Mike Wuerthele
Nearly a year after the initial declaration, Ireland is making ready to receive a $15.2 billion tax payment from Apple, and hold it in secure escrow until appeals end.
According to a report from Bloomberg, Apple and the Irish government are establishing a fund, and will jointly appoint a custodian to supervise the money. An assortment of appeals are pending, and are expected to take years to resolve.
Apple was supposed to have paid the bill in January, but appeals and a lack of a suitable escrow account have held up the process. It is still not known when the payment will be made.
The investigation into Apple's tax affairs in Ireland ended in August 2016, with the Commission claiming tax rates on Apple's European profits were illegally low, down to 0.005 percent in 2014 and 1 percent in 2003. Ireland was accused of granting "illegal tax benefits" to Apple, and had been "reverse engineered" on the fly to guarantee a minimal tax bill as time progressed.
In December, Apple CEO Tim Cook and other high-level executives were invited to Ireland to discuss the ruling and future action. Cook declined to attend, with Apple citing the legal complexity of the case behind his refusal, a move that Irish politicians considered to be a snub to the citizenry of the country.
Apple, Ireland, and reportedly the U.S. Government are all contesting the ruling, with the Irish government "fundamentally disagreeing" with the findings and resisting the back tax repayments. Apple claims the European Union "took unilateral action and changed the rules, disregarding decades of Irish tax law, U.S. Tax law, as well as global consensus on tax policy."
"The European Commission's case against Ireland has never been about how much Apple pays in taxes, it's about which government gets the money," said Apple spokesman Josh Rosenstock. "The United States government, the Irish government and Apple all agree we've paid our taxes according the law. Since virtually all of our research and development takes place in the United States, according to the law, we pay the majority of our taxes in the U.S."
Apple CEO Tim Cook has also gone on record in opposition to the ruling, and has amplified the company's position on repatriation of the overseas cash at the same time.
"We've said at 40 percent, we're not going to bring it back until there's a fair rate. There's no debate about it. Is that legal to do or not legal to do? It is legal to do. It is the current tax law," said Tim Cook after Lew's filing with the EU. "It's important for everyone to understand that the allegation made in the E.U. is that Ireland gave us a special deal. Ireland denies that."
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Charles Martin
Malcolm Owen
William Gallagher
Christine McKee
Wesley Hilliard
Andrew Orr
37 Comments
This seems extremely premature... Even if Ireland collects the money, any EU country that feels lost taxes to Ireland will be able to reclaim that money from Ireland and trust me, they will. As a result, even if Apple loses their appeal, which is not certain at this point given the verdict handled by French courts in favor of Google against the French government, that money is not staying in Ireland.
This is an escrow account. The money will stay in that account until all the appeals are exhausted. No one can claim any money from the account until the matter is fully settled.
There is a lot of damage control in the different comments from Apple representatives.
I particularly take issue with the line that Apple paid all taxes legally due.
I think few people doubt that, but one of the potentially most damaging claims from the investigation was that Apple supposedly decided how much was taxable in the first place and then duly paid all taxes on that amount in completely legal fashion.
So yes, what they are claiming is technically true, but behind that is the issue of companies deciding for themselves what to make available for taxation.
One would expect this kind of behaviour (which isn't limited to Apple) will change in the future in the EU as all the investigations conclude and rulings are made which will serve as the basis for new practices. Whether Apple is found to have received what amounts to state aid or not will be decided down the line, but the fact the investigation was formerly concluded and the summary made public has helped to shed more light on the inner workings of multi national companies.
Tim Cook attended different meetings in Ireland and Brussels with the EU team carrying out the investigation and knows first hand exactly what the case against Apple is based on. Some of those meetings were reportedly 'heated'.
With a little luck these kinds of investigations will lead to a fairer system in the future.
"According to a report from Bloomberg..."
How about a link to the Bloomberg piece in the article? AI is usually pretty good about including the link in the first paragraph, but I can't find it in this article. I want to read about how a nation couldn't figure out how to set up an escrow account in less than 7 months.