back to article Apple solemnly agrees to pay France $570m in back taxes, turns to camera, gives us a wink

Apple has agreed to pay France an estimated €500m ($570m, £440m) in back taxes following several years of protests – and a decision by the French government to pass a new tax aimed at US tech giants. "As a multinational company, Apple is regularly audited by fiscal authorities around the world," the company's French subsidiary …

  1. Anonymous Coward
    Anonymous Coward

    And yet, next week, Apple will be trotting out the "we pay all the taxes we're legally required to pay" bullshit as if nothing has happened. No, you don't. You own France $570 million. You owe Italy $350 million. You owe Ireland $14.5 billion. You cheat *constantly* on your taxes, and then when caught, shrug and hope we've all forgotten a week later.

    1. DougS Silver badge

      They don't really owe Ireland all that - that's their total EU wide bill. Since Apple and other tech companies funnelled their EU wide profits through Ireland to take advantage of Ireland's low rates, anything done to make them cough up back taxes in other EU countries would be taken out of that. So if they pay France a half billion, then that's a half billion they won't end up having to pay to Ireland. That's why the EU is trying to make them cough that up, and not Ireland (who was actually fighting the EU alongside Apple)

      Don't blame US companies for doing what the EU laws allowed them to, and moving profits around to whatever EU country charged the lowest rate. They are just taking advantage of the laws as written. France has discovered that frictionless money movement throughout the EU has its downsides.

      This whole problem is because the EU doesn't tax on its own behalf but rather lets all the countries do it themselves, just like the problems with Greece etc. are because the EU doesn't have a unified fiscal policy. It just isn't a sustainable model.

      1. DCFusor Silver badge

        Yep. The real issue with fairness is that these dodges aren't equally usable by all....

        You can legally avoid billions of taxes for a thousandth of that - by creating the proper office, with employees, in the low tax district and doing this foolery. Works great if you have the dosh in the first place - the big outfits all do, and all do this. But any small biz can't afford to play that game.

        We thus generate anti-progressive taxation via "any country who wants to write laws that allows that", and there's always one who figures some is better than the none they'd probably get otherwise.

        //

        But just to make it more interesting, since we are pretty much all direct or definitely indirect customers of these outfits, taxing them means what? Who pays? We do, of course. Always and forever, not exceptions have ever occured in all history - the corps either charge more, or go out of business, either way it's we who pay. Perhaps the more well-off pay more Apple tax, but most of us pay some of all of it. Do you think other manufacturers or advertisers don't get a boost in what they can charge by being just a little less, or a trivial example of one entity making the entire market more expensive?

        //

        Governments get more taxes, and use it to wastefully redistribute income - not that that is working out well, or standards of living have actually gone up since the 1980's at least. But it'll work this time, it's never been done just right (definition of insanity).

        //

        To inject even a little more fun into the analysis, think of it this way - while people usually are, and should be, equal under the law, we're not the same. Plenty of lower IQ people (as George Carlin mentioned so eloquently), plenty of low motivation folks and so forth. I think of the governments and their various departments as jobs programs for those sorts of people, who gravitate to sinecure jobs that require no thought, just choosing from drop down lists (which never really fit the complexities of reality), and showing up enough to last till a pension; depending on what country, it might even pay more than actually productive work - it certainly does if you count the pension most of us are never offered, or like most pension plans, is going to fail - arithmetic always wins in the end.

        //

        So, think of it this way. Paying some .gov jerk to stamp "no" on whatever they force you to ask permission for (especially including most of it not really being any of their business anyway) is actually costing us less than dealing with the life of (other) crime they'd probably adopt otherwise. As it is, most criminals are stupid - and keep an nearly as stupid police and prison system employed, all easy pickings and mostly leaving we smarter people out of it - which is not the worst possible outcome.

        Eg the middle intelligence people would cost us more as criminals than they do as...government occupied criminals.

