A Message to the Apple Community in Europe | Hacker News Reader

A Message to the Apple Community in Europe

apple.com

316 pointsepaga417 comments

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 sad thing is, it's kinda true. Not just Apple, and not just Cork, but overall the 'sweetheart' deals for companies bringing a lot of employment to the country, have helped. They're helping us find jobs rather than directly putting coin in the state purse, but I'm okay with that.

This is a country where, in the 70s & 80s, finding a job meant moving to the UK. Now, pretty much everyone I know works for one multinational or another. And the multinationals all came here for the same reason.

That is a rather unfair reading. I dislike the "look at the poor little people of Cork we rescued" but perhaps they insinuated that the Cork section was not as vital but I'm not sure I would see that as deriding them.

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.

Sure, but also think about:

* Can we expect mega corps to go "Hey, this loophole would allow me to only pay 50 euro in tax completely legally, but I think I'll pass on it this time"? In a profit based economy, it's expected that people will try to maximize their profits/minimize the tax that they pay within a certain framework. If Apple did nothing illegal, then it's kind of hard to say that they did something immoral. Or at least it's complicated.

* If we're ignoring legalities and only talking about what we like and what seems 'fair' to us then yes, Apple has a dirty history of using Eastern child labour, etc. But at this point, it's also ethically complicated about whether it's worse for Apple to have these few billion dollars of if they should go towards EU coffers to finance the bombing of the Middle East, etc.

I'm not advocating a pro or anti Apple stance here -- but I think most people in this thread are oversimplifying the case to the point of error, hence my original remark.

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?

http://www.bloomberg.com/research/stocks/private/snapshot.as...

"Apple Sales International supplies and distributes Apple products. Apple Sales International was formerly known as Apple Computer International. The company is based in Hollyhill, Ireland. Apple Sales International operates as a subsidiary of Apple Inc."

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.

That statement itself means very little. I would argue the value is created where thousands of workers turn designs into millions of individual devices; Tim Cook might argue value is created where slapping an Apple logo on the device transforms it from a regular gadget into a luxury status symbol. Either way the issue here isn't where Apple should pay tax, but that they should be taxed fairly. There are many international tax treaties to prevent double taxation, Apple simply need to pay tax like (most) everyone else.

You see, if there's no clear answer to where the value is created, then there's no clear answer to where the profits are taxed! So it kinda clips through the cracks. Whoops!

The value is "created" where the sale is made. Until money changes hands, there is no concrete value.

I'd agree with you, but this probably requires some advanced tax evasion deal between US and EU.

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.

Indeed, I suspect the companies you've listed and many more are watching this case keenly.

Then shouldn't all of them be in trouble right now too?

They probably will be next.

Ah, "next".

I gather that European tax law prosecution must differ from other kinds, because if me and five of my buddies did a crime we'd all be in trouble simultaneously.

Well, 35 EU companies were subjected to the same ruling in Belgium earlier this year and Belgian government has to recover 700 million euro.

Apple is not the first case, it is just more mediatic and has a bigger sum

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.

From the rulingÑ

> ASI, formerly Apple Computer International and originally Apple Computer Accessories Ltd., is a 100% subsidiary of AOE. ASI is an Irish-incorporated non-resident company that is carrying on a trade through a branch in Ireland

It's amazing that this scheme is even legal. In fact, I'm pretty sure it wouldn't be legal if Kim Dotcom did it.

Those with money and/or power get to make the rules. Dotcom certainly has neither compared to the corporations that he pissed off.

I'm starting to understand how vital unions were for being a lobbyist to the gov. That spoke from the people's perspective. There is a lot that I dislike about unions but their voice representing the people is missed.

Unions are a necessary lesser evil. The alternative, unchecked power to the corporations, is much much worse.

>'Apple Sales International', which was not based in any country and thus was not subject to tax.

How can I do it?

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.

Yeah this is weird. I like Apple products and I hate weird ass government taxes. (I run a company in Turkey, don't ask about the clusterfuck of corporate taxes here)

They managed to find ways to evade taxes. Which I can stomach. But writing such a letter and expecting sympathy? Yeah right. Good luck with that.

I reckon the letter is intended to maintain support in Ireland rather than the EU, which is a lost causes. Given the rise of EU scepticism and Brexit (remembering the UK and Ireland are extremely close) if Apple can maintain support in Ireland, Ireland will continue to push back strongly and might be somewhat successful.

Of course it could also back fire with the EU (particularly Germany) playing hard ball with both Ireland and the Brexit negotiations simultaneously and any negative effects on the UK economy scaring Ireland into compliance.

Irish sentiment is and remains vastly more pro-EU than it ever was in the UK.

That said this is a very cynical ploy by Apple.

> Irish sentiment is and remains vastly more pro-EU than it ever was in the UK.

Then why on earth would Apple think Ireland will side with them rather than the EU? If anything, the EU holds all the cards here since Ireland will have to negotiate with the EU post-Brexit, and who knows if Apple taxes will be a bargaining chip?

Ireland is its own country and part of EU. It is not part of the UK and is in no way 'brexiting'.

Why would Ireland need to negotiate with the EU?

I'm sure at least in my country, France, people won't hear about that case, and those who do will only hear about Apple's letter and won't read any EC documents. Thus the "mass" will somehow side with criminals.

I would fear the same, but I believe this is all too good for the media to pass on.

Imagine the headlines comparing how much an average person pays on taxes with Apple.

The other camp will indeed slam EU for butting in (again).

It will mostly depend on the news outlet's agenda.

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 mean they have very valid point, this entire situation is exactly why Brexit is not unreasonable to me - I still think it's a net loss for everyone but EU is slowly removing sovereignty of member states and centralizing power. So many EU funded programs throwing money around here, if you're entrepreneurial you will have a better time extracting money from EU funds than trying to create actual products. I see a lot of crying about VCs and rich dads burning cash in US, we have government funds going trough corrupt politicians doing that around here.

I was thinking the same thing. This letter by Apple appeals to the same feelings that were used to make Brexit happen.

It's not an appeal to feelings, it's a statement of fact.

The EU was never meant to control member state's tax policies. That's exactly what they are now trying to do. Regardless of whether you feel they're justified or not, Apple's point is sound: it is a loss of sovereignty.

Exactly, that sentence is _such_ a play on current sentiments.

Its incredibly shameful. Thanks for pointing it out, had missed it first time through.

Yeah, or maybe tell each EU citizen that Apple owes them 40 euro per year, and they can expect similar amounts from Coca Cola, and Starbucks, and Google, and McDonalds, and ...

