The €13billion Apple Bill

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Apple’s European headquarters in Cork

Further to report yesterday saying one unnamed minister suggested the Apple tax bill would amount to just €100million – as opposed to the €19billion previously estimated…

In the last few minutes.

Tony Connolly, of RTÉ, reported on the Today with Seán O’Rourke Show:

“We can establish that the amount of money that Ireland and Apple, or the amount of tax, rather, that the [EU] Commission believes Apple should have paid amounts to the sum of €13billion over a ten-year period.”

“That is a staggering figure – €13billion – that the Commission believes that Apple should have paid to Ireland and they said the fact that they didn’t, that this amounts to illegal state aid. Another line that I can tell you is that the Commission believes that between that, in that period, Apple paid an effective tax rate of 1%, then falling to an effective tax rate of 0.005% in 2013.”

“…So that’s what the Commission are saying. They’re going to give more details in that news conference [at 11am] in the next 15 minutes…”

Commission says Ireland granted undue tax benefits of up to €13bn to Apple (RTE)

Previously: Far From The Tree

Low Rates And Not Too Many Questions

UPDATE:

Screen Shot 2016-08-30 at 11.10.12

European Competition Commissioner Margrethe Vestager at a news conference this afternoon in light of the Apple tax finding

“…the profit between each Irish branch and the company’s head office or I should say so-called head office because this so-called head office only existed on paper. It has no employees, it has no premises and it has no real activities.”

“The Irish branch was subject to normal Irish corporation tax. However, the head office was subject to no tax in Ireland or elsewhere. This was possible under Irish law which, until 2013, allowed for so-called stateless companies.”

“As a result of the allocation method, in the tax rulings, only a fraction of the profits from the Apple Sales International were attributed to the Irish branch. The remainder, the vast majority of profits was attributed to the so-called head office.”

“This means that Apple Sales International, as a whole, paid very little tax on its profits.”

“Let me illustrate for one tax year: In 2011, Apple Sales International made a profit of €16billion – less than €50million were allocated to the Irish branch, the rest, the huge majority, was allocated to the so-called head office where they remained untaxed.

This means that Apple’s effective tax rate, in 2011, was 0.05%. TO put that in perspective, it means that for every €1million in profits, it paid just €500 in taxes. This effective tax rate dropped further to as little as 0.005% in 2014, which means that even less was paid in taxes, it was €50 per €1million in profit.”

Morto.

125 thoughts on “The €13billion Apple Bill

    1. Starina

      followed by a measly payment of around 10 million, all of which will go on either lunches or inquiries

  1. bisted

    …could the money rest in one of our venerable banking institutions until the court appeal is resolved?

    1. Daisy Chainsaw

      I volunteer my bank account and I’ll act as an independent observer. The €13BN can be lodged to my account for a 0.5% per annum administration fee. I’m not greedy.

          1. Spaghetti Hoop

            I take it you don’t mind young Margrethe Vestager there describing to reporters her night of passion with Bertie Blenkinsop?

  2. Anomanomanom

    I understand low tax for corporations greets jobs, thats a fact. But not paying the the low tax amount that you moved to Ireland in the first place for is not part of creating jobs. If we insisted on them paying, really paying, even 6% with no other cuts or loop holes they would still all come here. Saying we charge 12% is just ridiculously at this atage.

      1. Anomanomanom

        New phone and I assumed auto correct was on. And it is a fact. Thousands are employed directly because of our low tax.

  3. Panty Christ

    If Apple got special treatment I’m sure Intel and Pfizer etc did too. It’s like striking oil off the west coast and instead of giving it to Shell, we keep it and go full statoil on it.

      1. dav

        will we could start by NOT handing over the rights to said oil for the bribes our elected officials received.

        1. Joe Small

          Yeah, lets stop giving away all that all we may or may not have. That’ll teach those large oil companies not to search for any oil that we might have just in case they steal it.

      2. Sam

        What do you think would be the obstacle? The cost?
        If you read it often enough in the INM press, one might believe it, unless one also read how the O’Reilly’s made a deal with a drilling company, that in return for the cost of exploratory drilling, they would get a % in any oil field found.

