back to article Tim Cook: EU lied about Apple taxes. Watch out Ireland, this is a coup!

Apple’s chief executive Tim Cook has claimed that the European Commission made up its claims about the business’ tax payments in Ireland. Earlier this week EU competition commissioner Margrethe Vestager said that Ireland failing to collect taxes from Apple at the standard rate of 12.5 per cent amounted to “state aid” and thus …

  1. graeme leggett

    On the radio this AM

    Listened to some of it as broadcast by Today.

    Cook comes across as much as a politician would, managing to project a sort of weariness at the folly of Apple's opponents and bullishness at being in the right and that the appeal will succeed.

    1. Dr Scrum Master
      Flame

      Re: On the radio this AM

      Just heard Tim Cock's interview re-broadcast on the World Service.

      It may take a while for my blood pressure to recover...

    2. Anonymous Coward
      Anonymous Coward

      Re: On the radio this AM

      Is the interview available online?

      1. graeme leggett

        Re: On the radio this AM

        Today, which broadcast elements of the interview http://www.bbc.co.uk/programmes/b07qbfvr

        this I believe is the Irish station and programme original http://www.rte.ie/radio1/morning-ireland/

    3. Anonymous Coward
      Anonymous Coward

      Re: On the radio this AM

      Listen carefully to what he said, it was something along the lines of "we paid ... corporate income tax".

      Does he actually just mean employees income tax which, I assume, is sent to the treasury before the money is paid net to the employee? It would have been good for the interviewer to have been a bit harder on him and specifically asked how much corporation tax they paid that year to anywhere in Europe and how much revenue and gross profit they made in Europe. I think he would have stumbled on that one.

      The point is, there is no reason to have the company structure that they have if they were paying all the expected European taxes. The fact that Ireland allowed it amounts to not making them pay 12.5% on profits in Europe. That amounts to artificially helping a company - state aid. Similarly Ireland would not be allowed to charge them the full corporation tax rate but allow Apple to make special one off iPhones for the Irish government that they would purchase for 100 million Euros each.

      1. ragnar

        Re: On the radio this AM

        He probably didn't mean this. Corporate Income Tax, CIT, or "income tax" is often used around the world to refer to something similar to our corporation tax. It's more of an Americanism than a deliberate attempt to conflate employee taxes with corporation taxes. You are quite correct that this is a common theme though and needs to be stamped on.

        1. DougS Silver badge

          I don't think Cook is handling this correctly

          If I was his publicist, I would tell him he should say "Apple fully complies with all tax laws in every country in which we do business. As many companies do, we try to minimize the amount of taxes we owe under the law. We do not believe the EU is correct in their assertions, but this is up to Ireland and the EU to determine. If the final determination is that Apple owes back taxes because Ireland did not follow EU rules, we will pay the taxes we owe, though the EU should strongly consider whether retroactive changes to tax rates is the proper way to achieve their goals. While Apple is in a position to pay, other companies in a similar position could feel significant financial stress"

          And then refuse all further comment, referring to his previous statement that it is up to Ireland and the EU to determine.

    4. Anonymous Coward
      Anonymous Coward

      Re: On the radio this AM

      He is playing it like a politician. The empty promise to repatriate income so he can trying playing USA against Eu is just priceless.

      The Eu has built up decades of experience in fighting taxation derived state aid cases against member governments and local governments in member states. So far, on the current competition commissioner's watch, 40+ multinationals including Fiat, Starbucks, BP, etc have failed to challenge similar decisions so he can continue the bravado as much as he wants. It will not help against the knitting lady - she gives no quarter.

      I have zero sympathy for him in any case. As I have said before, money is like manure, you need to spread it around to make new things grow. In that respect, the state "inefficiency" is actually beneficial directly and indirectly when redistributing money obtained via taxation. The direct benefits are obvious: when money was mostly circulated in-country and taxed in the 60-es and 70-es we had significantly higher proportion of GDP dedicated to R&D in the developed world. We also achieved more as the state was subsidizing fundamental science instead of the current VC/Multinational driven money spend on yet another social bollocks sharing economy startup.

      The direct and obvious effect on R&D spend, however, pales by comparison to the indirect effect. When money is taken out of circulation in quantities comparable to countries' GDP (as it is now) and Leprechauned (as by Mr Jobs and Mr Cook), inflation drops forcing multiple levels of perversion of the market by regulators: quantitative easing, forced stimuli, etc. That in turn hurts all (but the super-rich) across the board. So, frankly, from a long term socio-economic perspective we should all keep our fingers crossed for the knitting lady to succeed here. Unless we want to live in a Elysium like dystopia of course.

  2. Mage Silver badge
    Devil

    Well, bears in the woods etc.

    Very predictable response that rings a little hollow.

    They may win the appeal on a technicality. However their greed is now clearly exposed. If Apple owes nothing in Ireland, that still leaves some issues:

    The flagship products in terms of design are largely only cosmetically and software Apple US origin.

    They use the same kinds of parts and same factories as products selling for a fraction and they have a four times bigger profit margin.

    They consistently try and flout EU SOGA on their direct sales.

    Their accounting and tax may be legal, but they are like a dragon sitting on all that cash. Taking cash out of the world economy is hurting it. They are parasites, though of a different less evil kind to Facebook and Google.

    They don't spend very much on real R&D, their incremental Software Development and their Patent Applications preparation and costs come out of that budget. Most of their innovations (Multitouch GUI from fingerworks) are bought in. Remove style and cosmetic and stupid things and what is left?

    Where do they pay any tax on their profits?

    Really they are a cosmetic badge operation of Asian and generic HW with USA gloss. So why does Silicon Valley, Obama etc rush to defend them? A tiny proportion of their profit is spent in USA.

    1. maffski

      Re: Well, bears in the woods etc.

      '..They use the same kinds of parts and same factories as products selling for a fraction and they have a four times bigger profit margin... ...generic HW with USA gloss...'

      And there you have it. It's everyday gear, so all that extra profit must lie in the IP (design, ecosystem, brand etc.). And that is based in the US, and taxed under US rules. So Ireland hasn't provided state aid and this ruling is either the start of a political land grab or, more likely, just for some big headlines.

      1. P. Lee

        Re: Well, bears in the woods etc.

        >so all that extra profit must lie in the IP (design, ecosystem, brand etc.). And that is based in the US, and taxed under US rules. So Ireland hasn't provided state aid

        I thought the opposite was true. Apple-Ireland holds the IP but the Irish government doesn't make Apple pay tax on sales outside Ireland.

        The question is whether Apple's arrangement was fair and comparable to any other corporate in the same position.

        1. Anonymous Coward
          Anonymous Coward

          Re: Well, bears in the woods etc.

          I thought the opposite was true. Apple-Ireland holds the IP but the Irish government doesn't make Apple pay tax on sales outside Ireland.

          Correct.

          The question is whether Apple's arrangement was fair and comparable to any other corporate in the same position.

          No. Two questions:

          1. Was it legal under existing Eu taxation treaties and harmonization directives? While tax was never fully harmonized, partial harmonization has been part of even the earliest Eu treaties. This includes all Eu members charging VAT (with any exception being negotiated), all Eu members charging corporate tax (no exception) as well as all members charging NI and income tax to allow benefits to be transferable.

          2. Was the failure of Ireland to comply with its commitments to Eu tax harmonization a form of state aid and was it deliberate and advertised to corporations in order for them to settle in Ireland. I suspect that there was at least one person in the Irish government to advertise it in the last 20 years which pretty much makes this an open and shut case outright.

      2. Anonymous Coward
        Anonymous Coward

        Re: Well, bears in the woods etc.

        Unfortunately for your argument, the basis for funnelling profits made outside the US through Ireland, and it's extremely generous tax treatment, is the notion that the Irish companies own the ex-US IP rights. The result is that Ireland makes a small but (for them) decent amount of tax, at the expense of every other country where those products were actually sold, and Apple pays stuff all by comparison with "normal" companies. Nice deal if you can get it.

      3. Aitor 1 Silver badge

        Re: Well, bears in the woods etc.

        Nope, it is not taxed in the US either.

        1. Major N

          Re: Well, bears in the woods etc.

          the way it works is Ireland won't tax the proportion of the value that is added by US Apple operation, Apple claim it is most of the value, due to the R&D, design, software manufacturing etc. taking place in the US, and thus it's taxable in the US, not Ireland. Ireland shrug and say 0.005% of a shitload of cash is better than none, and take the money, Apple ship the money to Bermuda and sit on it. Uncle Sam stares across the Caribbean, and waits.

