As an Apple customer I am not sure what to do in the future, if I should continue to support them by buying their products. I hope they lose in any case.

Boiling the argument down to "who" do you support is the 2 line news-byte version of it.

This is about the law, and has some pretty big implications.

1) The EU is essentially attacking a law made in 2003 in 2016. To do this retroactively for 13 years is far too long (imo).

2) If the EU wins the case, the money flows back to Ireland, in essence rewarding the country who was out of line to begin with.

I'm seeing a lot of comments saying EU's action is "retroactive" or "retrospective" - it is not. The EU law was always there, and Apple and Ireland were both in contravention for all the 13 years. Apple was in compliance with Irish laws, while contravening EU law.

If the IRS audits you and finds that you underpaying taxes for 13 years - you are going to pay all the taxes "retrospectively"! There isn't a 5-year statute of limitations on illegal EU subsidies (or IRS tax evasion).

The rest of my point remains though - this is not a new law, but a decades-old one.

See the actual EU press release: http://europa.eu/rapid/press-release_IP-16-2923_en.htm

"The Commission can order recovery of illegal state aid for a ten-year period preceding the Commission's first request for information in 2013"

The rules against state aid were always there in the various EU constitutional documents. Ten years is a long time, but it takes a long time to investigate complex issues and you don't want a system where it becomes worthwhile to stall the investigation and run out the clock.

The real message is that companies should refrain from trying to do "deals" with individual member states; doing so is extremely divisive. One of the arguments going around at the time of Brexit (I have no idea whether it's true though!) was claims of EU grants being used to move car part production out of the UK to Eastern Europe.

Edit: in fact, if you go through to http://ec.europa.eu/competition/state_aid/cases/253200/25320... and read the description, it appears to date all the way back to 1991, where Apple sat down with the Irish revenue and simply decided how much tax they were going to pay. That's how transfer pricing works.

Not entirely - any monies returned can legally only be used to pay back Ireland's national debt. The UK, Germany, and France are the biggest holders of Ireland's debt, so effectively the money is going back to them, albeit with Ireland benefiting by reducing its debt marginally.

Source: http://www.irishtimes.com/business/economy/european-commissi...

EU legislation on state aid has always been this way. It's a usual thing to force a company (Apple) to pay back government subsidies (incl tax subsidies) to a member state (Ireland), which says it doesn't want the money.

Member states granting illegal subsidies almost always say they believe the subsidies were legal or that no subsidies were granted.

2) Doesn't matter who gets the money. It's forcing corporations to not use Ireland as a tax haven anymore (there are others like Luxembourg, etc., but it's a step in the right direction)

This creates a system where even information from the national government charging taxes in its own jurisdiction can't be relied upon, and where literally billions of euros of tax can be retrospectively demanded indefinitely. That is a toxic environment for anyone running a business, even someone trying to do so honestly. If the EU wants to wade in after this much time and claim this much damage has been going on, it's going to strain credibility and the EU is going to deserve all the contempt that businesses will hold it in as a direct result.

I write this, BTW, as someone who runs small businesses in the UK that very much are at a disadvantage compared to the arrangements available to large multinationals. I'm all in favour of having a tax system that is transparently fair, where the same rules apply to everyone. But I'm not in favour of officially saying one thing, letting businesses carry on accordingly for a very long time, and then retrospectively changing the rules.

I think it's also worth mentioning that the EU's track record on tax issues and dealing with the large multinationals and their complex arrangements is awful. Just look at the hash they made of the VAT changes last year, which were supposedly going to have a beneficial effect by reducing multinational tax avoidance, but in fact did almost exactly the opposite, causing far more damage to smaller businesses than larger ones.

Apple's tax arrangements may be ethically questionable, and the system that permits those arrangements has plenty of room for improvement. However, if you think this specific move isn't a politically motivated cash grab by an EU that is in trouble and has several key elections coming up, I heard there are some Nigerian princes who have some great investment opportunities to offer you.

This is I think one of the few genuine substantial complaints against EU membership: the EU is very bad at dealing with small businesses, because they don't have time and money to get involved in the legislative process. Brussels is too far away.

This isn't to do with a contract or treaty as much as how it's interpreted and how that interpretation has changed recently. What's changed in the past 18 months is how the EU Commission interprets the arms' length principle as it relates to international tax law, now using it's own guidelines instead of the international norm/consensus, i.e.: OECD Transfer Pricing Guidelines. 'Retroactive' is definitely the right word to use.

