the taxable business was conducted in the EU....)

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Re: This doesn't cost Apple anything in the long run

It might bot cost them in the long run but it means money for the EU coffers. Who do you think pays for all the Ferrero Roche at the balls?

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Re: This doesn't cost Apple anything in the long run

It's also €13b that Apple can no longer invest and use to earn even more money.

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Re:

I'll take them on the run baby!!

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Anonymous Coward

Re:

I'll take them on the run baby!!

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Re: This doesn't cost Apple anything in the long run

Apple is only "investing" the money is the most conservative investments possible, so they will lose one or two percent, which is less than the interest the US government is going to charge them...

While the US may "chime in", they have little to say about how the EU's tax laws are interpreted. But if the EU prevails, this does NOT go into EU coffers. It goes into Ireland's coffers alone. The reason the EU is fighting this is because they feel that Ireland is getting an unfair advantage over other EU countries.

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Re: This doesn't cost Apple anything in the long run

John Brown - Yeah, the government of Ireland will be able to invest it into their country instead, paying for those things like healthcare, education, roads and the like...

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Particularly interesting...

...as it substantially reduces the benefits of headquartering in Ireland, after the event.

I wonder if they will now leave Ireland, since the benefit maybe isn't there, and if other high tech firms will follow?

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Pirate

Re: Particularly interesting...

Once Ireland decide to leave the EU, we can have a UK-Ireland free trade zone. We'll even let the use sterling.

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Re: Particularly interesting...

>Once Ireland decide to leave the EU...

As someone living here (well, the Northern enclave, anyway), once they do that, they'll quickly revert to being a third world economy, praying the potatoes don't fail again...

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Re: Particularly interesting...

Wonder if the UK would offer them a deal after brexit?

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Re: Particularly interesting...

Wonder if the UK would offer them a deal after brexit?

I suspect they would only be seriously interested if we remained in the EEA (and that didn't prevent similar preferential deals)

The way I read it is that the EU are chasing dodged taxes for profit within the free market, not having an HQ within that would make it far harder to for Apple to avoid that, with import duties etc.

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Re: Particularly interesting...

that when you have an issue with the TaxMan, they have been known to seize your properties until you get to an agreement.

I repeat : seize the property of the company that possesses ALL OF APPLE's IP RIGHTS...

Forgot what number we were at, but the next point should be "Profit"...(or thermonuclear war, depending ^^)

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Re: Particularly interesting...

This is about 20% of the EU bailout that was given to Eire. Isn't it about time that rather than defending corporate tax dodging with or without the connivance of dumb politicians of we got the bastards to pay their fair share.

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Re: Particularly interesting...

Lazy stereotypical racist bigotry. Nice.

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Re: Particularly interesting...

"I wonder if they will now leave Ireland, since the benefit maybe isn't there, and if other high tech firms will follow?"

It depends on what the EU decides about the other arrangements with Luxembourg etc. but for US companies 12% plus English as a 1st language is probably going to be a competitive deal.

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Re: Particularly interesting...

"that when you have an issue with the TaxMan"

In this case the tax man is still the Irish tax authority. They're not going to upset the Apple cart.

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Re: Particularly interesting...

13 Billion in unpaid taxes! - I guess that's the way to make money in the modern world, screw profits - just don't pay your taxes.

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Re: Particularly interesting...

A good part of tax avoidance is the "transfer" - if in name only - of intellectual property rights and then "licencing" them back to yourself from a low-tax country to a high-tax country whereupon the money that you pay to yourself (if not in name) is a tax deductible expense.

Politicians of all sorts rant about tax avoidance but in almost every bloody case, the corporate tax lawyers are only taking advantage of the laws that the politicians have written.

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Re: Particularly interesting...

"Politicians of all sorts rant about tax avoidance but in almost every bloody case, the corporate tax lawyers are only taking advantage of the laws that the politicians have written." --- and most likely those laws were written after lobbying by the very corporations that said politicians rant and rail against in their increasingly futile efforts to show how they are with the 'little people'.