        The state could have done the same deal, if it wasn’t bent over backwards to facilitate private interests over public good.

      3. Tish Mahorey

        “To keep oil, we’d have to find it in the first place.
        How would we do that?”

        That doesn’t mean you give it away without tax.

  4. Conor

    Sigh, we won’t see a penny of this. Between Apple fighting tooth and nail, and the money going on the “national debt” aka German banks, we’ll see nothing.
    Sorry folks, no diamond iPhones, Metros or anything of benefit to the general public

    1. Spaghetti Hoop

      There’s bound to be a few TDs, judges and developers suddenly splashing out on fur coats and new motors. Don’t kid yerselves -this pot of cash will oil the wheels of corruption somewhere and somehow.

      1. John

        No money has come in yet. It’ll be years before anything is forked over. And when it does, it must go off the national debt and nothing else.

        1. DaithiG

          Ya well that’s OUR national debt which is accumulating interest, so that’s a good thing IMO.

          If you had a 50K in credit card debt, and won 40K on lottery tickets and yer ma made you pay down your credit cards, you’d still be cribbing?

  5. Increasing Displacement

    Would probably fund a few schools and hospitals for 100 years

    They piss me off anyway. I mean, I like their OS and products, but no Apple pay or store in the country of their European headquarters? Go coitus yourself.

  6. John

    Any money received, eventually, must go off national debt. Which in turn would reduce interest payments on it.
    Its galling that Ireland will spend time and money fighting this at a time when we could do with the cash.

    And we could have done with the cash over the years.

    Before Apple starts whining, do they pay corporate tax anywhere in the world?

  7. Junkface

    1% Corporation Tax. Only available to the few of us with companies worth more than $100 Billion. They can’t give that tax break to everyone you see, that would be madness

    1. backomebollix

      They didn’t even pay the 1%, it was staggered downwards in a way which effectively made it no tax at all.

  8. Clampers Outside!

    Can anyone point me to a link somewhere that gives an explanation of Noonan’s argument, reasoning or whatever, for NOT pursuing it…. all I’ve seen so far is very waffly….

    A task for the BS bloodhound?

    1. Kolmo

      +1. Hard to understand the government accomodating legally kicking doors-in to evict families out onto the street for inability in paying a private banking debt and not pursuing the many millions of euros due to the Irish Exchequer by a very, very profitable company trading here

      1. Talismania!

        We must always be seen to be business friendly, even to the point of absurdity? Seems to be the point here.

    2. Increasing Displacement

      Because so much of our population is employed by companies that benefit from this I’d imagine Clampers

          1. Daisy Chainsaw

            That’s a grant of €260k per employee per annum. I must contact the IDA about a business venture I have planned from Panama…

    3. The Real Jane

      It is absurd. I mean, the corporation tax rate is already quite low. I guess they’re afraid of annoying apple and letting them flounce out of Cork.

      Personally, I’d accept the tax and then lower the corporation tax rate in the next budget if I were minister for finance.

    4. Owen C

      Low tax rates in combination with a friendly and predictable tax regime has been at the heart of Irish economic policy for the last 50 years, this a means to get foreign (mainly US) multinationals to invest here and bring with them manufacturing, technology and decently paid jobs to a somewhat remote island in the North Atlantic. Basically, this tax policy was set by Dublin (which has been a competitive advantage in itself vs tax policy on the EU mainland), with the Irish people broadly in agreement with it. As such, companies can invest here for 10yrs+ knowing that tax policy will not alter on a whim. And lets be honest, it has worked exceedingly well and been at the heart of the Irish economic miracle of the last 30 years.

      The EU decision may seem like “good news” for Ireland but essentially means that the economic policy mentioned above is now (a) inherently less predictable and (b) decided from Brussels. The risk is that if Ireland does not try to at least fight back against this decision (a) the EU will push back even more on tax policy (they have used the competition competence to make this ruling, it essentially, from a technical perspective, has nothing to do with tax policy, which is at the sole discretion of sovereign EU states) and (b) foreign companies will no longer view Irish tax policy as predictable or Dublin-decided. As such, they may decide not to invest (or invest less) here vs previously.