>> Doesn't matter who gets the money

Perhaps, but it matters who loses it. The US Treasury see it as their money, since the untaxed cash hoard being referred to is on the Apple Inc. balance sheet. The implications for the EU could be far reaching.

I'm conflicted on whether Apple should pay back the sum - it would seem fairer to me to simply agree that 'This Stops Now'.

Second, if that poorly Irish designed piece of tax law wouldn't have existed, they might have structured things differently. Even if Apple is to pay the €13bn, you can assume they will sue the Irish state for the exact same amount in damages.

If the EU wants to harmonise tax law, they should focus on that. But I'd be curious to see if it will ever happen, given member states don't want that. The state aid mechanic is the only thing they have to perhaps combat avoidance a bit. But if you only have a hammer... Well, just look at Vestager - that's exactly what happens. I wonder, has she challenged Danish tax mechanics?

Last year the big Danish energy company DONG (recently privatized and entered the stock market) was investigated but found not in violation. Here's an exciting article about it:

http://europa.eu/rapid/press-release_IP-16-1885_en.htm

These cases take years to investigate. So no, Vestager is not selectively helping Denmark; you are looking at the wrong country for corruption.

I recently read in the newspapers she's also investigating Belgian harbours, because for some reason, they're exempt from paying corporate tax. HOWEVER, if she'd rule against it, she would be unable to force the Belgian government to recoup that money, because that tax break existed even from before the EU was founded..

This person said they were not taxable for 2008 and 2009. The tax authorities disagree. A complex case with the person moving abroad is described. The amount of money that would be taxable is less than $200,000. In 2014, a tax court ruled one thing. Now in 2016 the first city court looked at the case. And that's just for one person, with relatively simple finances.

I can imagine considering Apple and the even more complex EU law could take huge amounts of time to process. The article said 3+ years was used on just investigating the case. Maybe if they had an extra 500 lawyers and accountants they could do it quicker. Or better legal powers to investigate this sort of tax stuff between the countries. But from what I've heard, I imagine the cross-border investigations are sending letters to the local authorities and waiting months before you get any concrete information. These guys are nothing like the federal law enforcement of US.

Take the tobacco lawsuits in US -- wasn't it known for 40+ years that tobacco was extremely harmful? Should the companies be allowed to continue given they haven't been sued by the government or stopped in some way for that amount of time?

Also, regardless of the company, don't you deserve a fair trial if the law is applied correctly? For if we disregard this, we might as well disregard other situations, which creates a dangerous precedent. Legislators shouldn't be putting the burden on companies, because they badly designed some law (or it had unintended consequences).

I've personally almost gone to court on a tax case, where the tax authority was pulling ridiculous arguments out of thin air with no merit whatsoever. The guy handling my case was extremely unreasonable, and it took intervention from some high up civil servant (who was more "up to date" on specifics of that law) to make him change his mind. It helped that I had one of the best local tax law firms represent me. These are often test cases to see what judges will allow, and to see if the precedent will stick. No point going to court if you don't have a good case and setting a bad precedent, since I said I would have no problem publishing the judgements for the entire tax community to see if I won. A full tax case can easily take 10-15 years.

Which is utterly absurd by any reasonable standard. Governments claiming the money may be faceless machines grinding away, but on the other side it's either a private individual or a business dealing with it.

If it's a private individual, or a small business where the lives of those running it are very directly connected to the business's performance, then any tax investigation forces them to live with a sword hanging over them throughout. That is going to cause considerable distress and potentially to undermine any long term financial planning they want to do, among other harm. Expecting someone to put up with that situation for a few months is bad enough. Expecting someone to put up with it for a decade or more is wildly disproportionate, even in the case of a significant underpayment if it was due to an honest misunderstanding rather than clear and deliberate tax evasion.

Even if we're talking about a large business whose staff might not suffer personally as a result of the case, it's still going to waste staggering amounts of time and resources to participate in an investigation over such a long time. It's going to damage long term financial planning, it's going to be unpleasant for the staff, particularly anyone potentially responsible for any mistakes, and it's going to cost the shareholders a small fortune, and again all of that remains true even if the final conclusion is that no-one did anything wrong or little real harm was done.