That's the goal of the EU though over time - to erode the tax sovereignty of member states. It's inevitable.

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.

Nah.. everyone knows very little value is created in California or Shenzhen. It's all done in a few small offices in Ireland, dontchaknow.

Irony aside, I have argued in the past, and I will argue that some innovations from Google/Amazon/Facebook/Apple (GAFA) are not exclusively done in Silicon Valley (or Shenzhen, when it comes to hardware).

I have seen a team of engineers, all trained for free by a French university, have a meeting, in French, with senior executive of a French group (from the same university) about a software tool they wanted to implement; the suggestion that came out was based on algorithms developed by engineers and scientists working within a joint program between a large state-owned industrial group and French universities.

I would add that said alumni all were generously paid during their study, but that would identify the university. Not the program, or the algorithm, though. And that’s the rub: it happens all the time.

Added value to GAFA: billions. Money that the French government put into the program: dozens of million directly; billions if you include maintaining generations of engineers up to date. Money that the French government is going to get from that: zilch.

And all the engineers, senior of not, are very proud to have benefited from those program. This is their identity, literally: they introduce themselves using the common formula First name, Last name, University, Graduation year.

To have those executive remain silent internally is sickening.

A large part of the specific 'value' of Apple is actually created by the community of Apple users. It is the users who endorse their products to others, it is them who are willing to pay higher prices for Apple-branded products compared to otherwise similar products from other suppliers, it is the users who have - partly in response to Apple marketing, partly due to the large commitment (financially and otherwise) they have towards Apple products - created a virtual community of Apple-aficionados where showing up with anything but Apple will lead to questions, where 'nobody ever got XXXed for choosing Apple'.

If these users decide that the Apple has lost its sheen, once they refrain from buying mobile phone cases with holes cut in them to show the branding, Apple will quickly find out they are essentially no different from companies like HP or Dell. Their profits will start resembling those of the rest of the industry, their stock price will sink to something resembling their P/E ratio and they will have to compete on a more level playing field.

This is why this letter somewhat puzzles me. They were caught using a tax avoidance scheme, clear and simple. They try to talk their way out if this but fail to show anything that would legitimize their actions. This does not sit well with European Apple users and as such it has the potential to damage Apple's reputation - and with that its value - in this market. They stand to lose more than they gained by avoiding those taxes in the first place.

A lot of corporations are creating tons of value from PO boxes in Ireland, Zug and other tax havens.

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'.

I would agree with you if it were really a case of Apple dodging tax by (for example) lying about their revenues to reduce their tax bill.

Except it's not. Apple paid all the tax Ireland asked for. The problem is the EU are saying Ireland should have different tax laws and therefore Apple should now pay Ireland retrospective taxes based on what the UN thinks Ireland's tax law should have been in the past.

The problem with that should be mind-numbingly self-evident.

1. It's the EU, not the UN.

2. My understanding is that Ireland's tax laws should meet a certain EU standard. Apple was meeting Ireland's laws but Ireland was not meeting the EU's and thus Apple wasn't paying the correct amount of tax. So the laws have always been in place, they just weren't being followed correctly by Ireland or by Apple.

1. Fixed, oops!

2. That sounds like fault lies with Ireland, not Apple. Or perhaps with the EU for failing to enforce their own damn rules.

>> "That sounds like fault lies with Ireland, not Apple. Or perhaps with the EU for failing to enforce their own damn rules."

This decision is the EU enforcing the laws though. And I think the fault does lie with Ireland - but nobody is saying the fault lies with Apple. That's why they're not being fined. They're just being told to pay money they have always owed, money which was never theirs. I can see it from both sides though. Why should Apple be 'punished' if they were told they were paying the right amount? On the other hand if my accountant screws up my taxes and I pay too little I have to pay it back eventually.

So it wasn't Apple's fault then, right? Which means it's a business between EU and Ireland, and Apple has nothing to do with it.

No, that's not right.

The idea that state aid laws are relevant to corporation tax levels is a relatively recent phenomenon in the EU which is why these tax setups date back decades and it's only now that the EU has suddenly "discovered" that they're illegal.

The laws have not always been in place and not being followed. Rather, an extremely vague set of EU powers is now being stretched past the limit in order to enforce EU policy of the day.

Have you got any good info on the state aid laws? I've seen it mentioned in every news story on this and not one has the courtesy to explain it.

Judging from what you're saying though the law has always been in place and no new law has been created to enforce this decision - it's just an old law being interpreted to cover this scenario. Is that correct?

> The problem is the UN are saying Ireland should have different tax laws and therefore Apple should now pay Ireland retrospective taxes based on what the UN thinks Ireland's tax law should have been in the past.

No, the EC is not saying anything about the tax laws of Ireland

"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."

Yup. The question is -- where do you create "value", only in R&D or also through the manufacturing and distribution chain?

If only R&D created taxable value, there would be no need to tax anyone after the research stage. Of course that's not the case (and it's actually the opposite of what you want, as a society). This is a very weak argument; if that's all they have, they're going to lose any appeal.

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.

Of course they did (the loophole is now closed), but the point here is that this scheme was entirely legal. The EC is now saying that even though it was legal, they owe the tax anyways. That is not how things should work in a system based on the rule of law and fairness.

Imagine for a moment that your own government raised your personal tax rate and said that since they felt the previous tax rate was too low, you also owe taxes from the past.

"Member states cannot give tax benefits to selected companies - this is __illegal__ under EU state aid rules," the commissioner said.

"The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years."

http://www.rte.ie/news/2016/0830/812819-apple-tax-ireland/

It seems hard to believe that Apple was receiving special treatment when practically every MNC has been using this very same loophole. But at this point it is he said/she said. This loophole is now closed, so the EC pursuing this feels more vindictive than anything (especially since the EU has had it out for US tech companies for awhile now).

It's likely that Google, Facebook, Ikea, et al. will receive similar consequences in the near future. Apple is just the first to receive a slap in the wrists. Hopefully this will reach beyond Ireland and similar investigations will be done in Netherlands and Luxemburg.

A lot of Europeans (me included) are not at all happy to see massively profitable companies operating in Europe without paying practically any taxes. This makes it impossible for European companies to compete with them and I'm very glad the authorities are looking to level the playing field and bring in some tax revenue while doing so.

The EU has been pursuing companies, including domestically based ones, under "illegal state aid" rules for years. Why should US tech companies get special dispensation to avoid repaying state aid ruled illegal that the likes of Real Madrid and Estonian Air (which went bankrupt when faced with the repayments) didn't?