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Mushroom

Re: Particularly interesting...

This was no about head quartering in Ireland - It's about 'special deals' that are forbidden and rightly so. Peeved myself that Microsoft and others seemingly reached 'agreement' with HMRC. This is simply unfair to those that cough up at the correct rates.

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Re: Particularly interesting...

Good to see I'm not the only commentard from the occupied six counties.

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Re: Particularly interesting...

Talking of tax avoidance. There was a good documentary about a village that investigated the dutch sandwich approach to dodge tax as an entity. All above board (providing the UK was in the EU off course)

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Re: Particularly interesting...

Brexit? Is that still a thing? I'm expecting Ms May to announce that it's all off in a month or two, and I estimate that at least 400 MPs will support that decision.

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Anonymous Coward

Re: Particularly interesting...

I'm expecting Ms May to announce that it's all off in a month or two

But only after David Davis, Liam Fox and Boris have all had to fall on their own swords and admit their incompetence at failing to achieve a workable Brexit ...

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Re: Particularly interesting...

They have already distanced themselves from Brexit. In fact even distancing themselves from having to push the button. Even the daily mail is being quiet (which speaks volumes)

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WTF?

What about

Luxemburg?

Oh, of course. The person who set that up is now EU president.

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Re: What about

That is happening too - Fiat, a couple of fashion houses, etc. She is not taking prisoners.

Anyone who thought Steely Neelie was an incarnation of a Rider, have not dealt with this one.

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Re: What about

Yes, but Luxembourg has come up with a new wheeze as a free port…

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Re: What about

"That is happening too - Fiat, a couple of fashion houses, etc. She is not taking prisoners."

Exactly. I've seen a few comments from over the pnd that "they" are just going after rich American companies. The reality is that all companies trying it on have "them" coming for them. It;s just that the big US companies seem to be the most prolific and, as a tech site, the big US tech companies garner the main headlines here on El Reg. And Apples slice of the pie seems to be pretty damned big. Big enough to make headlines not just in the mainstream press here but around the world.

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Of course, Ireland has already protested

/Rant/ It's not like we can allow the rule of law to be applied like that, to all alike! /Rant off/

So this'll be a case for the courts. How much will the lawyers' fees be when the matter in question is a puny13 beeellion? And what LR units do we have for that? The price of 20 million iphones?

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Re: Of course, Ireland has already protested

So too has America - the EU doesn't have the right to tax American companies - that right is reserved by the US ... and no doubt, at some point in the future, they will get around the thinking about doing something about it - or not.

Governments everywhere have to start recognizing that in a global economy they all have to co-operate and agree to a uniform tax structure - this sort of thing (moving your income on paper, assigning intellectual property rights to convenient locations) will continue otherwise.

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Re: Of course, Ireland has already protested

Oh Happy Day ... to be a lawyer in Ireland that is.

Considering how hard Apple corp litigates to protect rounded corners, they are going to go all in when it comes to real money.

What I don't understand is American citizens are liable for US income tax on any gains made outside the US. ( as per the IRS claiming capital gains on Boris Johnsons house sale.) But companies can offshore their profits until they are repatriated to the USA. Which suggests that overseas companies with US parents are truly 'foreign' and not under US law, so why the feigned outrage at the EU becoming supra-national within it's own borders??

After all it's not like the USA has ever tried to impose any supra-national authority around the world..

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Anonymous Coward

Re: Of course, Ireland has already protested

The US should be happy about this. It would discourage the many inversions that have taken place (where big US company buys smaller non-US company and moves HQ to lower-tax non-US location).

The reality of course is that those in charge of these big companies, or who are large investors in these big companies, have control of the US government (corruption, aka "lobbying") and other institutions and don't want to see people taking their big wads of money from them.

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Re: Of course, Ireland has already protested

Apple don't have to do a thing, for the time being, it's the Irish government who are spending the money.