I just don't see any justification for these endless legal proceedings or going back far into history. IMHO there should be a statute of limitations of a few years in place after which what's past is past, there should be a strict limit on how long any investigation can last before either formal legal proceedings are held or the matter is dropped permanently, and ideally both of those time limits should be in some way proportionate to the scale of the alleged shortfall.

It's exactly the same with what Apple did.

Apple deal with Irish government was illegal regarding access to EU free market. If Apple is not happy with that, they can open a business in every EU country, pay local taxes in each of those and keep their deal with Ireland only for the Irish narket.

I don't even get how anybody could defend Apple on this. You're get caught trying to cheat, you pay what's due, that's as simple as that. The fact that the Irish governemt took part in this illegal deal is another problem that should also be pursued by EU.

For me personally, at this time it would _not_ stop me from buying from Apple. This is not a contradiction, the reality is that Apple isn't the only offender.

This is coming from someone that has avoided flying Ryanair his entire life, no matter how convenient or cheap it could've been.

Perhaps you believe that the government needs $X to function and by Apple paying less, we have to pay more. But this isn't true either as I'm sure your tax bill won't go down if Apple loses this case. Perhaps spending will increase in some program or some new commission gets created from the funds but this will not come free, as any money transferred from Apple to the discretion of Irish politicians will come from Apple shareholders.

    and by Apple paying less, we have to pay more.

In fact, spending and revenue have diverged increasingly since the financial crisis. Around 50% of federal funds are either transfer payments to the elderly (Medicare or ss) and military.

http://www.factcheck.org/2011/07/fiscal-factcheck/

Also understand, these taxes are not for nothing. Without highways Apple can not ship it's product, without a legal system anyone can produce Apple's designs and undercut them.

We can decide what government services make sense to provide but everyone needs to pay their share or the system will fail. Rather violently, if history is any guide.

I believe they even called the liability out in their s1 filings, but I can't currently check.

Re Apple: I am ok if Ireland gets the blame. Probably should be split though, since Apple knew very well what they were doing.

It doesn't help that bad or just plain wrong advice is given all the time by the tax authorities, at least in my country. I no longer even bother asking them about most things, because the last few times I called with a relatively straightforward business question, they still managed to give me completely wrong answers (always in their favour, naturally). The reason I know that is because when I was surprised by those answers and then took independent advice, the independent advisors used the tax authority's own official documentation to show me why what they told me was incorrect...

So i have been happy to receive cheques from the government years later for over paying, and actually nonchalant about the deductions.

But what is important is that the rules to apply equally to everyone, and they should also apply to businesses large businesses and small businesses, and mega businesses.

So when people agree with the EU findings on this subject, it isn't just out of spite or dislike of Apple. Some feel strongly about tax evasion, as it enriches those who practice it to the detriment of ordinary citizens (taxes pay for public works and institutions). Some may find that huge corporations benefit unfairly from these convoluted tax evasion schemes compared to ordinary citizens, and small and medium sized corporations, and they seem to get away with it too (unfair competition).

Apple knew they could get caught, that risk has been assessed when they implement this scheme and found to be low enough to warrant it at the time. If anyone else gets caught not paying their dues in taxes, you can bet the local revenue service will be knocking on your door for the amount owed. Corporations are no different.

Also this isn't just about Apple. The EU has been going after a bunch of mega-corps the past year, including Starbucks. Apple is just one of the bigger fish amongst the big fish.

And, I'll leave aside moral considerations because they are not strictly relevant to the point of whether the EU's ruling is correct.

My point was that I don't see that either side of the legal argument is blindingly compelling. Certainly not without hearing a lot more argument and research from both sides.

It comes down to a disagreement over whether Apple's use of a particular loophole in Irish law constitutes Ireland giving Apple a special deal that is unavailable to other companies.

Apple/Ireland argue that the loophole existed in law and was available to anybody.

EU argues that even though the loophole may technically have existed in Irish law, it still constitutes a special deal with Apple because (I think) it takes a lot of money to hire the tax experts necessary to exploit it.

What is the knockdown blow that makes either one of these either totally compelling or totally uncompelling?

I don't see why people are so certain on either side of this.

I live in Ireland. I work at a multinational - pretty much everyone I know does. And I know that on one hand, most MNCs aren't paying their "fair share" - most of them are here for the same reason. On the other hand, I know our jobs probably wouldn't be here otherwise.