          So, Technically, it will be taxed by the US... IF they ever 'repatriate' it to the US from the Bermudan Black Hole. This is why they sit on $Bns in a tax exile while not paying dividends etc, because the instant they try to spend it, the IRS will take their rather generous cut.

          1. Naselus

            Re: Well, bears in the woods etc.

            "So, Technically, it will be taxed by the US... IF they ever 'repatriate' it to the US from the Bermudan Black Hole."

            Which they will only do when they're offered a repatriation tax holiday. Which was why many people argued against Bush 2's 2004 holiday, because it would just encourage corporates to sit on offshore cash mountains and wait for another one.

            It's really amazing how many different ways George W Bush's presidency has managed to produce ongoing disasters.

      4. oldcoder

        Re: Well, bears in the woods etc.

        Ah, but as I understand it, US taxes do NOT include sales outside the US.

        Thus the profits you mention that would have been taxed in the US are not... making the profits even larger.

    2. StaudN
      Facepalm

      Re: Well, bears in the woods etc.

      I was right with you until you said "though of a different less evil kind to Facebook and Google".

      What scale exactly are you using for that sweeping statement?

    3. CaptTofu

      Re: Well, bears in the woods etc.

      "greed". So the company, which employs people, makes things of value that people want, is greedy, but the EU apparatchiks, who produce nothing but always want a cut of the profits ( but none of the losses), are not greedy. See exhibit B, collectivist mindset.

      1. LDS Silver badge

        Re: Well, bears in the woods etc.

        How much money Ireland got from EU to save its butts? Where do you believe those money came from? Taxes paid by other EU citizens.

        1. Slx

          Re: Well, bears in the woods etc.

          They were actually high interest LOANS not grant aid. Not a cent was written down. The bail out is a whole other kettle of corporate fish. The Irish were effectively forced to borrow vast amounts of money under the "no banker left behind" policy.

          Don't worry, other EU tax payers got or are getting that back, with hefty interest and avoided their banks going bang as a result.

      2. katgod

        Re: Well, bears in the woods etc.

        Agree CaptTofu,

        (bears in the woods) statement makes everyone who does not pay more taxes than they need to greedy.

        If one disagrees with a particular tax rate, then one should change that tax rate if they can get others to agree with their new improved rate.

    4. Anonymous Coward
      Anonymous Coward

      Re: Well, bears in the woods etc.

      Wow. This is a hollow a comment as you'll read about tech.You managed to say nothing imaginative or relevant in just over 200 words. I wrote a pithy and detailed response but before posting it, I realised that you really are not worth it. You are just another gobshite commenter talking about something that they clearly know nothing about. And it's really dull.

    5. Anonymous Coward
      Anonymous Coward

      Re: Well, bears in the woods etc.

      anon obviously - this tax dodge is worked everywhere.

      I worked for years for a UK company in the US - this company (currently listed on the UK stock market) arranged its accounts every year so that the sales made in the US were always unprofitable. Every year we had to send all our accounts to the UK at the start of December and each time, before the end of December, we would receive a management services invoice that nulled out our profits.

      I left the company many years ago - in part because I couldn't believe that they would keep on getting away with this and didn't want to have any part in it, and because running an unprofitable company means that you get paid very little and have no influence on corporate policy. It seems that they continue to make most of their profits in the US, I've no idea how they handle their accounting these days but the upper management hasn't changed so it's a safe bet their tax dodging hasn't changed either. Their stock price is doing nicely however.

    6. Schultz

      "Their accounting and tax may be legal"

      Or maybe not. The EU commission found that the Ireland headquarter was a fictitious entity, set up purely to avoid taxes. In many countries, it is illegal to do such a thing. Consider what might happen to you when you just make up stuff in your tax return declaration to avoid paying your share.

      I believe that Apple might be in quite some trouble once the national tax authorities in the rest of the world wake up. Good thing they got some money in the bank to get this sorted out :).

    7. DougS Silver badge

      @Mage wow, so many wrong statements in that trolling post

      "their greed is now clearly exposed" - Please list the large multinational companies that don't try to minimize the amount of taxes they owe/pay.

      "less evil kind to Google and Facebook" - From your first few paragraphs it sounds like you are practically equating Apple to Hitler's more evil twin, but Google and Facebook are worse? Care to share with us your evilness scores for various companies and historic/fictional figures like Hitler and Satan so we understand the degrees of evil you are able to divine?

      "They don't spend very much on real R&D" - Apple's R&D budget is over $10 billion. That BILLION with a 'B'. That's more than the revenue of most companies. Or is it somehow not "real R&D" to you if it is Apple doing it? If so, what do you consider real R&D, and which companies are doing it?

      "Most of their innovations are bought in" - that's true for most companies. You didn't think Microsoft invented DOS, Word or Excel, did you? I guess they invented Windows, but only after they'd had a look at the Mac once Apple had figured out how to take a GUI out of the lab (which they compensated Xerox for in terms of stock options, and saw with their permission) and work it into something ordinary people could use rather than the PhDs who used Xerox's Alto prototype. The only thing Google invented was search, they've bought in everything else from Android to Maps to their advertising network that actually makes all their money. And they didn't even invent search, they just invented the 'page rank' algorithm that made search better (well until SEOs found it was easy to game by creating link farms)

      "Where do they pay any tax on profits?" - they pay full whack on all their profits in the US, and are the largest single taxpayer in the US. More than Wall Street banks, oil companies, retailers like Walmart, and so on. US law doesn't require them to pay taxes on overseas profits until they bring the money home, and they haven't brought the money home. They arranged things overseas in an advantageous fashion for them to minimize the taxes they pay there, just as almost all large multinationals do. They make more money than any publicly traded company in the world, so they are an obvious target when tax authorities decide to start overturning couch cushions looking for more money.

      "Cosmetic badge operation" - yeah, they should make everything in the US like all these other US based consumer electronics companies do like Samsung er I mean Panasonic er I mean Lenovo er....oh wait US companies...I know Dell, nope guess again, IBM, nope guess again, Microsoft, nope guess again...

  3. FF22

    Just dumb

    Tim Cook is dumb or just playing dumb. Contrary to what he claims there's nothing new about the ruling, and the EU has already a tax control code in place, which Ireland - in cooperation with Apple, Google, and co - deliberately ignored. The ruling adds nothing new there, it merely confirms that the attempt to get around the code - that has been existing for multiple decades now - was illegal and futile.

    Cook is also wrong that Apple and Ireland would have the same interests. They do not. Ireland's interest are collecting all the back taxes from Apple - and the latter of course wants to avoid having to pay that.

    Apple can try to appeal the issue, but really, the only thing they can achieve is that they'll have to pay even more interests on back taxes. The rules are and were always clear. Apple definitely tried to break the EU tax code (in cooperation with Ireland), and now they got caught and will have to pay for it.

    1. Dan 55 Silver badge

      Re: Just dumb

      Ireland's interest isn't collecting back taxes, in fact they're appealing. They would get €13bn now and probably have to hold the door open while the multinationals leave in an orderly fashion later. They would prefer to carry on having a goose which lays golden eggs.

      1. lglethal Silver badge
        Stop

        Re: Just dumb

        Nonsense. Ireland will say its appealing, may even go through the motions, but in the end they will lose and turn around and say "aww im sorry, we tried so hard. Better luck next time. Can we please have the equivalent of 2 years worth of our government budget that the EU says you have to give us? Sorry we really don't want it, but you know what can you do. The EU aren't they bastards, eh? "

        It's always the EU's fault. Even when its not.

      2. Charlie Clark Silver badge

        Re: Just dumb

        They would get €13bn now and probably have to hold the door open while the multinationals leave in an orderly fashion later.

        Where else in the EU should the companies locate to?

        1. Dan 55 Silver badge

          Re: Just dumb

          Where else in the EU should the companies locate to?

          Luxembourg seems quite popular and for some reason Juncker doesn't kick up much of a fuss over their tax.

          1. LDS Silver badge

            Re: Just dumb

            Luxembourg-based companies like Amazon are the next in the list...

      3. sjiveson

        Re: Just dumb

        Apple and other companies should NOT be blackmailing nations with a choice between investment (including jobs) or paying tax. They, like most companies in the world, should be providing the first and paying the second. Anything else IS an unfair advantage.

        Where exactly will those investments and jobs go? Is another European country likely to offer a similar deal? If not, and they have no base in Europe I'd imagine they can't do business here. That's the choice they should and hopefully do now face.