Only after the Irish government has either lost, given in, or run out of money to pursue the appeal against the decision and actually charged Apple the 13bn will Apple then spend money to appeal against the Irish government.

This one could run and run.

Of course, there's one other thing - if Apple do get charged 13bn in Ireland, they'll declare it as a loss to offset taxes in the US, so they won't lose the entire amount, and the US won't like that, as their tax take (40% of 13bn is 5.2bn) would be reduced, fairly appreciably, so they'll want to wade into the action. Fun days all round. We thought it was a protracted affair when one company sued another, add in nation states and probably our grandchildren will be watching the outcome of this.

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Re: Of course, Ireland has already protested

So too has America - the EU doesn't have the right to tax American companies

It isn't. The Irish government was giving preferential treatment to two Irish companies, set up by Apple with specific purpose of doing trade in Europe.

A uniform global tax structure is not only a pipe dream but completely illegal or unconstitutional for the majority of countries.

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Holmes

Re: Of course, Ireland has already protested

That's actually the point. All the competition commissioner did was determine that one EU state had granted illegal subventions to two EU companies. Normally that's a clear case, and I'm not aware any of the previous similar decisions have ever been contended, let alone successfully.

Of course, with a big name and a seriously big amount of money involved...

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Anonymous Coward

Re: Of course, Ireland has already protested

Irish Companies based in Ireland would be subject to Irish taxation at the appropriate level. Apple are of course free to move those monies to America and be taxed at the appropriate rate there.

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Anonymous Coward

Re: Of course, Ireland has already protested

"the EU doesn't have the right to tax American companies"

I thought that the point of this action was that the companies in question were supposedly headquartered in Ireland, and therefore are technically Irish (EU) companies?

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Trollface

Re: Of course, Ireland has already protested

> And what LR units do we have for that?

It's approximately a "Republic of Ireland annual healthcare budget"?

https://en.wikipedia.org/wiki/Healthcare_in_the_Republic_of_Ireland#Health_Service_Executive

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Re: Of course, Ireland has already protested

These are 2 EU companies, not American ones. Mailbox companies/headquarters are easy to setup, but if you happen to do that in Ireland, you are not only subject to (favorable) Irish tax-laws, but also the risk of the EU overruling them.

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Re: Of course, Ireland has already protested

Can't Apple just let it's mailbox companies go bust facing the tax bill then?

If double-glazing companies can do it (and even reappear under a new name but same management soon after) then surely...

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Re: Of course, Ireland has already protested

Considering one of them holds their IP...that would be fun

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Re: Of course, Ireland has already protested

The companies in question are Irish subsidiaries of Apple. Apple could reduce its European tax burden by repatriating the money to the US, but then they would have to pay US taxes, which are higher.

Apple and Ireland will appeal, and they will lose eventually. I doubt Apple will move: Ireland will be the only English-speaking country in the EU, and its normal corporate tax rate (not the sweetheart deal) is lower than most.

The same ruling is also applicable to Google and other tech companies whose too-clever-by-half tax avoidance strategies have been laid bare, even though the EC has not even touched the main tax dodge of using arbitrary intra-company payments for "intellectual property" to shift profits to tax havens.

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Re: Of course, Ireland has already protested

"So this'll be a case for the courts."

Right now it's more likely to be a case for the Irish tax commissioners.

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Re: Of course, Ireland has already protested

"Governments everywhere have to start recognizing that in a global economy they all have to co-operate and agree to a uniform tax structure"

Some governments - e,g, Ireland - realise that at the level of multinationals there's a free market in tax rates. Individual governments can decide whether they're better off being poor competitors in that market in order to clean up taxing purely domestic businesses so it's not going to be a race to the bottom, more a matter of strategic choices.

If the US wants to continue the high tax route it can scarcely complain about the obvious consequences with multinationals. Nobody's stopping them from lowering their tax rate if they wand to.

Countries such as Ireland, however, are better off with a low tax strategy. Would it be right for the US or anyone else to force them into a tax regime they don't want to apply?

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