"especially since the EU has had it out for US tech companies for awhile now"

Sorry but this is typical American FUD, European companies are scrutinised on the same terms and when breaking the law or dodging stuff are getting (high) fines as well.

It is not Europe's fault that this kind of news doesn't find its way in the US... .

Bullshit. Yes, all MNCs are dodging taxes where they can, but it's not like their finances are so easy that all you need is One Weird Trick and poof!, gone are the taxes. One of the multitude of measures Apple (and apparently nobody else) used was found illegal. The rest aren't, and Ireland is still a tax haven compared to the rest of Europe.

> It seems hard to believe that Apple was receiving special treatment when practically every MNC has been using this very same loophole.

Right. MNC have, but local companies had no way to do that. That's the crux of the issue. In fact, some people started an inquiry how to replicate that scheme.

Fine, but then shouldn't Ireland pay the European Commission a fine or something? It seems unreasonable to make Apple retroactively pay.

Apple innocently, and unknowingly, buy a stolen and ringed car. A chance check reveals the car to be stolen - Apple lose the car regardless of them believing it legitimate.

Apple innocently, and unknowingly[1], accept an illegal tax benefit. Apple lose the benefit of the illegal activity.

What's the difference? Caveat Emptor for both. Even if you want to consider them the innocent victim they don't get to keep the benefit of a crime.

[1] I'm less convinced it's unknowing here - Apple probably have a surfeit of international taxation experts and lawyers.

You can't benefit from someone else doing something illegal and keep your benefits. One of the principles of Western law.

So it seems to me that the Irish government should be punished, not Apple. Apple did nothing illegal.

Apple was part of a illegal deal. Does it ring any bells?

"Member states cannot give tax benefits to selected companies - this is __illegal__ under EU state aid rules,"

Yeah - but this arrangement has been going on for more than 20 years, no?

A little late in the game to be declaring it 'illegal'?

I'm not against the ruling, but it's clear that the EU is messed up.

Make no mistake - the only reason Apple was under investigation is because they were making so much money.

This thing should have been brought up the moment it was implemented.

Also - the EU is structured to incent governments to screw other governments by creating crazy tax schemes.

You know who spearheaded this? Jean-Claude Junker - the same guy who spent 10 years developing tax avoidance schemes for Luxembourg!

They gave tax benefits they weren't actually (legally) able to give. So those benefits are entirely void and never existed to begin with.

IMO they should be able to sue the agency (or agency's employees) that supposedly granted them the tax benefits for damages because they misrepresented the actual tax situation, but they still owe the unpaid taxes and have to pay them back.

Not knowing the law doesn't protect you from breaking it. In this case, they're not even being punished -- the $$ owed aren't a fine, just the taxes (and interest) they should have paid to begin with.

This is similar to buying stolen goods: sure, you may not actually have known they were stolen, so you might not be directly punished, but you still don't legally own the goods (even though you paid for them) so they will be confiscated and returned to their rightful owners. You can sue the seller for damages, but the state is under no obligation to reimburse you for handing over "your property" (because it isn't).

It is not as though Apple knocked on the door and were welcomed in with tea and cake. This deal (these deals?) were the result of much planning and lobbying by Apple.

And you're right, it's not a punishment, just asking them to pay what was owed. If you owe the taxman £20000, it's a big problem for you. If you owe the taxman £13,000,000,000, then it's definitely a problem for the taxman :)

As a concrete example: German celebrity and football manager Hoeneß was found to have withheld about € 30 million in taxes. He was charged with tax evasion and punished with a prison sentence of 5 years and six months but no additional fine.

He did eventually pay back the entire amount (plus interest) but he was released from prison after having spent only roughly half his sentence (which actually didn't confine him to prison for his entire "stay" anyway).

> The EC is now saying that even though it was legal

You are wrong. From EC statement: Ireland gave ILLEGAL tax benefits to Apple worth up to €13 billion [1]

[1] http://europa.eu/rapid/press-release_IP-16-2923_en.htm

Then Ireland should be paying the bill... It's like punishing a student for having a hall pass a teacher admitted writing.

There was a discussion yesterday about this on HN. It's pretty much a corporations responsibility to try to avoid as much tax legally as it can. In this case, Ireland gave them LEGAL tax break (at least that was what the Irish believed at the time) and now Apple is getting blamed..?

It just doesn't make sense, put the blame where the blame is due.

> Then Ireland should be paying the bill.

There's certainly some merit to that argument.

> It's pretty much a corporations responsibility to try to avoid as much tax legally as it can.

That's a popular falsehood. It is a corporation's responsibility to fulfill the wishes of its shareholders. That doesn't even necessarily mean maximizing profits, and it certainly doesn't mean avoiding taxes to a degree that incurs both legal and reputational risk. If the shareholders want the company to act as a mature and respectable person would, then the corporation's duty is to do so.

Perhaps it's more like punishing a student for cheating in an exam with a cheat sheet that some teacher wrote.

Then lets sanction all murders by state in Syria, because they are only murdering traitors and terrorists so it's LEGAL also because they say so. There is something like international law in case of Syria and there is something like EU law for member countries. While being a member of EU you have access to whole EU market. So no, what they did was ILLEGAL. Apple exactly knew what they were doing and knew it was against EU law, they only thought they will get away with it.

IIRC, they will pay the bill in the form that they will collect Apple's money to help pay part of the national debt.

Ireland will probably not see a penny from it.

In the UK they did exactly this: http://www.lawandtax-news.com/asp/UK_Court_Allows_HMRC_To_Im...

If you evade tax, you know full well what you are doing, even if it's technically legal you should expect to be retrospectively taxed, especially if you are exploiting the system to such an extreme.

LOL. There's no "even if it's technically legal". It's legal or it's not. The police aren't going to let you go from something because you were only "technically breaking the law."

It's possible to for something to be technically legal according to the letter of the law, but still be breaking the spirit of the law and consequently considered illegal by some.

https://en.wikipedia.org/wiki/Letter_and_spirit_of_the_law

I see you're a fan of Ethereum!

Oh wait, actually even the people who wrote a system for unchangeable, code-backed legal documents don't believe in the letter of the law.

The entire argument against "retroactive" corrections sounds a lot like "you can't punish us because we've been doing this for a really long time and getting away with it until now".

the entire argument is that you can not apply laws retroactively.

They didn't evade taxes, they avoided them.

There's a big difference. The latter is legal, the former is not.