        1. ecofeco Silver badge

          Re: Just dumb

          Apple and other companies should NOT be blackmailing nations with a choice between investment (including jobs) or paying tax.

          It isn't blackmail, it's extortion and I'm personally fed up with it as they would not get away with this if the politician weren't undeniably complicit and directly benefiting from it.

        2. DougS Silver badge

          @sjiveson - tax blackmail

          No, companies shouldn't blackmail governments over taxes but it happens all the time. Not just on an international level. In the US companies will move from one state to another, or choose the site of their factory, based on tax incentives they are offered. Sometimes the laws are written so that only that one single company can take advantage of them!

          It even happens at a local level. A department store based for at least 20-25 years at a mall located in the city where I live was induced to move about 5 miles to a suburb thanks to a property tax break of $1 million a year for 15 years. You'd think that wouldn't happen between cities that are "neighbors" but they wanted an anchor store for a new riverfront re-development they were doing and the fact it would leave a big hole in that mall that ended up taking almost five years to fill didn't bother them in the least. They also gave countless smaller incentives to smaller businesses that located there, providing them a big unfair advantage to competing smaller businesses who didn't know the right people to be offered those deals.

          If I had my way, there would be a nationwide law that there can be no tax breaks, interest free loans or similar incentives to influence a company's decision where to locate or relocate its facilities. But good luck ever getting that passed, I'm sure the government officials involved are often 'greased' one way or another. Probably sacks of cash are rare, but taking them out for expensive dinner, or a trip to NYC or Hawaii on a "fact finding mission" or season tickets in prime seats to football games, or a management job for their daughter....I'm sure kickbacks are plenty even in the small scale of local stuff. Can't imagine what sort of kickbacks would be at play on the EU level, but I'll bet the officials making tax policy decisions are set for life after they leave their bureaucrat job with bureaucratpay.

          1. MachDiamond Silver badge

            Re: @sjiveson - tax blackmail

            If I had my way, there would be a nationwide law that there can be no tax breaks, interest free loans or similar incentives to influence a company's decision where to locate or relocate its facilities. But good luck ever getting that passed,

            There is a difference between poaching a retail store to move 5 miles (Walmart does this frequently) and inducing a company to locate to a depressed area that has lost some major employers. Detroit/Flint have lost a lot of auto manufacturing as Ford creeps down to Mexico and GM is shifting to China. They have large decaying buildings and ghost residential neighborhoods that they want to reinvigorate. Offering tax incentives, land and other support is a way to get companies to locate to what looks like a bombed out third world country with ghetto-like social problems in place.

            It's would be hard to create regulations that prohibited companies from relocating or cities/states from offering inducements to companies to locate operations is their area. Poaching can be a problem, but what do you say to a company being recruited to move from a high tax/high regulation state like California to a state with much lower taxes and a pro-business mentality?

            Apple, Google and Starbucks should combine forces and purchase their own country to base operations. I'm sure they could find a nice island with beautiful beaches and book nearly all of their profits there. People would be lined up to work there.

            1. DougS Silver badge

              Re: @sjiveson - tax blackmail

              Apple, Google and Starbucks should combine forces and purchase their own country to base operations.

              A simple solution to counter that would be for countries to institute a tariff or sales/VAT tax, applied only to the products of companies based in that special corporate country.

      4. LDS Silver badge

        Re: Just dumb

        And where could those multinationals go inside EU? The standard tax rate in Ireland is still one of the lowest, and there are no many other places to go. East Europe? Far less appealing for most high-paid executive and upper level employees. which may not like to be sent to Bulgaria or the like.

        Good only when you need low-paid workforce - Dell already moved its EU operations from Ireland to Poland because it was cheaper there to customize servers and PCs.

        And if they move outside the EU, they lose all the advantages of having an EU headquarter - EU is still a big, rich market.

      5. Anonymous Coward
        Anonymous Coward

        Re: Just dumb

        hold the door open while the multinationals leave

        Where? There are only 2 countries with slightly lower tax rates in the Eu than Ireland - Bulgaria and Romania (10% vs Irish 12.5%).

        Sure, Apple and Google may stop routing his Australian sales via Ireland + Singapore (as they do now), but there is no place they can run as far as their Eu income is concerned and the commission is 100% within their rights to enforce that it is taxed.

        1. Andrew Dancy

          Re: Just dumb

          I'm pretty sure you'll find Romania is 16% as they have a flat tax - corporation tax, income tax, tax on self employment, etc are all the same rate - 16%. Nice and simple and virtually impossible to avoid.

          1. Naselus

            Re: Just dumb

            "I'm pretty sure you'll find Romania is 16% as they have a flat tax - corporation tax, income tax, tax on self employment, etc are all the same rate - 16%. Nice and simple and virtually impossible to avoid."

            That'll be why they're such a dominant economic powerhouse then.

  4. Mike Shepherd
    Meh

    Pass me the Kleenex

    "...the EU was seeking to expand its powers over national governments...a devastating blow to the sovereignty of EU member states... Ireland is being picked on and this is unacceptable".

    Oh, worthy man, who sets aside all self-interest to defend the downtrodden countries of the EU!

    Well, maybe not all self-interest.

    1. Missing Semicolon
      Facepalm

      Re: Pass me the Kleenex

      "...the EU was seeking to expand its powers over national governments..."

      It already has. What was the Maastricht Treaty, the Treaty of Lisbon, etc all about? The primacy of EU law over member state law is already established.

      That boat sailed decades ago.

      1. Avatar of They
        Facepalm

        Re: Pass me the Kleenex

        Very true, the moment you sign up for a single currency, you pass taxes around that currency to the central area as well. Only right if they control the currency they have a way of determining central tax and interest that might affect that currency.

        Can't have every EU government setting their own versions of that single currency.

        Not sinister as they quite clearly got rid of the irish pound in favour of the Euro. So they kind of walked wide eyed into this. Cook is just panicking at the fact he got caught and will have to pay. But didn't Trump state he might allow them to transfer all that wealth back into the US at a very low one off payment? (might have dreamt it)

      2. Dan 55 Silver badge

        Re: Pass me the Kleenex

        Ireland got an opt out over EU primacy over their tax laws in their Lisbon treaty due to their 'no' answer in the first Lisbon referendum.

  5. Warm Braw Silver badge

    The EU Commission has sinister plans to control tax rates across the continent

    Whereas that should rightfully be the work of Apple, Amazon, Google, et al.

    1. Commswonk Silver badge

      Re: The EU Commission has sinister plans to control tax rates across the continent

      Well if it hasn't at the moment it soon will have; I suspect that everybody (except the large corporates) is getting heartily sick of the "now you see it; now you don't" methods of accounting that multinationals use to minimise their contributions to the wider societies in which they operate. The current approach is little short of pillage; grab what you can and disappear as fast as you can, or least make the money disappear so that you are still around to grab any more that happens to come along.

      As the EU Commission has pointed out, this is not a simple matter of tax due on Irish sales as much as allowing other profits to pass through the accounts unchecked. I never thought I would ever raise a cheer for the EU but on this occasion I have made an exception.

      Tim Cook might just find out that the old adage of "there's no such thing as bad publicity" is not universally true.

      I hope...

    2. kmac499

      Re: The EU Commission has sinister plans to control tax rates across the continent

      Well maybe Mr Cook could arrange a meeting with commisioner Vestager at the 'Head Office' in Ireland where all the profits weren't made, with a few interviews with the HQ employees to clarify a few points...

      Shouldn't take too long eh Tim???

      1. LDS Silver badge

        Mr Cook could arrange a meeting

        Oh, Apple would call its Hollywood friends and setup a whole fake HQ, it would be funny to look at know actors and actress to play the roles of Apple employees...

  6. alain williams Silver badge

    This is an EU matter

    A large part of EU trade rules is to create a level playing field. Sweetheart deals as Eire has done, also with others - not just Apple, benefit Eire at the expense of other countries.

    Individual governments are losing the ability to control the large corporates; it needs something the size of the EU to do it - the USA will not since ''they have the best politicians that money can buy''. The EU also needs to address the imbalance between large and small that allows the large to take the mickey, eg supermarkets paying bills late.

    Unless these behemoths are brought under control we will end up with the large eating the small - the resulting lack of competition will be bad for everyone (except for a few at the top).

    1. John Brown (no body) Silver badge

      Re: This is an EU matter

      "Individual governments are losing the ability to control the large corporates; it needs something the size of the EU to do it "

      Good point. It's a shame more people don't get that, but so long as they have their shiny and can complain about immigrants we'll always have a brexit to fall back on.