        //

        You can see why I'd never go anywhere in politics...the truth never sells well....especially if it's obvious in hindsight.

    2. Gene Cash Silver badge

      It's not bullshit

      I try to pay all the taxes we're legally required to pay. I'm not rich enough nor are my finances complex enough to have a staff accountant looking for loopholes.

      But a loophole is a loophole. If they didn't want it there, they shouldn't have left it open. I think it's unfair to essentially change the law after the fact. Passing new laws to close the loophole is fine. Being "subjected to the current proposed tax backdated ten years" is bullshit.

      I hate Apple for many, many reasons and will never again own one of their products (I was stupid enough to buy an iPad once) but this is not something they should be stuck with.

      1. JLV Silver badge

        Re: It's not bullshit

        You’re right, but the complex shell games around inter-subsidiary pricings have been around forever. I remember 3M France, in 1992 at a conference, getting, very gently, joshed at by _friendly_ businessmen that they deserved congratulations for not making any profits with their (large) French operations.

        Im pro free market, against excessive taxation and pro free trade, but multinational companies really shouldn’t be able to game tax rates that blatantly. It’s not healthy in the long run and shenanigans like this is why losers like Trump or Tsipras get elected.

        So, yes, close those loopholes.

        1. JcRabbit

          Re: It's not bullshit

          I think everyone agrees that loopholes should be closed. *Back taxing* those loopholes on the other hand, especially going as far as 10 years, is nothing but legalized robbery. The companies didn't do anything illegal, they just gamed the system by doing what the law ALLOWED them to do in the first place.

          1. Andre Carneiro

            Re: It's not bullshit

            I see where you're coming from but have to disagree with you.

            Loopholes are, by definition, technicalities that allow you to defeat the spirit of the law because it was shoddily implemented.

            You may well be doing something that is not technically illegal but you know damn well that your intent is certainly not pure.

            1. Anonymous Coward
              Anonymous Coward

              Re: It's not bullshit

              Loopholes are, by definition, technicalities that allow you to defeat the spirit of the law because it was shoddily implemented.

              That's the problem of those who drafted and approved the legislation then. Why should we (or companies) have to work out what the drooling idiots of government meant to achieve in administrative laws and then act according to that? Its often hard enough to understand what they actually write.

              Relying on "the spirit of the law" is rubbish. If writing rules in black and white, those doing the writing should get off their lazy fat arses and make sure the written rules are as brief as possible, comprehensive, easy to understand, evenly and thoroughly enforced, and do what the writers want with a minimum of unintended consequences. France, the UK , the US, and quite a few other countries have vast, convoluted poorly drafted, out of date tax codes. And then idiot politicians are (supposedly) surprised that this complexity they have allowed to continue produces unwelcome results.

              But other countries (eg Hong Kong, Singapore) have shown that far shorter, far simpler tax codes are possible, and can be more efficient, less prone to loopholes and avoidance. Tax codes (and all bureaucracy) is just a rule engine - and like computer code or a physical machine, the more parts it has, the less reliable and effective it will be, the more opportunity for waste and the accumulation of dirt. Until countries like France and the UK realise that 10,000 page plus tax codes are central to the problem, nothing will change.

      2. LDS Silver badge

        "But a loophole is a loophole"

        Sure, but its actual "interpretation" may change. For example Ireland may have thought it was safe with its deals - until EU started to interpret them as illegal state aids. Had Apple accepted to pay the standard quite low 12.5% company rate, the loophole would have fully worked - greed put it in a situation where it might not.

        The devil could be in the details, and if loopholes found by companies were and are in collision course with other laws and regulations.

        Evidently it would be far better to close existing loopholes once and for all - although it looks to require a consensus that doesn't exist as some small states take advantage of them too - but other ways can also be used to recover payments for past years while looking for future solutions.

        1. DougS Silver badge

          Re: "But a loophole is a loophole"

          Apple isn't losing anything over the "standard quite low 12.5% rate", assuming that the EU is only trying to claw back the difference between what Apple would have paid under that rate and what they paid under their special deal with Ireland.