MNCs paid 80% of all corporate tax in Ireland, in 2015. The top 10 payers paid 40% of all CT between them. It's really one of those "quantity vs quality" things, and Ireland has opted for quantity. A rather than extracting a lot from MNCs, we extract from a lot of them instead. And it does balance out - CT forms about the same % of govt revenue as the european average. We're not actually losing out this way - but we are gaining jobs and investment. And for a country where "getting a job" used to mean the ferry to the UK, that's huge.

And MNCs hoarding cash here does have other benefits. eg, Apple are building a datacenter not far at all from me, because it's cheaper to build it here, than repatriating the funds to the US to do so there. We create more jobs, more investment, more value by being friendly.

I also have to be a bit realistic - the moneys funneled through Ireland without being taxed, wouldn't have come this way at the full rate. That is - "our fair share" is a bit revisionist; if we taxed them 12.5%, we would have received 12.5% of nothing. They would have sent it somewhere even cheaper instead (eg, Intel are building out in Israel because they were able to offer 5% instead).

Of course I can see the other side, that corporations need to play fair. And that what we're doing is costing someone somewhere else instead. But I do see the day-to-day duality - that people here, in Ireland, will bounce between complaining that Apple don't pay enough, and being excited that they're building a few hundred more jobs 4 miles down the road, within the same conversation.

(and to be clear, it's not just Apple - the primary concern at the moment is that while Apple may concede and pay what the EU demands, the next investor, employer to move here, might have second thoughts.)

Are you staying there isn't a principled stand to take here?

Or that there is reason to object on principle but one shouldn't because it's not self-serving?

2. If Ireland would've done a good job, Apple wouldn't be having this problem today. Which probably means Apple will recover the tax payable from Ireland, through damages.

3. There's plenty of tax optimising any business owner can do.

    > There's plenty of tax optimising any business
    > owner can do

No?

Then you're holding Apple to one standard and yourself to another.

    > I would prefer the money stay with the shareholders

    > rather than transferred to European politicians

    > if you disagree and think that politicians would
    > make better use of the funds than an individual

I'm trying to figure out if you're taking Apple's side because of the Shareholders vs Government angle, or the America vs Europe angle.

Just as an example, NYC recently sued BNP and used the money partly to buy iPads and iPhones for the police force. Even if a wrong is done, the primary victims are rarely the main beneficiaries and the funds just increase the ever growing administrative state and encourages future shake-downs

> The city has already pledged some of the money toward equipping police officers with 41,000 iPads and iPhones, part of a joint, $160-million initiative with Mr. Vance’s office.

[0] http://blogs.wsj.com/metropolis/2015/05/01/french-bank-settl...

If we applied your principle of universally siding with corporations/individuals paying less taxes than they are supposed to, then no one would pay taxes at all and the government would cease to exist.

If you think that the current tax rates are too high, then start/join a political lobby that seeks to reform the tax system. But given that we do have a current set of tax laws, it doesn't make any sense to universally support those who have been found to violate those laws.

But that's not what's happening, really. If as an individual the IRS wrote to you and said "look, all your tax returns in previous years were in compliance with the law, but we've now decided those laws were wrong and you owe us more money" you might understandably be a little annoyed.

There's a reason that in most (but not all) cases we don't allow new laws to be retroactively applied - because we recognize it to be unfair.

It's okay if you disagree and think that you meant to directly invoke images of fascists but it shouldn't be inconceivable why someone would ignore your ill-conceived argument.

That's money that should never have been in shareholders hands in the begining because illegaly kept as it's unpayed due taxes. Invest your money in businesses that respect the law if you want to avoid this situation.

I'm not sure this is true. It's not a coincidence that many small businesses often pay their employees under the table, ignore minimum wage and overtime laws, and often prefer cash payments. The IRS chooses to go after the individuals where there is the biggest spread between how much they can collect and how much it costs to go after that person. If a small business is reporting suspiciously low income, the cost of going after them won't be worth it.

> Every individual should support the EU. If the EU is defeated here it will be a loss to the small man and small business

"Apple" doesn't pay these fees. The shareholders do. You're taking away that money from investors (401k, pension funds, ordinary investors, hedge fund investors, Tim Cook) and giving it to Irish politicians. This may be a good or bad thing, but you cannot argue that this money is coming from some giant black pit called Apple.

I can't spell out exactly how this will impact debt and equity valuations but to assume that a $14 billion tax hit will have no impact whatsoever is a bit naive.

But since i'm not a lawyer so i can't speak about Irish law though ...