    2. mhenriday
      Boffin

      Re: This is an EU matter

      Individual governments are losing the ability to control the large corporates; it needs something the size of the EU to do it - the USA will not since ''they have the best politicians that money can buy''. Which, of course, is why the US government and the best politicians money can buy (on both sides of the Pond) are so concerned to see that TTIP passes, so that the responsibility for regulating businesses is removed from governments which might just possibly be responsive to the desires of the governed and placed in the hands of a panel of international corporate lawyers....

      Henri

  7. Anonymous Coward
    Anonymous Coward

    You can see his Cork carrot's dangling from here

    But I think it's actually a wad of cash in his pocket he hasn't paid tax on.

  8. Graham Jordan

    Can someone just fill in the blanks for me?

    I think I have it right, but just for clarification;

    Apple channels all it's profits through its Irish "business" and pays naff all for doing so.

    The 400 million he claims is legit 12.5% corp tax in Ireland, but the 13 billion is profits made across Europe that IF tax laws were a little more strict, would be paid to the countries where they were made but because of legal loopholes, need to be paid to Ireland instead.

    So assuming that's right, what have they been paying British tax payers in terms of corp tax? If Facebook paid less than I did in 2014, wtf did Apple pay?

    1. Jason 24

      Re: Can someone just fill in the blanks for me?

      Apple pays naff all tax on the profits because it's taxable income is not the typical "sales - costs" calculation.

      It's based on a percentage of their operating cost.

      Weird, huh?

    2. Alien8n Silver badge

      Re: Can someone just fill in the blanks for me?

      Apple Inc pays nothing in the UK, Apple Stores UK however pays a minimal amount (probably as close to zero as you can get using the same logic as Starbucks et al).

      Apple Stores are part of a different "Company" to Apple Inc, the wholesale price for anything sold in their UK stores will be set at a level that negates any profits after employee tax is taken into consideration. They'll pay a huge amount of employee related tax, but their corporate taxes will be next to zero as all the profit will go to the "parent" company that doesn't actually exist anywhere. It's this loophole that the EU is trying to sort out.

      1. Arctic fox
        Headmaster

        @Alien8n "They'll pay a huge amount of employee related tax"

        Is that a reference to the taxes that Apple hand over to the British tax authorities as a consequence of the PAYE system? If it is then it is Apple's employees who are paying their own tax, Apple is paying bugger all. In fact it is a serious comment on what BigCorp can get away with when their employees pay vastly more tax than a company as rich as Apple does.

        1. Alien8n Silver badge

          Re: @Alien8n "They'll pay a huge amount of employee related tax"

          @Arctic_Fox Not quite true, PAYE is made up of both employee and employer contributions. While Employee A pays tax and NI on his £30,000 salary the actual cost to the employer is much greater as they still have to pay Employer's NI for each employee. For most people this equates to a further 13.8% on top of the employee's salary.

      2. Flak_Monkey
        Joke

        Re: Can someone just fill in the blanks for me?

        The parent company does exist... it's in the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying "Beware of the Leopard"

        1. John Brown (no body) Silver badge

          Re: Can someone just fill in the blanks for me?

          "Beware of the Leopard"

          Really? That;s just soooo 2009!

    3. Anonymous Coward
      Anonymous Coward

      Re: Can someone just fill in the blanks for me?

      My in-law is the head of a multinational company in my country of origin (In the EU).

      They pay the taxman exactly 1e every year, the benefits get funneled to Ireland, and there they pay almost no taxes.

      This is tax evasion and money laundering sanctioned by a state.

    4. Anonymous Coward
      Anonymous Coward

      Re: Can someone just fill in the blanks for me?

      So assuming that's right, what have they been paying British tax payers in terms of corp tax? If Facebook paid less than I did in 2014, wtf did Apple pay?

      According to the FT in the past ten years Apple have paid £85m in corporation tax in the UK. ICBA to go back and work out what UK sales have been over the past decade, but I'd hazard a guess that we're talking about something of the order of £20bn. With net margins of around 22% that's say £4.4bn in profit. So at the UK 20% rate, one might surmise they should have paid over £880m in UK taxes.

      That's a rough as a bear's bottom, but in order of magnitude terms it will do, and indicates that they paid less than a tenth of what a UK-based company would find itself paying. However, in amongst the finger wagging at the Irish government, it should be noted that this isn't just the Irish government who are complicit - the UK tax authorities have known all along that Apple make far more money here than they pay tax on, but have turned a blind eye to the extremely dodgy transfer pricing, just as they have with Google, Microsoft, Starbucks, Amazon and others.

      1. Palindrome
        Holmes

        Re: Can someone just fill in the blanks for me?

        Net margins of 22%? No, really, I think you are being a bit harsh.

        According to their latest filing (which you can read here: https://beta.companieshouse.gov.uk/company/04996702/filing-history), the poor loves only made £28 million on a turnover of over £1 billion. So nearer 2.8%.

        Hardly worth getting out of bed for, if you ask me...

        1. Anonymous Coward
          Anonymous Coward

          Re: Can someone just fill in the blanks for me?

          The rights to use the Apple name on their Apple products in the the UK is expensive, you know. You would have thought that Apple UK could've negotiated a better deal with the Irish IP company.

      2. katgod

        Re: Can someone just fill in the blanks for me?

        Ledswinger,

        So assuming you are correct, are these companies doing something illegal? If so why aren't they being taken to court? The US would like all these companies to pay more US taxes also but apparently what they are doing is legal.

    5. Anonymous Coward
      Anonymous Coward

      Re: Can someone just fill in the blanks for me?

      https://franhendy.files.wordpress.com/2016/08/screenshot_2016-08-30-13-27-01.jpg

      this is a copy of an EU slide showing some alleged tax/profit flows

  9. RobertD
    Holmes

    Why is anyone surprised?

    Ireland has form in this, look at the tax arrangements of Bongo and his U2 chums.

  10. Richard Jones 1

    Luxembourg Any One?

    I thought that there was bit of hushed up, glossed over up, ho-ha over Luxembourg and their odd tax deals involving someone called, what was the name of the chap now shielded by; no employed by the EU, was it Juncker?

    1. Charlie Clark Silver badge

      Re: Luxembourg Any One?

      No, no cover up. Juncker's successor at the head of the Luxembourg government is having to deal with it and Juncker has to resist the urge to meddle.

  11. Andyjwebster

    Show your working

    Clearly this is not a glass half-full / glass half empty situation. Either the EU and / or Apple and / or the Irish Tax Authorities are lying.

    It would surely help us all to work out who is not lying if the Irish Tax Authorities were to publish:

    1 The blank pro-formas as used bt Apple to complete their tax returns,

    2 Their internal documents prescribing the process to be followed

    3 The number (not the names) of all other companies, both Irish and foreign, given the same tax arrangement or any other deal of a similar nature (classified by the type of deal).

    On the basis that the EU's claim that the "Head Office" is in the cloud, Apple could also confirm that this is the case, and if not, give details of where it is etc.

    1. Naselus

      Re: Show your working

      "On the basis that the EU's claim that the "Head Office" is in the cloud, Apple could also confirm that this is the case, and if not, give details of where it is etc."

      Even if it is 'in the cloud' then it's still somewhere. It's not like the iCloud is based in a different plane of reality.

      1. Rimpel

        Re: Show your working

        > It's not like the iCloud is based in a different plane of reality.

        no - but it is behind a reality distortion shield

  12. Anonymous Coward
    Anonymous Coward

    The longer this goes on, the more he sounds as nutty as John McAfee.

    Hope it lasts.

  13. andy 103

    They just picked a number from I don't know where.

    A bit like Apple pricing in general then.

    1. Alan Bourke

      Re: They just picked a number from I don't know where.

      BOOM he went there

  14. Anonymous Coward
    Anonymous Coward

    "Cook dismissed the figures, telling the Irish Independent: "In the year that the commission says we paid that tax figure, we actually paid $400m. We believe that makes us the highest taxpayer in Ireland that year.”"

    So he is saying they paid ~5% tax then, if they had a profit margin of 20% (which as its apple is probably more). In 2014 they generated approx $40B ($8B in profit) in revenue in Europe which went through Ireland, which they paid $400m in tax.

  15. imaginarynumber

    I do wish someone would ask Cook why iTunes, registered in the pseudo tax haven of Luxembourg used to charge all EU customers the higher Irish VAT rate of 23%. Doubtless he would say that the servers were based in Ireland.

    However if I buy something from the MS or Google store, I am taxed UK VAT and AFAIK their servers are based in Ireland as well.