Apple did not do anything wrong from what I can see: they were given a good deal, they took it. It turns out that deal was illegal so they have to pay some money to rectify the error.

Doesn't seem very fair but governments are pretty unforgiving when it comes to taxes overall.

How very sad, another erosion of fundamental common law principles in the UK. In the last couple of decades, the UK has abolished the right to remain silent, the right to a public trial by jury, the protection against double jeopardy, the writ of habeas corpus, and the lack of ex post facto laws. Freedom of speech has become very qualified as well, with bans on various forms of "hate speech", and the freedom of assembly has also been seriously curtailed.

"In the UK"??? Check your geography.

but the point here is that this scheme was entirely legal

Yes and no - the EC's argument makes a bit more sense imo: Yes, it was legal in the sense that Apple broke no irish tax laws. But the tax laws themselves have violated some higher-level EU laws that Ireland had pledged to obey - at least that's how the EC sees it.

Perhaps a more fitting (but still horrible) analogy were if you make an employment contract far below mandatory minimum wage. Neither you nor your employer is violating the contract and both of you might be perfectly happy with the conditions - but your contract might stil cause disadvantages to third parties (other workers) and might violate state laws.

Right, and in that case the worker would not be punished for the illegal activities of the employer.

In this analogy the worker is Ireland and the employer Apple. The analogy would be that the worker must now receive, and the employer now pay, the difference between the contract and the minimum wage. Just like Apple must now pay and Ireland now receive the extra tax.

According to press release, the scheme could be legal according to some Irish laws, but it violated EU law, which also applies to Ireland as a member of treaty. If government of Ireland didn't take EU law in account when applied tax rulings, that doesn't mean it was acting legally. So it more looks like the tax office lost your tax declaration and you decided you have your own personal tax rate of 0. No surprise, when the declaration will be found you'll be charged.

> The EC is now saying that even though it was legal, they owe the tax anyways.

As far as I understand, the EU is saying that it never was legal under EU law.

Shouldn't they sue / negotiate with Ireland in that case? Given that they allowed Apple to evade taxes.

If Ireland now refuses to collect taxes from Apple, yes.

> the point here is that this scheme was entirely legal

That is maybe your legal analysis of european union state aid legislation, but in the end it's the commission and the court of justice who have to assess it.

The EU's argument is that it was always illegal under EU law. In their view the analogy would be you local council say the you don't have to pay income tax, and then a court finding they didn't have the right to make that agreement.

I don't really have a view which is correct, but I think it's important to note that the EU doesn't accept it is acting retrospectively.

No, you got it wrong. There is/was no loophole and it wasn't legal.

> not how things should work in a system based on the rule of law and fairness.

The problem here is that the rule of law and the rule of fairness had diverged, and there was a higher-level law forbidding that. This kind of conflict happens all the time. In the US, the most common manifestation is laws being struck down as unconstitutional. Governments are bound by laws too. When they break those laws by treating people unfairly, correction is needed.

It was illegal under EU law but Apple and the Irish government didn't seem to care much. Now, that imaginative case doesn't make me cry because we talk about corporations with preferential deals that stifle competition. It's definitely not fair for mere mortals to pay 20% and Apple 0.0005%. How could a such system be fair?

Do you think corporations are people?

When I say mere mortals I mean companies of mere mortals(i.e. like your start-up and mine). Do you find it fair for your company to pay more tax than Apple? How can you compete with them on price?

Why is it unfair? You're automatically jumping to the assumption that individual people should pay the same tax rate as a corporation. Why? Just because most countries do it now? It wasn't done through most of history though. What about the notion that corporations should pay no tax at all, and the only taxes should be on individuals.

> Why is it unfair? You're automatically jumping to the assumption that individual people should pay the same tax rate as a corporation.

I didn't say that corporations should be the same tax as individuals. I've said that's unfair for Apple to pay less tax than any other EU corporation/company. How can you compete with Apple if they pay no tax and your start-up pays 20% ? How could Apple have succeeded if they were to pay 20% tax and all the others (i.e. IBM) was to pay no tax?

> What about the notion that corporations should pay no tax at all, and the only taxes should be on individuals.

That would be basically slavery of foreign people(not nice).

> That is not how things should work in a system based on the rule of law and fairness.

Not all law needs to be 100% formalist. It's perfectly possible to have a blanket law that says "If some tax evasion scheme is generally considered to be unfair/unreasonable, it can be annulled no matter what the letter of the law says".

> That is not how things should work in a system based on the rule of law and fairness.

Something doesn't jive here. If it is that clear cut, didn't EC read its own laws before asking Apple to pay? If there is a paragraph they skipped someone should point to that, Apple should perhaps.

It would seem to me EC is implying what has happened in the past was not entirely legal somehow. Then it is not obvious what should happen next.

Notice Apple mentions how they "asked govt. of Ireland" for guidance. That means they might have documentation of a govt. official advising it to act that way. That is very important because it is building the case of Ireland here doing something illegal against the EC laws. So Apple is washing their hands here of this case.

> but the point here is that this scheme was entirely legal

No it was clearly not. How did you come up with that?

It was not legal. Ireland did not have the right to give a preferential tax treatment to Apple.

Imagine for a moment that you enter into an extremely complicated tax arrangement aimed to reduce your tax burden, quite aware of the risk that at a later date the authorities will judge you to owe that tax regardless and you will end up with a massive bill.

Tax judgements often don't occur immediately. Just ask any one of the 50,000 IT contractors in the UK that are facing this exact situation right now with respect to EBT arrangements. Some owe tax dating back over more than a decade.

They knew the risk, they took it, they lost. No-one is naive here, certainly not Apple.

"That is not how things should work in a system based on the rule of law and fairness". If you find a loophole in the fiscal system and exploit, you are following the rules, but at the same time, you are clearly robbing the society as a whole. In France, this is a fraud. see https://xkcd.com/1494/

Shouldn't they be taking this up with Ireland? Like, Apple pays Ireland, Ireland pays the EC. Ireland failed to collect the correct amount of money owed to the EC. It's Ireland who's at fault, and "oops, GFY EC we're brexiting." (assuming that the EU and the EC are related)

Seems like interesting timing. They've decided to go after back taxes right before the UK leaves the party.

> Ireland failed to collect the correct amount of money owed to the EC

Just for your info this isn't what happened, it's Ireland's tax money. The EC doesn't collect taxes. Instead the EC ruled that Ireland was providing illegal state aid (under EU rules) to Apple through its tax arrangements. So this loophole was nullified and Apple have to pay the back taxes to Ireland. The EU gets nothing (the EC is the executive body of the EU).