          The EU still has a serious problem with all the different tax rates, and the ability to for companies to move money and profits around as they like. Obviously the flow will go to whoever has the lowest rate, even if special deals are disallowed. This works in the US because the US as a whole has taxes, and then individual states are allowed (most do, but not all) to tax income themselves. Even a few cities (NYC for one) does.

          If the EU had its own taxes, and then allowed countries to have supplementary taxes things would work better in the long run. But they'd never get the members to agree to that now, unless/until things get to the point where it looks like the EU may fall apart.

  2. This post has been deleted by its author

    1. DougS Silver badge

      Re: Apple will laugh all the way to the couch...

      Who says they are trying to PUNISH? They are trying to collect on back taxes owed, these are not fines.

      BTW, if you taxed Apple of any other company in the trillions you'd bankrupt them. No company can afford to pay such a tax bill, let alone a tax bill from a single country. If any country created such a tax system, its consumers would no longer have any products to buy because Apple, Google, Facebook and every other US or EU company subject to such a tax would stop doing business in France instantly. France isn't such a big market US companies can't just say 'adieu' if they go crazy like you think they should.

      1. DerekCurrie Bronze badge
        Paris Hilton

        Re: Apple will laugh all the way to the couch...

        Problem: Apple doesn't owe any back taxes defined by a law that didn't take effect until January 1, 2019. See my comment below about Ex Poste Facto laws being illegal in the EU.

        1. DougS Silver badge

          Re: Apple will laugh all the way to the couch...

          Well that's in dispute because Apple got a lower than "official" tax rate from Ireland via a special deal, and the EU claims such special deals have always been illegal. Since it was decided in a court that Apple needed to pay up, it looks like they were right (or at least right enough that EU judges agreed with the EU)

          That's not the same thing as an ex post facto law.

  3. Korev Silver badge
    Coat

    Apple, aren't they Mavericks?

  4. cornetman

    > ... force American tech giants to pay taxes in the countries where they make their sales.

    But that there is the rub: where is the sale taking place? In Ireland? In the US? In France? Or neither? Or all of the above?

    In truth the Internet doesn't care about country borders and consequently, neither do most people when it comes to buying and selling.

    I don't really see an end to this kind of problem which is a particular problem for sales of non-physical, ethereal goods.

    1. big_D Silver badge

      The sale takes place where the customer is. Simple.

      1. I ain't Spartacus Gold badge
        Trollface

        The sale does not take place where the customer is in the EU. Because the EU has the Single Market.

        Perhaps someone should tell the French that "they can't have their cake and eat it", "there's no cherry picking" and "the four freedoms are inviolable"...

        1. big_D Silver badge

          The sales tax is already applied where the sale takes place, not where the company is based.

          Corporate tax revenues should then also be calculated on that basis (or per country on a basis of sales in those countries).

          1. I ain't Spartacus Gold badge

            big_D,

            In that case, the EU would not have a single market. The point of the single market is that one company in one country can do one lot of paperwork to sell to anyone in the single market. If you now have to do separate paperwork for each country, then you've destroyed that frictionless single market.

            Also the EU doesn't have a sales tax, it has VATs. And VAT is not applied where the sale taxes place, but where the company is. So for example Amazon sell a lot of stuff from Amazon S.a.r.l. which I think is their Luxemburg company, because VAT rates there are lower, so they can out-compete shops and online stores based in countries with higher VAT rates. Equally when Apple sell phone to French retailers, they'll do it at Irish VAT rates - which those companies will reclaim via EU VAT rules, and those shops will then sell at French VAT rates if they're in France. I don't know if Apple have one EU online store, to take advantage of the VAT rules as Amazon do, or have one in each country.