    I wonder if they used all of that lovely VAT to sway the Irish Taxman.

    1. Geronimo!

      Funny that: I recall getting billed by Microsoft -as a German company- charging the 22% Irish VAT, as opposed to the 19% or -later on- 21% German VAT.

      I am not sure what the bills from Apple state at the moment.

    2. Steve Davies 3 Silver badge

      It is a bit odd

      Back in the dim and distant past, when software came on media as well as online, Adobe used to fulfil the media orders from Scotland and the electronic ones from Ireland.

      IT was often a few pounds cheaper to buy the media plus shipping than the download just because of the VAT levied. The UK was cheaper than Eire.

      Oh, the wonders of the Tax System. Ask 10 accountants how it works and you will get 20 different answers.

      As the VAT returns have to be done quarterly and vert little remains with the people you are buying from then I'd be incluned to give apple the benefit of the doubt here. Whatever is the case the VAT paid to the Dublin Government by Apple, Adobe, Microsoft, Google etc etc etc must be considerable.

      As for Luxemburg, then I go ask a certain J. C. Junker about it all after all he set it up before becoming WU President. I guess it is safe to say that his home country won't be investigated in the same detail as Eire.

      1. Adam McCormack

        Re: It is a bit odd

        Your mixing your taxes up there - this is corporation tax on profits which is neither being collected in Eire, nor in the countries where that profit is generated.

        VAT is collected by the Supplier from the consumer and offset against any VAT on purchases the Supplier has made in the course of its business; the remainder being paid to revenue & customs (or other local equivalent)

      2. Naselus

        Re: It is a bit odd

        "Whatever is the case the VAT paid to the Dublin Government by Apple, Adobe, Microsoft, Google etc etc etc must be considerable."

        I suspect the VAT paid by all of them to the Irish exchequer is 0. They may collect and pass on VAT paid by their customers... but it's the customer who pays it, not Apple et al.

  16. foo_bar_baz

    Sovereignty Shmovereignty

    We western democracies try to foster free trade, because we know it is a Good Thing (tm). That means removing obstacles such as import duties, but also removing other practices such as non-tariff barriers to trade and unfair state aid to companies. Those are agreed upon under the auspices of trade agreements and transnational bodies such the WTO. When a country is not playing fairly, eg. engages in dumping, these organizations intervene because it is their job to do so.

    The job of the European Union is to create a common internal market with a level playing field. The level of integration is higher than other treaties, but the principle is the same. Ireland agreed to specific terms when it entered the union and got the benefits of participating in the market. If the findings of the commission are based on fact and Ireland has broken the rules, then corrective action has to be taken.

    Crying about lost sovereignty is disingenuous and besides the point.

    1. ZanzibarRastapopulous

      Re: Sovereignty Shmovereignty

      > Crying about lost sovereignty is disingenuous and besides the point.

      Yes, if you don't care about sovereignty,and I don't either, but the EU does feel the need to pretend that it still exists even when the really big problems of the Eurozone can only be properly solved by the members accepting that they are a single country, with a single tax regime.

  17. John Sanders
    Holmes

    This is all politics

    ""and warning Ireland that the EU was seeking to expand its powers over national governments.""

    True.

    ""Cook comes across as much as a politician would""

    True as well, see: http://fortune.com/2016/08/24/apple-tim-cook-fundraiser-clinton/

    It is all politics; from my point of view: fcuk Apple and fcuk the EU.

  18. Charlie Clark Silver badge

    It's not what you say but the way that you say it

    Apple would collaborate with the Irish government if it launched an appeal against the ruling

    I don't actually think that the ruling can be appealed, it has to be challenged in the court. And, as Apple is the benefactor of the subsidy, it's up to Apple to challenge it. But nice of Mr Cook to suggest that Ireland has somehow been punished by the ruling and that Apple is on their side.

    As for the prospect of a challenge the ECJ has a history of confirming the Commission's rulings, especially when it comes to upholding the principles of the single market, of which unfair state aid is an obvious example. And companies invariably play along as the alternative could be reduced access to the market, or being forced to repatriate the earnings so that they can be taxed in the US.

    1. Jason Bloomberg Silver badge

      Re: It's not what you say but the way that you say it

      as Apple is the benefactor of the subsidy, it's up to Apple to challenge it.

      I do not believe that is correct. The EU are not telling Apple to do anything, they are only telling Ireland that they have done something wrong and must correct that wrong. It is for Ireland to argue the case they did no wrong.

      I do not know what the mechanism would be but I expect there is some channel for Ireland to argue that (1) the determination that Ireland gave 'illegal state aid' to Apple is wrong, and (2) the amount Ireland is being asked to recover from Apple is wrong.

    2. Naselus

      Re: It's not what you say but the way that you say it

      "I don't actually think that the ruling can be appealed, it has to be challenged in the court. And, as Apple is the benefactor of the subsidy, it's up to Apple to challenge it. "

      Neither of these things are correct.

      The ruling can be appealed. And Ireland is considered to be the benefactor in this case, because it has drawn Apple into Ireland through the sweetheart deal, to the general benefit of the Irish economy (or rather, to the detriment of everyone else's).

      Remember, Apple aren't actually the defendant. Ireland.gov is. The EU is basically alleging (with quite a lot of truth) that Ireland has offered Apple a sweetheart deal in order to steal tax revenues from all the other countries in Europe.

      It's kind of assumed that Apple will lie, cheat and steal, and that's not an issue because all corporations will do that if they're permitted to do so. The issue is that Ireland is acting as an enabler for Apple to do so in exchange for a cut of the profits. If Apple pays a 0.005% tax rate to Ireland on profits from the whole of Europe to avoid paying the rest of the continent any tax, Ireland has basically stolen that 0.005% from other EU governments. THAT is what has been decided in court.

      The US's involvement in this is that the money that has washed through Ireland then goes and sits in the Apple Cash Mountain awaiting repatriation. If and when Apple repatriates the cash, it must pay a big chunk of it to US.gov, but until that day happens, it doesn't. Apple, like most multinationals, is sitting and waiting for a Republican government to declare a tax holiday so that it gets a steep discount on that tax - it might pay as little as 5% on it when one is declared. The last time this happened was in 2004, when multinationals brought some $300 billion back into the US. In effect, the EU is trying to sidestep this process by taxing prior to the 'let's let the money sit offshore for 20 years' stage, which is eminently sensible - but it also acts as a transfer of tax income from the US to the EU, and is a tad controversial through being completely not how taxation has worked over the past 200 years or so.

      It's a bit odd that Ireland's punishment for this is to be brutally forced to accept $13 billion at gun point, and both Apple and the USA are neither being accused nor convicted of anything, but must both lose a massive chunk of cash. However, this is basically the same gang who decided the best way to revitalize Greece was to saddle it with an unsustainable level of debt while simultaneously forcing it to reduce national income. This is what passes for logic in our collapsed economic system.

  19. Potemkine Silver badge

    Bloody hypocrite

    So we have now a new Avenger, SuperCook who's committed to defend the Freedom not to pay tax to maximize profits everywhere....

    If the World was fair, when visiting Foxconn he would have to stay in one of the luxuous collective dorms and work for a year making IPhones 70 hours per week... Dream on...

    1. katgod

      Re: Bloody hypocrite

      Potemkin,

      If the world was fair wouldn't you give all your money to the Foxconn workers as you no doubt wealthier then most of them? Or do you prefer that only you decide what is fair and keep your wealth.

  20. Anonymous Coward
    Anonymous Coward

    Irish tax man missing the point

    FTFA - Ireland’s commitment to Apple has also been reaffirmed by the Irish taxman, who said “the profits of non-resident companies that are not generated by their Irish branches – such as profits from technology, design and marketing that are generated outside Ireland – cannot be charged with Irish taxes under Irish tax law.”

    But that is the point - you let them declare their profits in Ireland, but then don't tax them because they weren't made in Ireland. This is what we ordinary people call a t-a-x s-h-e-l-t-e-r.

    There are none so blind as those who won't see.

    1. Alan Brown Silver badge

      Re: Irish tax man missing the point

      "There are none so blind as those who won't see."

      Especially when their livelihood _depends_ on them not seeing.

  21. CaptTofu

    Leftists, so many of them here posting, always side with the State, always maligning the productive while praising bureaucrats. They are quick to "greed". So Apple, which employs people, makes things of value that people want, is greedy, but the EU apparatchiks, who produce nothing except red tape, narcoleptic ineptitude, but always want a cut of the profits ( but none of the losses), are not greedy.

    Also see exhibit B, collectivist mindset.

