
A Message to the Apple Community in Europe - epaga
http://www.apple.com/ie/customer-letter/
======
sixhobbits
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.

~~~
wbillingsley
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.

~~~
soneil
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.

------
madeofpalk
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.

~~~
pmontra
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.

~~~
socket0
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.

~~~
mcphage
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!

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

~~~
JamesBarney
I think this is the best way to tax corporations. Corporations can move around
where they produce goods, but it's much harder to move where they sell them.

------
ar0
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.

~~~
ck425
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.

~~~
jahnu
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.

~~~
sangnoir
> 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?

~~~
ck425
Why would Ireland need to negotiate with the EU?

~~~
ChoHag
Although I think not what was being referred to, the UK and Ireland do have a
more porous border than most EU states do with their non-EU neighbours.

------
sz4kerto
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.

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

~~~
zigzigzag
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.

------
bertil
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.

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

~~~
bertil
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.

------
k-mcgrady
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'.

~~~
sjwright
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.

~~~
k-mcgrady
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.

~~~
sjwright
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.

~~~
k-mcgrady
>> "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.

~~~
sjwright
>> "They're just being told to pay money they have always owed"

...to an entity that repeatedly insists they're not owed it.

~~~
k-mcgrady
True but Ireland has an interest in fighting this too. There are potentially
thousands of jobs on the line plus a lot of future investment. I don't think
this will cause any companies to leave Ireland as there is now going to be
nowhere else in the EU they can run this tax deal but it takes away an edge
they have on investment over other major European cities.

------
arbuge
"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."

~~~
toyg
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.

------
d_t_w
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.

~~~
danielrhodes
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.

~~~
adamors
"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/](http://www.rte.ie/news/2016/0830/812819-apple-tax-ireland/)

~~~
danielrhodes
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).

~~~
exDM69
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.

~~~
walki
I am a Luxembourger and I fully agree that the EU must close these kinds of
tax loop holes. In the past my country made a little money out of these tax
loop holes, this was immoral money that my country did not even need. Doing
this, other European countries lost a lot of tax income. The only ones winning
big time in scheme were the international companies abusing the EU and its
people.

~~~
pzh
Just out of curiosity, why would tax competition be considered bad? It is
generally accepted that monopolies and cartels are bad for the free market,
but when it comes to governments and the services they provide, we're
completely OK with tax cartels. These EU and OECD tax agreements basically
amount to a tax cartel, where governments agree they'll fix their tax rate
regardless of the infrastructure and level of services they provide...

~~~
xgbi
It is bad because it decorrelates the country you make a profit out of from
the country you pay taxes on this profit.

The people paying for your product are able to buy it because they live in a
country that provides for them, through added value, jobs, health care,
infrastructure and so on. If you want to profit from these people's buying
power, then you have to conform to that country's rules of business, that's
all.

Apple is _very_ happy to make huge sells of iPhones thoughout France, Germany,
Italy and such countries, siphoning money from their people to Ireland,
without ever contributing as much into the local economy. They employ a few
hundred people in Apple stores and hotlines, but compared to their profit it
is just ridiculous.

~~~
pzh
Is that really the case? Apple operates in Ireland and it pays taxes there
based on a certain competitive rate it has. If Apple sells phones in certain
countries, it has a network of suppliers there and it pays taxes on their
business operations there. It seems that you're making the argument that the
phones have to be produced in every country where they're sold in order to
eliminate trade deficits (the so-called decorrelation of profits and taxes
that would result from the importing of a product). But the only way for the
other countries to get that tax revenue would be to be competitive enough
(through competitive tax rates, availability of talent, infrastructure, legal
system, etc.), so that Apple would be incentivized to open offices and move
their R&D and pay taxes there. It seems you're arguing that these other
countries shouldn't have to compete on these criteria, but should somehow be
entitled to that tax revenue or at least to protectionist measures that would
make sure that Apple has no incentive to go anywhere else, purely based on the
fact that willing buyers purchase Apple's products there. I'm not sure that's
a very strong argument because it basically amounts to saying that if you
don't force Apple to give some form of a discount to these buyers, they won't
be able to buy the product in the future...

~~~
pjc50
The thing about transfer pricing is that it makes the "location where value is
created" _completely arbitary_. It's not where the R&D is done, it's where the
shell company that holds the patents is registered.

Apple subsidiaries in random countries selling phones don't pay taxes because
they don't make any profit. They don't make any profit because they're
"charged" an amount for the phones (and IP, branding etc) that exactly equals
the sales.

------
jacknews
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.

------
BenoitP
> 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.

~~~
ck425
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.

~~~
emptyfile
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.

------
Scirra_Tom
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.

~~~
DrJokepu
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.

~~~
bertil
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.

~~~
dingaling
> 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/](http://www.revenue.ie/en/tax/vat/)

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

~~~
bertil
You are technically correct, which is the best kind of correct.

However, I’d be surprised if Apple buys enough things in Ireland to offset the
sales of iPhones in Europe.