This investigation into dodgy corporate tax deals has nothing to do with Brexit (note that this is about Ireland, not the UK), and it's been going on for most of a decade now.

Thanks for the info!

> Shouldn't they be taking this up with Ireland? Like, Apple pays Ireland, Ireland pays the EC.

No. This isn't over money owed to the EC, it's over state aid perceived as manipulating the Single Market in a company's favour, which is [to an extent] undone by requiring that company to repay the money

> Seems like interesting timing. They've decided to go after back taxes right before the UK leaves the party.

It's the culmination of a three year investigation and legal process, and they've been going after companies with other special tax arrangements with local governments for years. I don't think Brexit had anything to do with it.

> Of course they did (the loophole is now closed), but the point here is that this scheme was entirely legal

No, it was not legal, this is what the ruling says

I think exploiting a public system, by systematically looking for loopholes should be illegal and the involved parties should be held responsible.

Did they ask the EC if it was legal in the first place? If they wanted a guarantee they should not rely solely on the approval from the government in Ireland.

"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."

And yet the value creation seems to be happening mostly in tax havens... and NOT in the US. Nice try, Timmy.

Be a sport and put your money where your mouth is, and repatriate all that foreign stash cash to the US, and I am happy to side with you. Yet somehow, I believe this won't be on the menu anytime soon...

> the vast majority of our profits are taxed in the United States.

That's not even true! As you say, they keep their profits offshore to avoid US taxes: http://uk.businessinsider.com/apple-taxes-offshore-ireland-e...

> That's not even true!

That's a graph of cash reserves, not revenues. It's highly likely that Apple spends most of the revenue it accrues in the Unites States. You know, on expensive shit like Apple Campus 2.

The EU have even said the bill could be reduced if further US taxes are paid.

They won't do it until Hillary gets in and reduces the rate of repatriations which Apple has been lobbying for for a long time...

I've read this theme several times. What has she done to lead you to make this conclusion? Or is this no more than your own bias and fear?

Yeah, I read it. Which is how I know about it. It's not at all an unreasonable suggestion.

http://www.cnbc.com/2016/08/14/tim-cook-addresses-apples-us-...

"Cook added that it was up to Congress and the president to enact tax reform, which he is "optimistic" will take place sometime next year."

I am actually both scared and biased, you got me!

Temporary 'tax holidays' have happened before. Sorry, no links atm.

Which tax haven(s) are you referring to there?

I'm guessing the one where Apple had an effective tax rate of 0.005%

Tim would pay tax in the US only if it gets a sweetheart deal of 0.0005%

The letter reads as a "But, but... I don't wanna pay taaax..." cry.

I think it reads more like, "tax us, and you'll see what we can do to you."

yeah right, when they pay the same taxes as I pay on my wage I'll eat a shoe.

No need. In 2014 they paid 0.005% in Ireland.

I concur 100%. BTW, Apple doesn't pay the tax they owe in this country either due to moving IP to Ireland and other tax favorable countries. Of course, they'll just move to Panama.

You are wrong. Actually right, but why should you pay back? There must be agreement going forward. How about your family pays new taxes for the last 100 years, taxes that are invented TODAY?

Thank you for down-voting me without explanation. How retarding.

Did you read the article? They are forced to pay retroactively. It's like if the government raised income tax rates and tried to collect the difference for the last 12 years from your taxes. Would you like that?

IT Contractors in the UK right now are facing demands to pay retroactively for tax stretching back over a decade in some cases that they purposefully avoided at the time using a scheme called EBT (or, being paid in loans by a trust because loans aren't taxed).

They had advice at the time that these schemes were legit (though every adviser would deliver that with a wink), any adult human must have known there was a large risk HMRC would disagree eventually (just as Apple knew they were running a risk), and now they face demands to pay the tax they failed to pay in the first place.

Are they the victims? Certainly they will tell you so. Sympathy I have for them? Nil.

Except "ex post facto" contradicts "no exceptions": abide by the laws in play at the time, and it seems Apple actually did.

> it seems Apple actually did.

According to Tim Cook/Apple's PR team.

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.

Nothing says devastating blow to the sovereignty more than a multinational company pressuring a country to give them illegal tax benefits.

Or it might play well on rising nationalist anti-EU sentiments throughout Europe. The EU has a lot of battles to fight at the moment so Apple might be betting that they back off to an extent. That said I agree it will likely blow up in Apples faces. It strikes me as a line that would play well in the US (replace EU with US and re-read it) that they've not realised won't work over here.

Honestly since brexit I've been constantly amazed how little Brits and Americans understand continental Europe's opinion on the EU.

On the continent euro-sceptics operate on the extreme political fringe, they never got into any parliament in numbers and are considered toxic as coalition partners.

The EU won't blow apart, the EU is a fact of life and an economic necessity, Brexit was so shocking because it is indeed unbelievable that anyone would try to quit the EU.

Lots of big companies commented on Brexit (before the vote). I agree it didn't do them much good in the public eye, but Apple didn't choose to dive into a political debate, it is being dragged into one.

I see a bunch of comments from non-Irish people here saying how badly this letter is going down. But it's aimed at the Irish. Ireland has benefited to the tune of tens of thousands of jobs (perhaps way more) from just a handful of big tech firms, in a country with a population of just 4.5 million. It is one of the things that contributes to the falling Irish unemployment rate.

If the EU starts trying to systematically move big, rich employers out of Ireland (and that's the purpose of these moves, to eliminate Ireland's "unfair" appeal), then there's a risk Irish sentiment will start to turn against the EU, just like it did in the UK over the issue of immigration. If the EU systematically attacks their primary competitive advantage in order to satisfy the high-tax French and high-debt Spanish, then what becomes of Ireland?

I hope so, but knowing my Apple fanboy friends, they will be apologizing for Apple whatever they do.

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.

According to the letter Apple is the largest taxpayer in Ireland, in the United States and in the world, surely that statement is incompatible with the statement that "they've been paying virtually no tax for years". One of these statements must be false.

Apple pays VAT, employment tax in Ireland and certainly a couple more. They avoid paying corporate tax by using a Irish sandwich Double Dutch tax structure (where you create subsidiaries of subsidiaries, and pretend all the value creation happened in over-seas territories where corporate tax is negligible).

Apple is probably right in saying that the total of VAT, employee tax, etc. is the largest in Ireland, the US and World: they are the largest company in the world, so that statement should be fairly obvious. If someone who makes 1M$ per year pays 0.5% taxes, he still pays more than someone who pay 20% of their 24k$. That’s why this statement is seen as disingenuous: the ratio to your revenue is was matters.