            1. LDS Silver badge

              "VAT is not applied where the sale taxes place, but where the company is"

              Wrong. Depends if it is a B2B sale or a B2C one, if you're selling goods or services, and the total amount of your sales in a year in a given country. For B2C sales:

              "If you sell goods and send them to consumers in another EU country, you usually need to register your business there and charge VAT at the rate applicable in that country - unless the total value of your sales to that country within the respective tax year falls below the limit set by the country"

              https://europa.eu/youreurope/business/taxation/vat/cross-border-vat/index_en.htm

              The limit is usually a few tens of thousand euros - some countries 100K - to help smaller business to avoid more complex VAT management. Apple, Amazon & C. are quite above the limit....

              Anyway what a "single market" means may not apply to taxation - and VAT is an example.

            2. big_D Silver badge

              That has been the case for a long time.

              When I buy something on Amazon from a British seller, I still need an invoice with their German tax ID.

              The seller can sell in any land of the EU without restriction, as long as they are registered for VAT / sales tax in that country.

              Amazon had to change a few years back to comply as well. Especially as more and more businesses were buying through Amazon and required a valid Tax Ident. to claim the tax back.

              I've had to send a few products back, because the seller on Amazon charged the German 19% MwSt, but didn't have a valid German tax number, so I couldn't reclaim the tax, so I couldn't put it through the books, so the product had to go back and I re-purchased from another seller that did have a valid tax code.

              Amazon S.a.r.l can now only charged reduced tax on certain "virtual" items, but even that is limited.

  5. Boris the Cockroach Silver badge

    Whats the betting

    that Apple france suddenly has to 'buy' its IP from Apple ireland, thus making no money whatsoever in France.....

    It seems in today's world , only us little people pay tax...

  6. DerekCurrie Bronze badge
    Paris Hilton

    Apple Owes For 2019, seeing as no Ex Poste Facto laws are allowed in the EU

    This issue is, I strongly suspect, not being adequately described in the press. From what I have read in this article, Apple owes only the taxes defined in France's law from the first day of 2019. That would NOT be ~$570 million.

    What further information is missing here?

    Q: Is perhaps ~$570 million an estimate for 2019?

    Q: Is France in fact using an (illegal) Ex Poste Facto law?

    Q: Or is this all a ball of confusion that has yet to be properly described in the press?

    Q: Or am I missing some finer point that perhaps should be better defined in the press?

    Meanwhile, Apple should pay the taxes it owes. Apple should not pay taxes that are bogus, illegal or cooked up as a method of governmental profiteering. That would include Ex Poste Facto law taxation.

  7. Griffo

    Transactional Tax

    Is this another reason for countries to look more seriously at shifting to transactional taxes?

    Tax the transaction, in the country it's made, at the time the transaction is made. The ability to funnel transactions to low-tax jurisdictions could be severely curtailed if not stopped entirely.

    1. Simon2

      Re: Transactional Tax

      There is already transactional tax. Its called VAT or sales tax.

      1. LDS Silver badge

        Re: Transactional Tax

        The problem is VAT is paid by the customer, not the seller. All the ideas floated around in the past years to increase taxes like VAT would put a bigger burden on customers.

        It is true that taxing companies bears the risk that some of those taxes will be passed along to customers in the form of higher prices, but it's not always possible to pass the whole sum - because a company could price its goods out of the market (even Apple is probably pricing itself out of a large share of its own market), or see a sale slump.

        Anyway tax policies are a complex issue, and balancing them it's not easy. There's a big evidence anyway that in the past years in most Western countries the tax burden has been shifted heavily towards workers, especially middle-class ones, and it starts to become unbearable especially in periods of crisis. A re balancing is needed, or the protests we're starting to see now will be just the beginning.

        1. DCFusor Silver badge

          Re: Transactional Tax

          Companies, now and for all time, put their prices based on their costs and margins, and always have and always will pase 100% of those costs along to consumers in one form or another. Thinking you can ever "tax those other guys" is naive in the extreme and displays ignorance of how money works.

