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People filing their own tax returns: "This is pretty complicated. Maybe I should hire an accountant or something"

People commenting on a case involving international tax law and how it applies to a mega corporation: "I got this - I'm gonna tell everyone else what the fair and legal result of this case should be"

OTOH, I'm getting a bit tired of these PR pieces that pretend that their company is all about uplifting communities and helping people. I've got nothing against free-market capitalism -- it seems to be working out more or less OK compared to some other economic systems we've tried -- but it seems pointless to have to always pretend that you're not playing the game in order to make profits. A "yes, this was a loophole that we found that allowed us to not pay much tax, but that doesn't give anyone the right to close it retrospectively, and we'll be seeing the EU in court" would have been a nicer statement to read from them.

I thought it was rather barefaced in the article that moments after crediting itself for lifting all those poor citizens of Cork out of poverty by giving them jobs (there's quite the "you should've seen the place before we came along, terrible, terrible" vibe to the first two paragraphs) it then goes on to deride the people it employs as being worthless by saying that of course virtually all the real value is created in California...

Sure, it's R&D is in California. But R&D is only 7% of its expenditure. The other 93% is necessary to bring in the revenue, so it very much part of the value.

The question is not whether some tax trickery is legal according to the small print of the law. The issue is that the taxation level of humongously rich corporations is perceived to be unfair. This is especially a sensitive issue in Western Europe where the middle class is taxed through the roof to sustain social-democracies that are having big problems with their budgets. Apple is heading for some serious PR damage if they believe they will get out of this with their traditional cute marketing.
Tax law is not easy by any stretch and it's probably now more complicated than ever. We are at a point in time where possibly for the first time in history companies are so big to be in every country of the world, there are new fields to regulate, new technologies an situations. Laws are sometimes hard to change and haven't caught up yet with all of this. That's why there are many gray areas and possibly many loopholes.

If they had a real interest in the community, what would be really nice to see is companies trying to contribuite to improving this laws rather than trying to find loopholes that then need to be patched with what are more "hacks" than proper solutions.

Instead here we see Apple trying to justify themselves with some bs PR. Pretty sad but quite in line with what I would have expected of them.

You don't need to be an expert to understand that 50 Euro Taxes on 1 Million Profit, is not that much.
The most specific and IMHO damming allegation was how they avoided paying tax.

From the EU press release:

    [Ireland] endorsed a split of the profits for tax purposes in Ireland: Under
    the agreed method, most profits were internally allocated away from Ireland
    to a "head office" within Apple Sales International. This "head office" was
    not based in any country and did not have any employees or own premises.
    [...]
    The remaining vast majority of profits were allocated to the "head office",
    where they remained untaxed [...] an effective tax rate of about 0.05% on
    its overall annual profits.
So, at the advice of Ireland, Apple was able to attribute sales to 'Apple Sales International', which was not based in any country and thus was not subject to tax.
Isn't this just simple tax evasion? How can a head office not be based in any country or have any employees?
And to use Cook's words "A company’s profits should be taxed in the country where the value is created." By this logic maybe the EU should get only VAT, which is paid by Apple's customers and not by Apple, but the US is left without a huge amount of tax money.
This is known as the "Double Irish, Dutch Sandwich" tax strategy.

And has been used by many multinationals e.g. Google, Facebook, Ikea, Coke for many years.

Falling to 0.005%

[...] In subsequent years, Apple Sales International's recorded profits continued to increase but the profits considered taxable in Ireland under the terms of the tax ruling did not. Thus this effective tax rate decreased further to only 0.005% in 2014.

The firm had to be incorporated somewhere.
I don't really get what Apple is trying to achieve with this letter. Looking at my (continental) European colleagues, it comes across as aggressive bullying by a U.S. company and clearly harms public opinion of Apple, which cannot be a good thing for a company that sells consumer products. Maybe it looks differently from the Irish perspective, but obviously Ireland is a tiny market compared to France / Germany / etc., which are all countries where U.S. companies' (legal!) tax maneuvers aren't looked kindly at and where such a letter can only do more harm than good. People don't like the European Commission, but they like "lecturing from the Americans" even less.