The European Commission, the vast majority of observers and almost all Hacker News members are right in saying that they paid virtually no (0.005%) corporate tax, because that was the point of the statements they made to tax authorities around the world.

On whether what Apple did was legal: the stated that their all their value creation happened in the Dutch Antilles, which is patently false. That is nothing short of lying on your tax form. The Irish government accepted it because they were strong-armed into accepting that or seeing jobs go elsewhere. That type of coercion is also something that this letter lies about.

In the US, John Oliver pretending he is the Head of a Church whose main tenet is his personal enrichment is widely accepted as a legal, and deserving of a tax break; in the EU, such statements are considered disingenuous (that’s the fancy word for “bullshit”) and treated accordingly.

> Apple pays VAT

That is incorrect. Apple doesn't pay VAT, they offset any notional VAT bill against the total of VAT collected from customers and pass-through the residue to the revenue agency.

Generally, each such trader in the chain of supply from manufacturer through to retailer charges VAT on his or her sales and is entitled to deduct from this amount the VAT paid on his or her purchases.

http://www.revenue.ie/en/tax/vat/

The non-corporate end-user is stuck with paying VAT because they're not 'adding value'.

"Apple pays VAT"

Apple do not pay VAT, consumers pay VAT.

You don't also count the PAYE each of Apples employees pay as "tax that Apple pays" do you?

If I'm paying VAT, it doesn't mean I can stop paying income tax.

It does... if said government passes a law that says individuals that fit certain criteria are exempt from income tax.

Not at all - there's some clever wording at play here. Apple may well be the "largest" taxpayer in the world. But that doesn't require that they are the singular entity paying the largest total sum of taxes. It's pretty common to measure the size of corporations by market value - Apple is pretty much the "largest" corporation by that measurement, and since they do pay some taxes (a laughable amount, but it nevertheless wins them this checkmark) they technically are a taxpayer, too.

If tax is % of revenue (def simplified for corporations) - does it matter if they paid the most if they make the most money?

I haven't confined that they have the largest revenues, but paying the most is a weak argument in the face of what the governing body decides as what is a "fair" amount to pay.

Whether or not this decision is fair is another conversation altogether...

They use absolutes when it suits them. It's not about paying the most, it's about paying a percentage.

When I say virtually no tax, I mean the relationship between the % they pay and the % everyone else pays.

I'm sure they are counting all of the taxes paid by their employees. I've seen other large corporations use the same language and logic when justifying special tax exemptions.

If what you say is true, that wouldn't be a case of slippery language, but rather an outright lie. Taxes paid by their employees (your words) would be by definition not included in a summation of taxes paid by Apple.

Therefore, [citation needed]

Apple is probably referring mainly to VAT and employee payroll taxes. However, the EU action is only concerned with corporation taxes. Apple confuses the issue by convolving the two.

Maybe they are talking about their employee's income tax, capital gains tax of shareholders, VAT etc. Smokescreen. Disingenuous.

The OP is wrong. He is just regurgitating misinformation.

Because people have this weird notion that everyone should pay the exact same proportional amount of taxes. So if I pay 20% of my income as taxes and someone rich pays 10%, it doesn't matter that his 10% is few million dollars. It's like renting an apartment for $1000/month, and having a roommate that pays $900 a month - and then insisting that he is not paying his fair share because $900 is only 1% of his income, while the remaining $100 is 20% of yours.

You say "yuck" but that open letter does contain more than just a few historical points. Set aside the "emotional" stuff and there are some statements worth taking seriously.

"we have become the largest taxpayer in Ireland, the largest taxpayer in the United States, and the largest taxpayer in the world."

An impressive feat for a company that has around 13% of the smartphone market and 7% of the computer market. Yes they're a big company with lots of revenues, but I find it hard to believe that if Apple was so aggressively dodging tax that they'd still be the world's largest taxpayer.

"the vast majority of our profits are taxed in the United States"

Is this true? Are a majority of Apple's profits taxed in the United States at normal business tax rates? If so, that would put the flurry of accusations into some degree of proportionality.

"The opinion issued on August 30th alleges that Ireland gave Apple a special deal on our taxes. This claim has no basis in fact or in law. We never asked for, nor did we receive, any special deals."

"It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been."

Which if this is the case, the UN has a problem with Ireland's laws, not with Apple. This is the first piece of news that has made me wonder if the UK was right to brexit.

Last year, Apple had $72.5B in worldwide pre-tax profits and paid $19.1B in US corporate income taxes. That's an effective rate of ~26%, even thought > 60% of their revenue is from sales outside the US.

https://finance.yahoo.com/quote/AAPL/financials?p=AAPL

Wow, those numbers really put all this into perspective.

Kudos for them for finding that photo. I bet the guy who dug it up is getting high-fives all round and is feeling really smug. Tries to promote the idea that Apple (who put 'Designed by Apple in California. Assembled in China' on every phone) is as Irish as Guinness.

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.]

To say Apple's Cork presence is just a pretense is largely inaccurate. I've been to the Cork campus numerous times while I worked for the company for seven years (2005-2011). The campus was, and is, still a huge base of operations for Apple. The majority of their AppleCare international support is based there (both support personnel and management/exec), as are many other departments. There are, literally, hundreds of people there from all across Europe who have relocated to Cork.

Beyond the main Holyhill campus, Apple has a large amount of office space within Cork's city centre.

Additionally, Apple also has a pretty big assembly line there. Many of their products have also been (and still are) assembled there. For many of the PowerPC and earlier Intel machines, if the serial number started "CK", it was assembled in Cork (it's been a while since I've memorized Apple's serial number structure, but they used to be much easier to parse).

However, the area of Cork that Apple's campus is located isn't very affluent and suffers like many inner-city boroughs in Ireland and Europe. Ultimately, the state of the roads isn't Apple's responsibility. You'd hope that a company like Apple could lean on the local government to improve it, but Apple wasn't the company it is today, back in the early 2000s. It was getting there, but it was still coming out of the near-bankrupcy 90s.

Thanks. I think my anecdote still illustrates how fully removed Cork was from any of the high-value development or R&D work that Apple seems to have been accounting to Ireland though.

Definitely agree with you on the development / R&D. Cork is more a logistical base that's more about the day to day workings of the company, as opposed to coming up with the next big thing.

> "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.