    1. Charlie Clark Silver badge
      Facepalm

      The European Single Market is probably the most competitive, free trade bloc there is and the European Commission has for more teeth that something like the FTC in America.

      Lots and lots of leftists dislike the Commission for enforcing things like unbundling of telecommunications and energy markets and backhanders from states to keep unprofitable businesses going. Hopefully at some point this is going to include stopping the Spanish government from subsidising coal-powered electricity with money it doesn't have,

      1. fandom

        The problem is not the coal-powered electricity, the problem only comes when using Spain own coal.

    2. Loyal Commenter Silver badge

      So Apple, which employs people, makes things of value that people want, is greedy

      Yes, greedy, when it doesn't pay the same taxes on its profits as other companies based and operating in the EU. Nothing to do with 'leftism', and more to do with ensuring that all businesses play on a level field, and there is no cheating and collusion between multinationals and governments (AKA, in this case, state aid).

      It is a fundamental requirement for all parties operating in a shared market to play by the same rules, otherwise the market is asymmetrical and doesn't work. IMHO, the EU is quite right in enforcing this. After all, that's what all those treaties everyone signed were all about, and in the long run, everyone does better if we cooperate rather than compete, due to the obvious* efficiencies gained from doing so.

      *It should be fairly obvious to anyone with a brain that if you have 20 odd countries all doing the same thing, it is more efficient to do it once for all 20 with unified rules, rather than 20 times with a whole slew of rules and bureaucrats to make them work together

    3. Naselus

      "Leftists, so many of them here posting, always side with the State, always maligning the productive while praising bureaucrats."

      Yes, damn those Leftists and their insistence on a free market without state interference in favour of individual companies. Oh, wait, no...

  22. peasant

    I can remember back in the good old 90's when Jo Guest was a glamour model and people did want to LOOK. Tim Cock is not Jo Guest.

  23. LDS Silver badge

    Actually, the EU has truly some powers over governments, it's Apple that should have none.

    The EU treaties explicitly assign to EU bodies some powers over the participating states - and by approving treaties government explicitly assigned them to the EU -, including control over competition, and ruling about state aids are within those powers.

    It looks to me that even in the US most taxes are collected by IRS at the federal level, and it overpowers the single states. EU is not at that level still - but to become a true union, yes, it will have to go in that direction as well.

    But Apple instead should have no power over governments, while we see large corporations (Apple, Google, MS, etc. etc.) dealing directly with state officials to write the rules (or ignore them...), and well, dear Cook, that's exactly what it is destroying democracy and equality before the law. Those "animals more equal than others" - and of course all those pigs privileges were in the pure interests of the other animals...

  24. jimmy1

    Don't know why Tim Cook is accusing the figure of being plucked out of thin air

    It's quite simple to figure out how they reached the figure - CNBC and others have reported it

    http://www.cnbc.com/2016/08/30/how-apples-irish-subsidiaries-paid-a-0005-percent-tax-rate-in-2014.html

    "The European Commission used this example — based on figures from U.S. Senate public hearings — to illustrate how this worked in practice: In 2011, Apple Sales International recorded profits of €16 billion, but under the terms of the tax ruling only around €50 million were considered taxable in Ireland, leaving €15.95 billion of profits untaxed. Apple Sales International paid less than €10 million of corporate tax in Ireland in 2011 – an effective tax rate of about 0.05% on its overall annual profits. In subsequent years, Apple Sales International's profits continued to climb but, under the agreement, its taxable profits in Ireland did not — the effective tax rate decreased to 0.005% in 2014.

    Only the Irish branch of Apple Sales International had the capacity to generate income from Apple products, so sales profits of the subsidiary should have been recorded in Ireland, not the home office, the Commission argues."

    1. Daren Nestor

      OK, but this was under Irish tax rules, which are the same for everyone. The Commission's argument is effectively that no-one else was doing it (which seems a bit odd) so it amounts to state aid. This is fairly wonky reasoning (and even Steely Neelie had an opinion piece in the Guardian that she thought it was a step too far).

      The "non-resident company" tax arrangements that Apple and others use (non-resident companies) is being phased out - the end date is 2020 and no new companies of this type can be registered. This was the really problematic part of the whole affair, because the companies incorporated in Ireland as non-tax-resident. These rules have been in place for a long time - Apple started using them in the late 70's/early 80's.

      The gap is easy to understand - Ireland have "territorial" taxation, so profits made by subsidiaries of Irish registered companies abroad are not liable for tax (unlike, say, the US). The rest of the EU have a common market for goods and services, so the profits are not taxable there, either, because the company is registered in Ireland. It seems like there are a number of easy fixes (the Irish took the one available to them in 2013, as mentioned above).

  25. Anonymous Coward
    Anonymous Coward

    Missing the bigger picture...

    The US is opposed to the ruling - wonder why? Because at some point in the not-so-distant future the US is going to give all these multi-nationals a one-time opportunity to repatriate all their overseas holdings for a reduced tax, and then shut down all the loopholes.

    If Apple pays Ireland, that's billions the US will never see, and could start a wave of rulings that will see the funds repatriation lottery win for the US turn bust. The US will never let this ruling stand - there's just too much money riding on it. The Europeans will end up with nothing, nada, zilch. Apple, MS, Intel, etc. will return all that overseas money to US banks, and the US government will get its piece - as God intended. Just watch.

    1. Zippy's Sausage Factory

      Re: Missing the bigger picture...

      And there aren't similar rulings the EU instituted against EU companies then?

      If the US government start crying that US companies should be able to flout rules that EU companies cannot, I suspect that will pretty much be considered the opening salvo in a rather long and unpleasant trade war.

      1. John Brown (no body) Silver badge

        Re: Missing the bigger picture...

        "US companies should be able to flout rules that EU companies cannot"

        I think you just described TTIP.

    2. fandom

      Re: Missing the bigger picture...

      That future has been 'not so distant' since the financial crisis started, somehow it hasn't happened.

  26. Zippy's Sausage Factory
    Mushroom

    Didn't some German car companies get stung for billions a few years back?

    I'm sure I recall that the US government pushed hard for this to happen under the auspices of illegal state aid? Even if not, it's happened to Spanish football clubs - even the Lloyds bailout had to be structured VERY carefully to avoid it being illegal state aid.

    Given that these sorts of issues have happened a lot (the Spanish football clubs lost, incidentally) I can't help but feel that if I were an Apple shareholder, I'd be calling for Tim Cook to be fired right now - for incompetence in allowing what was clearly an illegal tax avoidance scam to go ahead in the first place.

    1. ps2os2
      Thumb Down

      Re: Didn't some German car companies get stung for billions a few years back?

      Also do not forget how VW cooked the books on MPG in the US.

    2. Anonymous Coward
      Anonymous Coward

      Re: Didn't some German car companies get stung for billions a few years back?

      "for incompetence in allowing what was clearly an illegal tax avoidance scam to go ahead in the first place."

      a) It was put in place in the 80s (?) a long time before TC was around

      b) It was affirmed subsequently by the Irish tax authorities >1

      c) The EU does not have unified tax laws, despite some (not all) of the EU countries having the € as their national currency. This is a ticking bomb under the €, which was pointed out before € was created

      d) The Irish Tax department has levied the taxes it thinks Apple owes, and Apple paid them.

      e) The EU, has now decided that it has indeed the power to override the tax departments of member states, and levy taxes directly on corporations on behalf of member states based on the "no state aid" doctrine. It is unclear to me which EU tax law they will use to figure out how much is owing to the member state. I suspect it is some post-rationalisation.

      Q: Were I Apple (Google, FB etc. etc) and operating in CountryX, which sovereign tax laws would I be following? (The hint is the word sovereign).

      A: CountryX

      The EU is not a federation, there is no federal constitution nor is their likely to be one. Federal constitutions (like the US, Germany, Australia, WI etc.) have very specific characteristics, and the combination of the Treaty of Rome and all the subsequent documents through Maastrict, Amsterdam etc. (forget where we are up to) are in no way even close to such a thing. In fact, "Federalism" (even though it might be argued is the most logical path) has been avoided like the plague. Why? Because the member states have better democracies (and Constitutions) than the EU and none of them will (or in most cases CAN) hand over all the power to the EU Commission, a non-elected body.

      But I digress.

      Basically this is the EU commission trying to implement federal taxation power via the back door.

  27. ST Silver badge
    Mushroom

    yeah, yeah, yeah, yeah ...

    .. sure, sure. Taxageddon, etc.

    Park it, Tim. We all pay income taxes, and our tax rate is nowhere near 0.005% annually.