In the end, this matter is a very complex legal question (1. were the Irish tax deals actually "deals" or just the day-to-day application of the Irish tax code?; 2. if they were "deals", were they illegal deals under EU rules against state support?). It is going to be answered by the European Court, which I guess (or at least hope) will not make its decision based on an "open letter" posted on the Internet.

This is getting interesting. One of the world's biggest companies is playing the emotions of the citizens of a country, and essentially telling them to distance themselves from the EU.

"This would strike a devastating blow to the sovereignty of EU member states over their own tax matters"

Maybe this doesn't look _that_ serious to non-EU citizens but given what's happening in Europe in general (nationalist parties on the rise, etc.), I'd be very careful with this approach.

I lost a very large amount of respect for Tim Cook reading that message. The statement:

> A company’s profits should be taxed in the country where the value is created. Apple, Ireland and the United States all agree on this principle.

is patently false given the Double Dutch Irish Sandwich structure of Apple tax reporting. This is not a coy avoidance the truth, this is a blatant lie.

No response, short of a link to an album of photos from the large and gleaming worldwide R&D centre that Apple presumably operates in Curaçao is acceptable.

I think generally Apple has been a pretty socially responsible company, more so than a lot of other tech companies. I also really admire their stance on privacy. They get no sympathy from me here though and this 'message' makes them look worse. When you have $200bn in cash reserves - literally $200bn you have no idea what to do with - and you're complaining about paying $14bn in back taxes you just make yourself look bad. The excuse that you brought jobs to a struggling economy also doesn't help you. You didn't look at Ireland and say 'those poor unemployed people, lets open an office there', you said 'they really need jobs, we can probably negotiate a good deal'.
"Taxes for multinational companies are complex, yet a fundamental principle is recognized around the world: A company’s profits should be taxed in the country where the value is created. Apple, Ireland and the United States all agree on this principle. In Apple’s case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States."

So is R&D the only part of the company they believe creates any value? Why operate in Ireland at all if so? Should just outsource it all...

Of course they know better. The value is right there in the first paragraph:

"Thirty-six years ago, long before introducing iPhone, iPod or even the Mac, Steve Jobs established Apple’s first operations in Europe. At the time, the company knew that in order to serve customers in Europe, it would need a base there."

A message to Apple from anyone who doesn't have rocks in their head:

You shift profits to avoid tax, don't play coy.

The era of tax being optional for multinationals is drawing to a close. You make your profit, you pay for access to the market, no exceptions.

Oh dear this is pretty mendacious:

" A company’s profits should be taxed in the country where the value is created. ... In Apple’s case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States."

No, I don't think the agreed principle is at all to tax research and development - it is to apply taxes at the point where the transactions take place.

In this case, in Europe. And the European UNION is named that way for a reason; the states have to abide by rules that are designed to protect and enhance the European collective-bargaining position, just as for workers in a labor union. Even so, some states still try to use lax corporate legislation as a competitive edge.

Now they've been caught out.

I'm no fan of retroactive taxation, but there it is - if the tax arrangements are deemed illegal, then the beneficiaries of that are going to be on the hook. Apple's claim that they followed the law may be true to an extent, but the full 'legal tax' situation must obviously include not only the Irish tax rules, but also the European ones, so they appear to have failed in due diligence.

> a devastating blow to the sovereignty of EU member states

This is bad, bad PR. Maybe let the EU citizens be the judge of that?

IMHO, it is a huge no-no for a company to make a political statement, especially in a troubled time like now (does Apple have any comments on Brexit, too?).

I think this will deeply hurt the fanboyism.

Yuck. Old black and white photos, emotional appeal to some sort of corporate heritage. Posturing as some sort of victim. Only thing missing is a tiny violin playing on that webpage.

Apple's been paying virtually no tax for years because it's argued it's legal to do so. Now the EC deems it was illegal. GG WP - you lose. Time to pay up now.

I'm sure due to the amounts involved that this potential event was in someone's "risks" column and hasn't come completely out of the blue for Apple.