And even more interesting: what have been the consequences, to employment and otherwise, of Apple avoiding to pay billions in taxes?

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.

In a way, the EC's decision actually acts as a safeguard against this kind of blackmail: a country may be pressured into making a bad deal like this, but EU law renders the deal invalid. And because the EC is not controlled by any single member state, it can't treat any single nation different from the others.

Ireland wasn't really pressured, was it?

You can phrase your post another way - the EU "safeguards" members against making their own decisions and possibly becoming more attractive than the others.

And because the EC is not controlled by any single member state, it can't treat any single nation different from the others.

Tell that to Jean-Claude "it's different because it's France" Juncker!

Well, where would they go?

All EU countries will be subject to the same law, and I doubt they would just stop selling their product on the european market (it would still make them money even when paying normal taxes).

Paying customs tariffs would probably be worse than paying taxes in the EU, too.

> Well, where would they go?

Any country that would give them large amounts of tax credits. I'm sure some countries would be willing to negotiate.

> I doubt they would just stop selling their product on the european market (it would still make them money even when paying normal taxes).

They could sell to resellers who would sell in Europe, if it came to that.

Adding another layer isn't going to help them, the tax will need to be paid and the additional layer will incur additional costs.

I don't think that there's anywhere they can go but that's the feeling I get from this message. I see it as Apple trying to strong arm the EU with a possible threat and trying to justify their actions.

https://en.wikipedia.org/wiki/Double_Irish_arrangement

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.

Apple writing a rebuttal to the EC decision and addressing it to "the community" seems a lot like Twitter celebrities writing rebuttals addressed to their followers. Anyone else get the feeling this is Apple trying to mobilise its loyal fans against the EC?

This ... is pretty much exactly what they're trying to do. It worked reasonably well for them against the FBI, so they're trying it here.

If so, that's insane. Why would EU citizens side with Apple against the EC if the only benefit is that Apple has to pay less taxes?

Against the FBI it worked because it actually had direct implications for their customers. But in this case there's no implications for their customers other than a vague threat that Apple will punish them (by punishing the EU market) if they have to pay more taxes -- that's not a rallying call, that's blackmail.

I think it has an adverse effect because Apple literally steals from EU citizens regardless being british, irish, spanish etc. How could can someone sympathise with their message which is not only insulting but also divisive ? I for sure will think twice before to get the new i-device.

Interesting. Does this imply that the UK deal with Google to let them pay less tax is now de jure illegal as well?

Most likely that's illegal too. However I'm not sure if they will pursue given the circumstances(UK out in a year or so).

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?

"Is the EC actually trying to apply a retroactive law?"

No. The whole agreement between Apple and Ireland was deemed illegal by EC[1], so now they must pay avoided taxes. You can't demand keeping stolen goods after being caught stealing.

1. http://europa.eu/rapid/press-release_IP-16-2923_en.htm

In a sense: yes. Apple made a deal with Ireland as to their taxation; the EU ruled it illegal, and judged that both parties must act like the agreement was never there.

That means Apple is due taxes to Ireland.

In a sense, Ireland is the guilty party. They entered the EU; that means they agreed with its rules. Later they made an agreement with Apple that is now ruled illegal in the EU. Yet, they will profit (in the short term) if this ruling will stand.

Note that Apple's only published issue is with the retroactive part.

Open question is whether Apple handled in good faith making that deal. I do not rule out judges would rule they did, because there are zillions of such deals, and because the EU doesn't mention anything about fining Apple (they 'just' have to pay the taxes they are due, with interest)

I doubt the deal was in good faith. They have an army of lawyers so most likely they knew about this it but took the risk.

I don't think that implies not being in good faith. Bad faith would be if they knew the EU would rule this illegal, but still continued with this.

You pay your army of lawyers avoid that. You want to walk extremely close to the edge, but not drop from it.

Treaty of Rome and its state aid rules => 1957

Ireland accession to the EU => 1973

I don't think http://curia.europa.eu/ will be very impressed by those arguments

No, they're saying it has been illegal all along, even if Ireland pretended otherwise.

I'm not a lawyer, but as far as I know the European law is prioritary before its nations'laws (except constitution). Apple took advantage of Irish law.

What is retroactive here is the payment of taxes, not the 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?

It seems the EU didn't learn their lesson with the UK and Brexit, and they continue meddling in the affairs of sovereign states by interpreting the rules however and whenever they see fit. I wonder what percentage of this tax Brussels expects to appropriate for itself. It's high time to put an end to this failed experiment and especially to the corrupt EC...

>> "I wonder what percentage of this tax Brussels expects to appropriate for itself."

The money is going to Ireland. It is not a fine but back payment of taxes owed.

Looking at it from a 'brexit' perspective it's yet another reason I'm disappointed we left the EU. It's powerful enough to do something about this while our own government can only wrangle £130m out of Google.

But if this money is collected by Ireland and goes into the Irish budget, wouldn't Brussels get a cut?

The EU will get money from it because Ireland owes money due to the bailout a few years ago and membership contributions I suppose. But those are things Ireland would be paying with or without this ruling. At least that's my understanding.

Who told you this "cut" stuff, Farage or the other clown?

It is a bit early to "learn their lesson with the UK and Brexit", because Brexit didn't happen yet. And if it will ever happen it is not given that it will be a sacrifice for the EU anyway.

Apple got a sweetheart tax deal from Ireland.

Tesla got a sweetheart tax deal from Nevada.

Pfizer got a sweetheart tax deal from the United States.

I don't see the difference.

Hopefully this will make a difference(at least in the EU).

I love to see Apple get hit with the kind of taxes that they themselves put on the marketplace with their over-priced hardware and the 30% cut that they take from the captive/locked-in audience of developers and users.

Down with Apple. They are a drain on society and they deserve everything they're getting right here.

The Joy of tech on this story: http://cdn.iphonehacks.com/wp-content/uploads/2012/04/joy-of...

This actually the worst piece of public opinion I have ever read from Tim Cook. It hurts their brand, it exemplifies American ego when it comes to dealing with other countries (please, don't tell me that you not paying taxes is some kind of sovereignty crisis for f*'s sake) and worst of all, it's poorly targeted. It's Europe - on average we do not like big corporations and we laugh on 'liberties', which are in fact money extortion by big players. I do not know who in Apple PR greenlighted this, but he/she might not survive the consequences.

Indeed. I was angered by the letter for precisely those reasons as well.

> Countless multinational companies followed Apple by investing in Cork, and today the local economy is stronger than ever.