      1. rory

        This EU decision does not mean that Ireland’s tax rate is decided from Brussels. This is about paying the actual tax rate that Ireland had already chosen.
        As for FDA deciding to leave Ireland to find somewhere better, they need somewhere in Europe. Where else are they gonna go where they can do better? FDA’s packing up and moving to the likes of Bulgaria or Bosnia and Herzegovina because of some vague claim of unpredictability? Again, don’t see unpredictability myself, the official line on tax remains the same. This is a specific case of tax avoidance (sorry ‘state aid’) that has no effect on Ireland’s corporate tax rate.
        Noonan is scaremongering imo.

    5. Andy

      http://economic-incentives.blogspot.nl/2016/08/some-take-outs-from-apple-ruling.html

      Seamus Coffeey on the contradictions in the announcement:

      Summary:
      1. If Ireland is the problem then how is it that other countries can avail of this €13bn “bill”? If other countries can issue demands for retrospective back taxes then those countries must have under charged Apple on taxes which means they provided illegal state-aid.
      2. In order for it to be illegal state aid the case has to be made that (i) it was a special deal for Apple alone, and (ii) no other company can avail of this. Yet the commission states it was (i) achieved through specific Irish tax laws (which means it’s not a special single-company deal) and (ii) the Commission didn’t address the fact that other company’s can avail of it (which undermines anti-competitive stance)

      Anyway, I’m sure the opposition will have this €13bn figure spent by the end of the day and we can expect Union demands for pay rises within a week.

      Ireland is home to the HQ of Int HQ of most of the top 10 pharma companies, the EMEA HQ for most of the largest tech companies. Does it seem logical to anyone that somehow Apple alone got a sweet deal and the other guys are just here for the lovely weather? Either that’s the case or these tax laws are available to everyone and are therefor not (i) anti-competitive, or (ii) illegal state-aid.

      1. Soaky in the Pooper

        So to get out of the 13 billion they have to argue that they’re a tax haven for a load of other companies?

  9. backomebollix

    Our dear leaders, who (on our behalf) told Apple that they needn’t pay any taxes here will now tell the EU (on our behalf) that they don’t want this money back. They will fight through the courts to refuse it! Into the sea with all of them, they care not for you or I.

  10. Bruce Wee

    I have a feeling even if we got the money we would still waste it regardless…we would build a Monorail or something like that. Amazing the rate of tax they paid from 2013 is 0.5%. I’m sure we will hit them with a “Leaving town Tax” if they did up root from here. NUTS….Anyway , will be dragged through the courts for years.

    https://www.youtube.com/watch?v=ZDOI0cq6GZM

    1. Talismania!

      A monorail to the Airport wouldn’t go amiss, unlike Springfield, Dublin is big enough to justify useful mass transit projects. Can’t wait to take the green line to Broombridge . . .

      1. Andy

        That Chinese train/bus thingy that was posted here recently – the blue one that travels above the traffic.

        It turns out it’s a scam (recent Bloomberg article) but I’m sure with €13bn we could make it work.

  11. Kolmo

    Only law abiding, hard working, long-commuting, debt-crippled, precariate worker saps pay taxes, for services they are not entitled to, because they are working….

  12. Junkface

    See Ireland is so damn wealthy and comfortable in every way, Housing, Healthcare, zero homelessness, we don’t need to be taxing Giant Multinational companies worth $100BN. Our working citizens are happy to pay a higher rate of 48% Tax on MASSIVE EARNINGS of over €32,000!!

    1. Anomanomanom

      You don’t pay 48% on earnings over 32k its 48% on earning over the limit after you earn 32k. You wont pay 48% on every cent.

      1. Junkface

        Yes thats what I meant, no need to get pedantic.
        Like 32K is obviously the salary of James Bond. You could get any Mortgage you wanted and a brand new Porsche

        1. forfeckssake

          James Bond as a civil servant would have been relatively modestly paid compared with the private sector. He certainly didn’t buy Porsches.

  13. Willie Banjo

    Even if we didn’t appeal this, there’s no guarantee we’d get anything near $13bn. There’s a mention in today’s ruling that other jurisdictions in EU can pursue some of these liabilities if they feel they are owed them.