Here is the European Commission's word on the issue: http://europa.eu/rapid/press-release_IP-16-2923_en.htm
True story: in the mid-2000s I was in the audience at an Apple recruiting talk for H1Bs at a European university (including one fairly-well-known then-Apple dev/manager). It didn't go very well: the audience was oblivious and largely uninterested, the Appleers were tetchy, I asked an impertinent question involving HyperCard. At one stage the rambling audience Q&A turned to a long discussion of the hypothetical possibility of Apple opening a European office at some point in the future. Now granted these were SW dev types rather than QAs or whatever, but ... I didn't quite have the heart to tell them about Cork.

I'm not so sure about this bit, but IIRC at this time (and a long time afterwards) Apple wasn't investing much effort in the pretence that Cork was a serious operation, to the extent that the access road to the site wasn't in good repair and hadn't seen attention in ages, possibly since it was built. [EDIT: I am duly corrected on this, see https://news.ycombinator.com/item?id=12390072 below.]

> "As responsible corporate citizens, we are also proud of our contributions to local economies across Europe, and to communities everywhere. As our business has grown over the years, we have become the largest taxpayer in Ireland, the largest taxpayer in the United States, and the largest taxpayer in the world."

Nice logical fallacy here, positively reframing / dumbing down a company's obligation to pay taxes in ${countries_of_activity} as "we have become the largest taxpayer in Ireland". That's precisely what Apple is condemned for: for consolidating fiscal activity in a tax haven, Ireland, in order to pay ridiculously-small taxes for Euro zone Apple activity, rather than paying (bigger) taxes in each EU country.

Also, Cook mentions "6,000 people across Ireland [...] performing a wide variety of functions as part of Apple’s global footprint.". I have no idea what that number represents, scaled to a multinational like Apple. I'd be curious to know what you think of this number.

This "message" is almost as bad as dodging taxes through loopholes.

It reads as the Apple Head of State trying to rally the troops, trying the "foreign aggression because they're so jealous" angle.

We had a similar case in the Netherlands with Starbucks. The European Commission has the argument that if a company has a treaty with a countries tax office that results in them paying less tax than other companies without such a treaty would, then the EC regards that as a state subsidie of a company by that government. A European government is prohibited to subsidise companies in a free market (there are exemption under law), they declare this an illegal subsidie and the government must get the illegal subsidie back. As fare as I am aware, Apple is not being fined in this case, the Irish government is. Its up to the Irish government to continue this subsidy, they just will be fined again if they do. Apple seems to say here that they might withdraw from Ireland because of the uncertainties around their tax evasion strategies, not because they will actually be taxed more.
I read two things in this:

- We bring work and employ a lot of people so we are good.

- Be careful because if we don't get it our way we are going to go away and you are the one that will suffer.

Saying that "It (Apple) has helped create and sustain more than 1.5 million jobs across Europe" is a far stretch if the majority of that number are app developers for who it makes no difference where Apple is located.
Hmm. I'm not sure whether Ireland owes any money to bondholders. If they do, this EU ruling will make it harder for them to negotiate with those bondholders, who can say "collect your taxes and pay up."

But, some bondholders are probably the same people who compel American companies with vast cash piles to stash them offshore.

Is this an issue for Irish voters? Their government made a deal that cost them money. If it's OK with the voters, their government can fight the EU on this. Or, if the voters prefer, the Irish government can try to collect from Apple.

After all the posturing is done, they'll probably settle quietly.

Didn't even know "The Apple Community in Europe" was a thing.
Interesting. Does this imply that the UK deal with Google to let them pay less tax is now de jure illegal as well?
One side note I haven't seen covered yet:

The court ordered Apple to pay the penalty of 13 billion euros, plus interest. For the last couple years, many bonds in Europe have been sold at negative interest rates. Does that mean Apple could potentially be paying less than 13B back?

I can't say I approve of corporate or tax inversion, and I'm not sure what to think of this article. I've read countless articles saying the opposite http://www.theverge.com/2016/5/5/11604704/apple-tax-evasion-...
"The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process."

Wow, strong stuff.

The real issue here is that a multinational tax-avoidance scheme is only available to large corporations. This means that their smaller competitors who do not have millions to spend on lawyers each year are taxed at the insane rates of their local jurisdictions. The larger competitors shield their incomes from those same rates, making them more competitive than the smaller companies.

This pay-to-play scheme, coupled with other regulations tailored specifically for large corporations, keeps them shielded from upstart competition. The best thing for consumers and business alike would be to slash the taxes and regulations, instead of going after what the companies "owe" the government -- as if a group of bureaucrats in some capital city have any justified prior claim on the fruits of someone else's labor.