Is the local economy in Cork much better than the rest of Ireland? I tried to search data that supports the Apple’s statement and couldn’t find any.

Don't blame Apple, blame the tax laws.

i.e. don't hate tha playa, hate da game.

No, blame Apple. And the other companies exploiting these laws. Companies can choose to be good citizens and socially responsible. Apple doesn't need to be environmentally friendly - it chooses to. $14.5bn is a drop in the ocean of their $200bn cash stockpile that they can't even use, they can easily pay this. It's not going to hurt their ability to compete even if everyone else is doing it.

Billion not Million, although still a small number in respect to 200bn its 7%. But I think you have to look at it in terms of the magnitude of the number, its easy to make it look small in comparison to their reserves but 14 billion is still enough to power a whole lot of economic growth.

I edited my comment as I was aware it was billion not million, it was just a typo. I think my point still stands though. If Apple were to pay the correct tax and MS, Google, FB still didn't Apple has so much money that it doesn't effect their ability to compete. In other words they can still win without playing this game.

EU should consider this hypothetical:

Imagine that aliens from a remote galaxy came to Earth to trade. They sell alPads and alPhones. They don't have any papers about how those were created and what kind of costs they paid in their galaxy. It was so long ago no one remembers and why would it matter anyway, maybe alPads and alPhones grow on trees in their world.

Now consider how we would like to tax those. Is VAT enough? If not maybe tax for land where they open their office? Whatever you decide do the same with foreign companies in Europe. It's the only way as digging into costs/deals in other countries which may not even be friendly with EU in the future doesn't make much sense.

The letter is gross but I don't understand why all this is specifically about Apple? Aren't they using the same kind of tax accounting other multinational companies do?

Forgive my ignorance, but what would happen if Apple chooses to ignore this ruling and doesn't pay any retroactive tax at all?

Could it still be business as usual?

Thank you my fellow apple fanbois and apple employees for flagging this thread. Has it been on the internal company slack?

Could someone please explain why this isn't on the top of the front page anymore?

The answer to that question typically is: Because people flagged it, and possibly the many comments going back-and-forth look like a flamewar (which AFAIK also causes a lower scoring).

Also, there are already multiple discussions about the base topic, not sure if another one helps much... (which might be one reason people are flagging)

Thank you. I always thought it was somehow only about a correlation between submission time and vote count.

Why did this fall off of the startpage?

Well, at least they used a bit of those billions to hire a good PR team. I'm always surprised how often press releases are tone deaf.

With a bit of luck this will trigger an Irexit.

So Ireland will loose access to the EU market and all those double irish deals are worthless?

What a load of corporate BS. How does it make first place on HN?

"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."

Please. They got caught not paying any tax in Europe. Ireland's tax laws are not ignored (EU simple asks Ireland to tax Apple according to usual Irish rules) and there is in effect no agreed upon international tax system anymore (if there ever were).

"The opinion issued on August 30th alleges that Ireland gave Apple a special deal on our taxes. This claim has no basis in fact or in law. We never asked for, nor did we receive, any special deals."

This is irrelevant. There was an understanding that Apple could channel all European profits through Ireland and that the Irish government wouldn't tax them on it.

"We now find ourselves in the unusual position of being ordered to retroactively pay additional taxes to a government that says we don't owe them any more than we've already paid."

First of all, it isn't retroactively. The obligation not to receive subsidies was there all the time. Second, it isn't at all unusual. Numerous companies in Europe have had to pay back subsidies, including tax subsidies, to governments that didn't want them back.

"The Commission’s move is unprecedented and it has serious, wide-reaching implications."

If by wide-reaching implications they mean that corporations can't hide behind phony company structures and will have to pay tax, then yes.

"It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been. This would strike a devastating blow to the sovereignty of EU member states over their own tax matters, and to the principle of certainty of law in Europe."

The EU commission is proposing no such thing. It is merely calling a spade a spade. Ireland joined the EU openly, and signed the EU treaty that bans state aid.

"At its root, the Commission’s case is not about how much Apple pays in taxes. It is about which government collects the money."

As in no government, apparently.

Yes, it's complex, and much more complex than a company having to be taxed where the value is created. There is no such agreed upon fundamental principle, not even with United States, and even if there were, I would argue that most of the value is created where the products are either produced or sold, not where the R&D department happened to be located or where a company had placed its IPR.

Don't know why you get downvoted, but such a embarrassing, slimy letter from Cook is relevant for HN. I guess he just killed a lot of his credibility with this sniveling letter.

After they pay their taxes, I imagine they will post some billboards like this:

Dear EU,

Please use some of the €13 Billion in taxes to keep art in schools.

Love, Apple.

Apple is more than welcome to express interest in the education of people they plan to employ, to whom they plan to sell computers.

They begged for clear and fair tax principles for years (up until this letter) and this is happening. It just so happens that if they contradict themselves, or lie, the EU will stop listening.

I wonder how much this has to do with the Brexit :)

Not much, so far at least. This latest round of trouble over Apple in Ireland predates the Brexit vote. And of course the Republic of Ireland is not in the UK.

Funny the total brainwashing that is going on in this statement by Apple.

Look, Apple failed to pay SALES taxes. And now they are trying to mix SALES taxes with the LABOR taxes of those 60 (sixty) people they actually employ in their operation in Ireland.

Apple is the most valuable company in the world, has a huge bank account just sitting there, and yet, they think they shouldn't have to pay taxes.

It's time to bring the money back and create jobs in U.S. Apple cannot expect the U.S to cover it's ass from EU. Tim's answer 'well the taxes are high here, so we cannot bring the money back' is not valid because guess what - my taxes are high too and I end up paying them.

Apple is de facto a multinational corporation. Heck, it seems it's a supranational corporation even. In that context, what does "bring the money back" mean?

Aren't the core of it's operations incorporated in U.S?

>and create jobs in U.S.

So instead of selling the products from Europe to Europe, create jobs in the US and sell them from there?

When you bring the money back, you can find creative ways to invest that will grow jobs.

Am I missing something, last time I looked they barely payed taxes in the US, so the argument is a bit of a moot point.

Assuming the main story has tripped some sort of flame war trigger?

https://news.ycombinator.com/item?id=12388601

223 votes in 3 hours and it's half way down page 2?

It's incredibly important news, shouldn't dang et al intervene and reinstate it?

I think the reason for this is that this is the "please don't take the 13 thousand million dollars I owe" response letter from Apple, which probably disgusts a lot of people.

It is absolutely relevant.

It's still on page 1 for me, item 21.

Reply on news.ycombinator.com