    1. DaithiG

      Of course they are owed. The EU bailed out our banks because of our elites inability to add and subtract and we damn well near brought down the whole EU.

      All the while we could have recuperated a few billion here and there from within our own shop.

      It’s a total racket, and the citizens are the ones who will be shaken down in the end.

  14. Leopold Gloom

    While I welcome such a ruling and would wish them to pay it, how much will actually go to Irish coffers.

    EU will next fine Ireland I imagine.

    Its also something which is probably happening in most EU countries, just we don’t have the backbone to go tell the EU, bondholders and the rest to do one.

    1. manonfire

      Noonan has spent millions ”
      defending” Apple, well have to pay the lawyers and also pay the eu lawyers as we lost the case, the eu will also fine Ireland, this will go to appeal so expect it to b in red tape land for ages, the eu are however looking at several other companies pulling the same stunt so it will be interesting to see where all this goes..

  15. Clampers Outside!

    So, basically…. Steve Jobs would be nothing without us. He wouldn’t be so damn deified by so many if the company collapsed* under having to actually pay tax on profits.

    Visionary me eye.

    *Collapsed may be a bit of a stretch, then again… maybe not….

    1. Andy

      Apple has $240bn in cash and marketable securities on its B/S. €13bn is a tiny dent in that.

      Apple is no longer a phone company – it is now simply an ETF with a phone design arm.

  16. Joanna Bateing

    Amazing lack of consistency here, the EU had no such problem with Ireland providing massive state support to private banks as far as I remember. There’s something rotten in the state of Denmark methinks.

  17. pooter

    This has nothing to do with motor insurance which is why the big insurers will hike the premiums again. Any excuse.

  18. 15 cent

    The EU are only getting involved because they want that sweet coin themselves. So they’ll squeeze Apple and Ireland to force Apple’s hand into moving to France or Germany or somewhere. I think we should leave the EU and go beg the Brits to take us back. We can’t run ourselves, no fuppin way, we’ve proven that.

    1. ahjayzis

      If the choice is between two mammy’s, let’s stick with the one that actually goes after corporate tax dodging.
      I paid more tax in the UK than Starbucks last year.

      1. 15 cent

        It’s hardly a noble act by the EU to do this shake down for the tax. They just see it as money that they can and will get, and a company they could move to France. There’s no good intentions in anything the EU do.

        1. DaithiG

          How is this a shake down exactly? There is Billions of $$$ of profits run through a headquarters that our dear leaders helped set up so they could get out of having to pay taxes.

          You dodge paying taxes and get caught, you pay back taxes and likely a fine for being a cheeky git. Any revenue service will do the same, to you, to me, to Redacted, to Apple, Pfizer, Google, whoever.

    1. Harry Molloy

      well on the face of it, if Apple had to pay they would have good grounds to try to recover the money from Ireland, given that they could argue they entered into the deal with a country in good faith

      1. ahjayzis

        They’d be banging on an open door there, I fear. The government would do an RTE on it and have the cheque in the post before the first solicitors letter arrived.

  19. postmanpat

    So if I was some kind of an insider Irish tax official back in the day who would allow Apple to do this as a way to increase profits and therefore increase its share price AND I was to say… buy some stock knowing that APPL would probably double in price fro 60 to 120 dollars (because the don’t pay tax duhh) AND make a huge profit ?, wouldn’t it be in my interest to stall any inquiry into said tax benefits?. Hummmmm. If ….say I was an EU official and knew the exact date that they would actually penalize Apple/Ireland , couldn’t I short some stock as the exact right time? how do I get into the rooms where these decisions and dates are set? I want to be rich too.

  20. DaithiG

    1 question about all this.

    Where was this head office located? I know it was a fictional entity but even on paper the office had to have an address? No?

  21. manonfire

    Like Turkey were very strategically paced, like Turkey we have a puppet govt who will roll over their own just to please their jesuit masters

  22. Fully Keen

    And as much as we are ridden by Apple they don’t even release their new phones here first. We have to wait ages.

    Used and we get nothing. Not even free apple stickers.

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