~~~
brohee
Apple is not paying VAT, it's collecting it. VAT is explicitely paid by the
end user...

~~~
bertil
The difference between the VAT that Apple collects and the VAT that is
reversed to their provide is what is considered paid by Apple — at least, I
assume it was in their lawyer’s math claiming they pay more taxes than anyone
else.

You seem familiar with the principle of VAT. In reality, many companies who
practice tax optimisation scheme are happy to play with that notion beyond
recognition.

In Europe, Amazon aligns some of its prices to local prices including VAT, but
they only collect Luxembourg VAT, pocketing the difference. The tax accountant
of any (international) travel agent would be happy to dazzle you with how much
money they are making from creative interpretation of international rules on
VAT. If a good is not sold, the last buyer still owe the VAT on it, even when
they are not a user of that good, end user or otherwise.

VAT is paid by companies: I’ve had enough issues with my own tax to confirm
that you don’t need to collect it to owe it to unscrupulous governments.

------
afarrell
Here is the European Commission's word on the issue:
[http://europa.eu/rapid/press-
release_IP-16-2923_en.htm](http://europa.eu/rapid/press-
release_IP-16-2923_en.htm)

------
leoc
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](https://news.ycombinator.com/item?id=12390072)
below.]

~~~
jads
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.

~~~
leoc
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.

~~~
jads
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.

------
ronjouch
> _" 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.

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

------
PedroBatista
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.

------
morphle
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.

------
duiker101
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.

~~~
tribaal
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.

~~~
xyzzy4
> 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.

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

~~~
xyzzy4
But still, people in Europe would be able to get iPhones, even if the cost is
higher. They would never be banned like illegal narcotics.

------
codeulike
[https://en.wikipedia.org/wiki/Double_Irish_arrangement](https://en.wikipedia.org/wiki/Double_Irish_arrangement)

------
kabes
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.

------
OliverJones
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.

------
khoury
Didn't even know "The Apple Community in Europe" was a thing.

~~~
pluma
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?

~~~
JustSomeNobody
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.

~~~
pluma
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.

------
bencollier49
Interesting. Does this imply that the UK deal with Google to let them pay less
tax is now de jure illegal as well?

~~~
themihai
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).

------
tuna-piano
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?

------
MollyR
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-...](http://www.theverge.com/2016/5/5/11604704/apple-tax-evasion-
cupertino-mayor-barry-chang-reform)

------
alphadevx
"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.

------
clarkmoody
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.

------
zyngaro
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.

------
sudhirj
Is this really that simple? Is the EC actually trying to apply a retroactive
law?

~~~
Someone
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)

~~~
themihai
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.

~~~
Someone
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.

~~~
themihai
The fact is that it was illegal. It didn't need a rule to decide its legality.
I can only speculate that they didn't expect to be forced to pay all the tax
back. Perhaps they expected a kind of warning given the local government was
on their side. There were/are others doing this (i.e. Microsoft,Google etc) so
they decided to stick with the herd.

------
jensC
I am sorry Apple, but that message made you look like you are excusing
yourself for paying no tax.

------
ctvo
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.

------
lstroud
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.

------
gerty
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.

------
gavanwoolery
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.

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

Pay.

------
Twisell
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?

------
lochlainn
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.

------
saynsedit
_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?

------
lifeisstillgood
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.

------
mgkimsal
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?

------
pzh
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...

~~~
k-mcgrady
>> "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.

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

~~~
k-mcgrady
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.

------
sjwright
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.

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

------
WayneBro
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.

------
sudeepj
The Joy of tech on this story: [http://cdn.iphonehacks.com/wp-
content/uploads/2012/04/joy-of...](http://cdn.iphonehacks.com/wp-
content/uploads/2012/04/joy-of-tech.png)

------
d3ckard
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.

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

------
ranit
> 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.

------
anotherhacker
Don't blame Apple, blame the tax laws.

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

~~~
k-mcgrady
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.

~~~
Sk1pp
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.

~~~
k-mcgrady
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.

------
bluecalm
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.

------
draw_down
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?

------
yyyuuu
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?

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

------
sydney6
Could someone please explain why this isn't on the top of the front page
anymore?

~~~
detaro
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)

~~~
sydney6
Thank you. I always thought it was somehow only about a correlation between
submission time and vote count.

------
julianozen
Designed by Apple in Ireland

------
chinathrow
Why did this fall off of the startpage?

------
cheriot
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.

------
gadders
With a bit of luck this will trigger an Irexit.

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

------
flexie
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.

"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."

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.

~~~
tobltobs
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.

------
somenomadicguy
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.

~~~
bertil
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.

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

~~~
leoc
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.

------
jbmorgado
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.

------
perseusprime11
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.

~~~
ff10
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?

~~~
perseusprime11
Aren't the core of it's operations incorporated in U.S?

------
PhilipA
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.

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

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

~~~
mangeletti
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.

~~~
snsr
It is absolutely relevant.