    1. Nikki Radir

      Re: yeah, yeah, yeah, yeah ...

      @ST

      "our tax rate is nowhere near 0.005% "

      ST, you've inspired me! I'll set up a company in a jurisdiction that taxes only profits made in that country. Create a local subsidiary that employs me for a less-than-taxable salary. Then persuade the company that I work for to pay that company for my services. Nullify profits by having the immediate parent charge it for management services, and use of the "Nikki Radir" brand. Charge most of my personal expenses to the parent company, route any remaining profit to a virtual parent-of-the-parent, stacking it up to wait for an opportunity to pay off my mortgage through a convenient, non-taxable route.

      Then errm... ummm... any tax lawyers help me out here?

  28. Anonymous Coward
    Anonymous Coward

    Apples own published results suggest otherwise

    According to apples own profit results they had an operating PROFIT of $53.5B. y/e Sep 2014

    If they paid a full tax rate of 12.5% = $400,000,000 then their profits would be in the region of $3.2B booked in Ireland

    So where was the other $50B booked (and taxed). The US? unlikely since it is common knowledge that 90% of worldwide income ex USA is booked through Ireland

    Like apples economics also very economical with the truth

    https://www.apple.com/uk/pr/library/2014/10/20Apple-Reports-Fourth-Quarter-Results.html

    1. Voland's right hand Silver badge

      Re: Apples own published results suggest otherwise

      It was 0.005 only in 2014. Apple gradually paid less and less ever since the deal was set-up.

      So 12Bn sans interest is probably an exact sum of the difference between what was paid and what should have been owed at 12.5.

  29. RonWheeler

    Moral confusion

    Hate big government, hate -active- tax dodgers. Lose/lose is the ideal outcome IMO.

  30. ZanzibarRastapopulous

    Practical law...

    It'll be funny when this hits an Irish court and that court - looking at Irish tax law - sides with Apple.

  31. the J to the C

    It's seems a fairly straight forward case, Ireland gave a tax rate way below what it should have by EU law to Apple, so that seems to me to be wrong, however Apple always do the right thing so it can't be wrong, are are they right to be doing something wrong

  32. Dave 15

    So who is telling the pork pies?

    They can't both be right.

    Question is do you believe a politician (not a chance) or a big business leader (not a chance)... its much the same as when the politician was accused by the police of using the word pleb... one fat liars word against another fat liar.

    It must be VERY easy to prove it... the tax authorities in Ireland must be able to show exactly what number of euros Apple put in the kitty. I bet it was low, probably not as low as the commission state, but low.

    As to the EU wanting to control every country... yup, they do, thats one reason to get out of it.

    1. Loyal Commenter Silver badge

      Re: So who is telling the pork pies?

      As to the EU wanting to control every country... yup, they do, thats one reason to get out of it.

      If by 'control every country', you mean have everyone play by the same rules, then yes. There has, however, been an awful lot of misinformation about what the EU does. That playing by the same rules applies to things like making sure that nobody cheats on trade rules and making sure that people respect the ECHR*, which is not a piece of EU legislation, but being a signatory to it is a prerequisite to EU membership. The ECJ** is the body that enforces this. Very few of our laws are 'dictated from Brussels' despite what loudmouthed bigots like Mr Farage would have you believe by shouting made-up statistics at you.

      Incidentally, if you were to read the ECHR (in summary it's actually a fairly short document, so I'd advise everyone to do so), you might start to wonder why certain right-of-centre politicians are so dead keen on us not being a signatory to it, especially when you consider that it was largely British lawyers who drafted it in the first place to put in place a legal framework to prevent a repeat-play of the stuff that went on in the 1930s and '40s (and before that some of the stuff that the good old British Empire got up to too).

      *The European Convention on Human Rights, not to be confused with the European Court of Human Rights, which upholds the Convention.

      **European Court of Justice.

      1. Frank Fisher

        Re: So who is telling the pork pies?

        It isn't the ECHR that's a problem, it is the supremacy of the ECJ that is. And in most countries of the world- ie everywhere outside the EU - controlling your own laws isn't seen as an act of "bigotry".

  33. Anonymous Coward
    Anonymous Coward

    Contrary to most comments, this is a bid by the EU to harmonise taxes by the back door

    Most of the reporting of this issue concentrate on the "fact" that the Irish did a deal to allow Apple to pay lower tax than other companies thereby giving it a leg up against its compeditors, i.e. state aid. However, the truth is that the mechanism it used (the so-called Double Irish) was available to be used by any company if it created a structure similar to what Apple had done. So where's the advantage the Irish government gave Apple versus other companies with operations in Ireland? The answer is none.

    What this structure gave Apple is an advantage over companies operating in other European countries. In effect, that this ruling is saying is that if a company puts in a tax structure which provides the company with an advantage over a company based in another juristiction when they both compete in a third country, this amounts to state aid. So, lets dial it back and look at companies who do no tax planning at all. Say we have a company based in Ireland which has a shop in Paris and competes with a German based company who also has a shop in Paris. Both companies repartiate their revenue to their home contries and calculate their profits as occuring in their home countries. The Irish company will pay 12.5% profit on that while the German company will pay 15%. This ruling implies that this corporate tax rate differential can be seen as state aid and the only solution to be compliant with state aid regulations would be to harmonise the corporate tax rate across the EU.

    As the EU treaties give tax competance to each country, this is a clear case of Commission over-reach, not for the first time.

    1. John Brown (no body) Silver badge

      Re: Contrary to most comments, this is a bid by the EU to harmonise taxes by the back door

      No, the "double Irish" is only available to those who can afford it in the first place. It is NOT available to everyone.

      As for you example of the Irish and German companies competing in Paris, again, wrong. This ruling will have no effect on it. Where it would have an effect would be if, say, the German company booked it's profits through a brass plaque HQ "office" in Luxembourg and the Luxembourg govt. gave the German company a special low tax rate not on offer to other companies, meanwhile then moving it's non-taxed profits out of the EU to an account in the Bahamas and so effectively paying no tax in the country of sale, the country of origin or even the company where the "brass plaque" HQ is.

      The EU is effectively one single jurisdiction in terms of trade. You can't import goods from the far east, sell them in Europe and send the profits off to the Bahamas and not expect to pay tax. All that does is drain cash from the very economy you need to be healthy so as to keep buying the overpriced tat.

      There seems to be an aweful lot of people who think a "free market" should be truly free of any and all regulation or taxation. Look where the lead to with the likes of Rothschild, Carnegie, Morgan et al. At one stage some of those robber barons, not content with just buying congressmen, actually tried to buy the US presidency. (then again, maybe that's since really happened)

    2. ZanzibarRastapopulous

      Re: Contrary to most comments, this is a bid by the EU to harmonise taxes by the back door

      >Most of the reporting of this issue concentrate on the "fact" that the Irish did a deal to allow Apple to pay lower tax than other companies thereby giving it a leg up against its competitors, i.e. state aid.

      Yes, Ireland is the bad guy here, and should be fined, a "tax" on Apple is likely to be illegal under Irish law.

      The offence is Ireland's tax system, not Apple's use of it.

  34. Anonymous Coward
    Anonymous Coward

    who is lying?

    I guess that is not why Cook unloaded $US36 million in his personal shareholding just prior to this announcement? What is happening in Ireland for all manner of tax-dodging schemes is well known to all in IT management. It is in fact, the new "industry" of the emerald isle. And "hey USA gummint", if you find this a wake-up call, why not examine the nature of the fruity -farms relationship with the PRC via the ironically named Foxcon in detail?.

  35. TVU

    "Tim Cook: EU lied about Apple taxes. Watch out Ireland, this is a coup! The EU's coming for your government, froths tech titan".

    No, Cook, you're just sore because the EU Commission found out about your grubby little tax avoidance scam that was organised for you by those squalid tax planners of yours.

  36. azaks

    as an AAPL shareholder, I'm furious...

    you pissed away 0.005% of EU profits on tax?!

    I was assured you would be registering Apple as a religion, making profits tax exempt.

    That would certainly be stretching the truth a lot less than funneling proceeds through sham companies that serve no purpose other than tax evasion.

  37. Herby Silver badge

    The only thing for sure...

    Is that lawyers and accountants will get rich. When you have that much $$$ on the table, you can afford to spend a little bit on greasing the rails.

    Money makes the world go 'round!!

  38. meanioni

    A missed point...