Given the current political context in Europe (Brexit, fears of populations across the continent of loosing their sovereignty to Brussels (i.e the EC), the message of Tim Cook is very political and bold: -"We believe these changes should come about through the proper legislative process, in which proposals are discussed among the leaders and citizens of the affected countries" - "This would strike a devastating blow to the sovereignty of EU member states over their own tax matters" I am not sure this is the way to go. Apple should fight this decision on a legal basis: laws cannot be retroactive - and not a political (borderline populist) one.
Is this really that simple? Is the EC actually trying to apply a retroactive law?
I am sorry Apple, but that message made you look like you are excusing yourself for paying no tax.
It bothers me that Apple has probably done the market research and identified that they have such a strong brand among some people that these messages work. First the FBI one and now this. Both misrepresented facts to make Apple look flawless.

The truth is already debatable in the US ('I don't believe the media / government agencies / research from the educated elite'), having corporations jump in to directly muddle the waters doesn't help.

Seems like it boils down to determining who gets to make tax law in the EU. Is the EU able to levy taxes on citizens of their member nations directly? Or, are the nations themselves responsible? I'm not sure the legal structure of the EU gives Brussels tax authority. This will be an interesting question to see resolved. It will tell us a lot about the future of the EU.
State aid has been forbidden or at least heavily regulated in the EU since the Treaty of Rome in 1957, although Ireland joined later in 1973. No need to play the victim here and stoke anti-EU feelings. Apple got caught, and rightfully so. Time to pay up what is due. Hopefully, others will follow.
I see a battle between two sides here in the comments which basically winds down to capitalism vs big government.

There is an incredible amount of corruption in both areas, and even between them (we call this "crony capitalism"). Both within the government, and within the private sector, corruption can be used to squeeze money out of the general population. Both have necessary roles, and their benefits usually outweigh their level of corruption. But to take the side of one or the other is a rather fruitless exercise.

Instead, effort should be focused on how to improve the laws so that we can make them work well for all parties involved, especially the general population. And sadly, its beyond the level of conspiracy at this point that the people who control the laws are the people who benefit most from them.

A Message to the Apple Company in the US: sorry, we can see through your shabby PR piece.

Pay.

I totally get that Apple should pay more tax. However I also understand that it must not be pleasant to be caught between two hammers.

UE want them to pay more taxes to them because of this wrongful loophole... USA want them to pay more taxes because of this wrongful loophole...

Maybe it's only common sense for Apple to wait that USA and UE define exactly what is actually the lawful taxes process that must replace this no longer existing loophole.

Also the very notion of retroactive "crimes" is usually not compatible with a healthy democracy. How can you be condamned for following instruction a sovereign state (Irland) gave you?

Does anyone feel like Apple might start abusing the "open letter" format whenever they're in hot water? Since they're so famous for ubiquitous brand representation, it automatically grabs your attention when a letter written by the CEO himself is posted. Even if it's subconscious, I'm sure some people (me included) read the letter and think that if it's important enough for Tim Cook to write passionately about, on the main site of his company, then Apple's probably in the right.

I wonder how many more open letters we'll be seeing in the next few years.

At the time, the company knew that in order to serve customers in Europe, it would need a base there.

Are you sure this had nothing to do with avoiding US tax and keeping a cash stronghold in Europe?

I think the most important question is how often does the US Federal government overturn special deals arranged by State governments for favoured companies?

Europe is in the midst of deciding if it wants to Federalise - and it's unprecedented to do this without war or the expectation of war.

Additionally most countries are in a race to the bottom in collecting MNC taxes.

The two issues are heavily intertwined and this is just the first "battle" that has risen to attention

It's going to be interesting to see what artillery both sides have.

Interesting and seemingly overdue.

What effect might this have on Apple (and others) repatriating overseas monies back to the US now. If it's going to be taxed overseas anyway, the argument for holding large amounts outside the US seems to be reduced.

Granted, there will still be other non-US tax havens, and I'm guessing the lower rates may still be a factor. But might this have any impact at all? Or will this just be seen as a small fine and companies will carry on as before?