          Less margin if they "eat it" simply means less for grandma's pension fund - or some other outflow of the profits created by whatever margin. There are no exceptions other than slightly shifting where the burden is places, but it is NEVER on the companies involved.

          There is the exception to that given the rampant cronyism out there, where big outfits buy laws that make them even more dominant over the little guys, as if network effects didn't accomplish most of that already.

      2. I ain't Spartacus Gold badge

        Re: Transactional Tax

        VAT isn't a transaction tax. It's basically a sales tax with more complex paperwork. VAT and sales tax are paid by the final customer of a product, as stated by someone else.

        There's an argument (tax incidence) that most of corporation tax falls on a mixture of a company's shareholders and customers. A company like Apple that mostly has control of its prices can pass tax costs on to customers, one that doesn't really control prices (most food companies say) will have to pass it on to shareholders in lower profits. So in the case of Apple a VAT or a corporation tax would have similar results - at least theoretically...

        To be an economics nerd, a transaction tax is something very different. It's usually a very bad idea as it penalises more complicated supply chains - because by nature a transaction tax is charged on all transactions of a certain type. So if you make something complex and are buying and selling loads of small components then you're going to pay transaction taxes on each of those - and that compounds up to meaning the tax is higher than the sales price. Or in reality, nobody makes complex stuff because tax makes it uneconomic. VAT is charged on all the transactions in a supply chain too, but the point is business reclaim that VAT - it's netted off against their VAT bill, so that's why VAT isn't a transaction tax.

        Note the EU was talking of having a financial transaction tax, but this was considered a bad idea because it would be very costly for pensions and might destroy the market in eurozone government debts - and thus risked destroying the Euro.

    2. ridley

      Re: Transactional Tax

      You will get countries offering low, low rates on transaction with a free VPN subscription thrown in.

  8. Ben1892
    Trollface

    Seems France wants to have their gâteau and mange it, happy to take the benefits of the EU but not play by the tax rules? What they are really saying is they want a Frexit too

  9. Anonymous Coward
    Anonymous Coward

    misleading article

    There is some confusion here.

    There is nothing such as Ex Poste Facto law taxation in France or in this case.

    There has just been an old conflict between the tax administration and Apple about accounting practices to artificially diminish profit in France. The loophole was not such a loophole, it was on the border of legality, and on the wrong side of the border. The €500m is just to make Apple compliant with old fiscal rules, for the last 10 years.

    The fact that the new law will also bring €500m, coming from all involved companies (mostly Google, Facebook and such like) is just a coincidence, and has nothing to do with the arrangement with Apple to close this old conflict.

    1. Anonymous Coward
      Anonymous Coward

      Re: misleading article

      So Apple, for the past 10 years, has not in fact been paying 'all the taxes we're legally required to pay' in France. They've been cheating, been caught, and given a 10 year back taxes bill.

  10. MMR

    iPhone prices

    It kinda explains why the last iPhone crop costs that much.

  11. Kubla Cant Silver badge
    Headmaster

    "mes amies"?

    Why does Apple only have female friends?

    If you're trying to be gender-neutral, then it apparently should be ami.e.s (see this article in The Economist), but it seems you'll incur the displeasure of the Académie française.

    1. Potemkine! Silver badge

      Re: "mes amies"?

      Ditto.

      "mes amies" -> "mes amis", unless all of your friends are women.

      "ami.e.s" is the new politically correct way to write it if you are from the Far Left. If you really want to be gender neutral you could write "mes amies et amis", which would be grammatically correct.

      1. JLV Silver badge

        Re: "mes amies"?

        Oh, je n’accuserai meme pas l’extreme gauche de la stupidite des ami.e.s ;-)

        https://english.stackexchange.com/a/55

        notice the bit about the “long history of criticism”. People could still say that, 9 years ago. Now, you’d be hung for daring to voice displeasure at unnatural linguistic contortions to assuage the professionally outraged.

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