    Generally taxes are used for public benefit (yes I know there are lots of exceptions and there will be snarky comments about this) - but in terms of providing and maintaining roads, law and order, fire protection, healthcare for staff, waste disposal, etc. Irrespective of the rights and wrongs of this case, Apple as an income and profit generating entity is quite happily using these services and benefiting from them, but is not willing to pay its fair share.

    Simply from a social good perspective and not from a "they're all a bunch of greedy bastards" they deserve to pay taxes to make their fair contribution across each European country in which they operate.

    Of course, the governments concerned could always withhold collection of waste, block off roads, ignore any 999 requests originating from Apple until they do pay.... :-)

  39. Smedley54
    Happy

    Oh please?

    Please let this be true.

    For several years, very profitable US corporations have used corporate inversions to park profits in tax haven nations - like Ireland. Like Apple, some have promised to repatriate the funds if the US would only adopt a reasonable corporate income tax like - of, I dunno - shall we say .0005%? If they get smacked now for their greed, and Ireland nets a windfall I'm sure they would - reluctantly - accept, I'm good. Hopefully, this is only the beginning of some real tax reform, but with the amount of money at stake, I'm afraid someone's gonna get bought.

  40. Frank Fisher

    So many commies reading the Reg?

    The point folks, surely, is that Ireland should be free to manage its own tax affairs, and the EU should not be imposing diktats in a capricious and unlawful way? Retrospective legislation? Threats? This not a club I'd like to be part of. Oh, we voted out. Hurrah. Iexit next?

    1. Poncey McPonceface

      Re: So many commies reading the Reg?

      Then the journalists at the Financial Times are commies? https://www.ft.com/content/3e0172a0-6e1b-11e6-9ac1-1055824ca907

      Good to know.

      It's funny how for a certain type of "useful idiot" that anybody who wants the rules of the *capitalist* system to be fairly applied must be a *communist*. That makes *loads* of sense.

      Iexit? As someone who lives in Ireland. Not a chance. I can assure you we watched the farce that was Brexit with amazement and buttered popcorn. I visited Britain just before the referendum and nearly every man-on-the-street wanted out but for the most ludicrous of reasons that we here in Ireland could see as baloney. Now that we've seen the fallout and backtracking on the £350,000,000 there's not a hope in hell of Iexit being tabled. Granted the € has its problems but I expect that over time there'll be more integration, not less. And that's not a bad thing, that's called economic reality.

      1. Frank Fisher

        Re: So many commies reading the Reg?

        The FT is rabidly pro-EU yes, and you make a fool of yourself by accepting the line that anyone voted out of the EU to get £350m a week spent on our NHS. That might be the spin the BBC put on it, it's not the reality.

        Our referendum was nothing less than a proper proletarian revolution against the bourgeoisie. You may be surprised what might happen in Ireland if the opportunity was offered.

  41. VulcanV5
    Happy

    *Headlines You'll Never See: EU Commission Investigates Luxembourg*

    You do have to wonder at what kind of alternative reality so many morally superior commentards are living in. So let's try some facts. The first duty of Business is to stay in business. The first duty of Government is to govern in its citizens' best interests. Shareholders are entitled to play hell when a company fails to legally minimize its tax burden. Citizens are entitled to play hell when a Government fails to make the country in which they live, open to business.

    Apple has some of the brightest and best in-house legal and taxation counsel in the world because it pays them some of the biggest salaries in the world. Governments -- in this case, the Irish Government -- can afford no such expenditure. So . . along comes Apple armed with news of loopholes which regulatory agencies have been too stupid / too lazy to close. And along comes the Irish government, which now that it has been alerted to the existence of such loopholes, must decide whether to close 'em and drive business away or leave 'em open and continue on as before.

    Finally. . . along comes an unelected self-serving hubristic bunch of empire-building clowns seeking to butt in on the sovereign decisions of a sovereign state -- the self same "Commission" that, surprise, surprise, continues to do nothing about the blatant abuses institutionalised in another member state called, er, Luxembourg, which happens to have, um, a certain linkage to an obscure bloke who goes by the name of Jean-Claude Juncker.

    Well: who'd a-thought it?

    The sheer idiocy of the Commission's behaviour really doesn't surprise, even if it'll take some beating, not least its "finding" that Apple must repay $13 billion in back taxes to, er. . . who? Mr Juncker? Apple certainly can't pay it to the Irish Government because it has never earned anything there that's remotely like the gross qualifying figure for a $13 billion bill. The Irish Government cannot "collect" the $13 billion because under international law it has no authority to do so. The EU Commission cannot collect the $13 billion either, because though the EU elilte would dearly like the world to believe that they're in charge of a sovereign State. . . they ain't.

    As one of those who voted Leave on June 23rd because I've grown sick, weary and tired of a faux country with its 'national' flag, 'national' anthem, multiple 'Presidents', multiple 'Parliaments', overseas 'embassies', 'national' currency and dreams of a 'national' army, it's delicious to see yet another nail being self-hammered into the EU coffin . . .

  42. R3sistance

    The sad thing is, this isn't news. We all know that there are multiple international corporations in Ireland because of the tax evasion. This isn't just Apple, but if you aren't a multi-national you won't see those tax benefits.

    More so Ireland has facilitated this to win jobs, I do not think Apple just paying the taxes is enough here. Ireland itself should also be punished as should other companies who have these special arrangements with Ireland. Now these companies are in Ireland they aren't going to just move and so this still remains a win-win for Ireland winning business in illegal methods. And let's remember, Ireland is part of the EU, Ireland has agreed to follow the rulings of the EU and there were laws against these SPECIFIC practices. The EU is perfectly in their rights to make this ruling. Apple and Ireland are just bitter, Apple since they have to pay their dues and Ireland since it'll put off other multi-nationals moving there in the wake of brexit that Ireland would hope to win with their illegal practices.

    The only surprising thing is that it took this long for the EU to actually do anything about this.

  43. Anonymous Coward
    Anonymous Coward

    Brexit opportunity?

    Once we are out of the EU - I am sure we could offer to host the Apple EU HQ and offer a compromise tax position? Maybe 8Bn tax instead of 12...

    1. ZanzibarRastapopulous

      Re: Brexit opportunity?

      The whole point is that Ireland is operating as a tax haven within the EU.

  44. GauteA

    Lost case

    This EU ruling was no news to Apple's lawyers. Cook was pre-warned.

    Apple's lawyers have, based on FIAT, BP, and other rulings, told Cook this is a lost case. Hence, Cook decides to play is last card: The Political Card; "Appealing to Irish politicians, being rude, raising the anti-EU feelings, f... those bureacrats, Ireland has autonomy do do what they want!"

    Cook has shown the weakness of his position.

    And Irish politicians has a crash course in EU-law in front of them.

    Apple will have to pay.

  45. Anonymous Coward
    Anonymous Coward

    Tim Cook's veracity

    Everyone knows that Tim Cook is a liar. Example, this whopper, in the Charlie Rose Interview:

    "There were things written in the press about people having back door access to our servers. None of that is true, zero. We would never allow that to happen, they would have to cart us out in a box before we would do that."

    1. Anonymous Coward
      Anonymous Coward

      Re: Tim Cook's veracity

      Citation needed - I have no clue why this is a "whopper". Please address my apparent ignorance - seriously (not troll)

  46. boatsman
    Mushroom

    apple got a sweet deal, that is not available to

    others. nothing to do with sovereignity, but with fair competition, as was the idea of free enterprise, capitalism et all, a long time ago.

    it doesnt work, but the EU is trying to fix it a little ......

    but mr Cook is not in favour of free enterprise, he is in favour of Apple enterprise.

    and he is used to a government that does as he wishes, on his beg and call...

    wake up, TIm. in Europe, you need to work for your money.

  47. cortland

    "I am not a lawer" etc

    But as I understand the law here in the US, income not taxable abroad is taxed in the US, if any of it gets back here.

    I wonder where Apple wants to spend it?

  48. ps2os2

    Apple and Tax's

    Tom Cook's claim sounds hollow given their propensity of moving money around the world to suit their needs rather than fulfiling the spirit of the law. I am sure some tax accountant got a tidy sum for letting APPLE figure out a way around the spirit. Shame on Apple.

  49. James Anderson Silver badge

    Time to ditch corporation tax.

    It has become a tax which only locally owned and registered businesses pay.

    There is no effective way to apply this tax fairly so that British owned and registered company pays the same rate as a foreign owned multi-national.

    Just look at how much tax Cadburys paid when they were a British registered PLC making chocolate compared with the tax they paid as a subsidiary of an American brown sugary fat manufacturer.

    The only fair thing is to scrap the tax and allow local companies to compete with multinationals on even terms.

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