Apple Could Owe More Than $8 Billion in European Tax Probe

Apple could owe more than $8 billion in back taxes if the European Commission finds issue with the iPhone maker’s corporate tax policies in Ireland, according to analysis by Bloomberg Intelligence.

Apple is one of several multinational corporations that have been scrutinized for corporate tax avoidance in Europe over the past few years. The European Commission began Apple’s tax probe in June 2014, and formally accused the iPhone maker of receiving illegal state aid from Ireland three months later.

The company’s $64.1 billion in profit generated from 2004 to 2012 could be subject to a 12.5% tax rate, compared to its current foreign tax rate of about 1.8%, depending on the outcome of the investigation. A decision in the probe is expected in Brussels by March, possibly after the 2016 Irish election.

Apple’s tax breakdown in Ireland (Image: Bloomberg Intelligence)

Apple operates multiple subsidiary companies in Ireland to pay significantly less tax outside the U.S., where it earns about 55% of its revenue. Apple continues to deny any wrongdoing, and both the company and Ireland vow to take the European Commission to court over any negative verdict.

Last month, Apple agreed to pay 318 million euros in Italy to settle an investigation that accused the company of booking profits generated in Italy through an Irish subsidiary, in an effort to lower its taxable income base and save 879 million euros between 2008 and 2013. Italian regulators concluded that tax probe in March.

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Tags: corporate tax, European Commission, Ireland
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Tim Cook Calls Apple’s Tax Avoidance Accusations ‘Total Political Crap’

60 Minutes has shared a preview of Tim Cook’s latest interview with journalist Charlie Rose, in which the Apple CEO emphatically counters the idea that Apple has created elaborate schemes to pay little or no U.S. corporate taxes on its overseas revenue.

Cook described the tax avoidance accusations as „total political crap,“ and deflected blame on the U.S. tax code for being far outdated. He added that repatriating the money in the U.S. is not „a reasonable thing to do“ due to high corporate tax rates.

Rose: You also have more money overseas probably than any other American company. […] Why don’t you bring that home?

Cook: “It would cost me 40% to bring it home, and I don’t think that’s a reasonable thing to do. This is a tax code that was made for the industrial age, not the digital age. It’s backwards. It’s awful for America. It should have been fixed many years ago. It’s past time to get it done.”

Rose: Here’s what they concluded: “Apple is engaged in a sophisticated scheme to pay little or no corporate taxes on $74 billion in revenue held overseas.”

Cook: “That is total political crap. There is no truth behind it. Apple pays every tax dollar we owe.“

Apple’s tax policies have been closely investigated over the past few years in Europe. Earlier this year, for example, Italian regulators accused Apple of booking profits generated in the country through an Irish subsidiary in an effort to lower its taxable income base and save nearly 900 million euros from 2008 through 2013. The investigation was completed in March 2015.

The European Commission began an investigation of Apple’s tax policies in June 2014, and the Brussels-based executive body formally accused the company of receiving illegal state aid from Ireland in September 2014. The commission has since requested more information from Apple, likely delaying a decision in the tax probe until at least after the Irish elections in early 2016.

Apple is said to utilize multiple foreign subsidiaries in Ireland to move around overseas money, which Cook says accounts for two-thirds of Apple’s revenue, without being subject to high corporate tax rates in the U.S. and elsewhere. Apple has consistently denied any wrongdoing, and Ireland vows to take the European Commission to court over any negative ruling.

Cook’s wide-ranging interview will also touch upon encryption technology and manufacturing products in China. In the same episode, Rose will also offer a rare inside look at Jony Ive’s „secret design studio“ at Apple’s headquarters in Cupertino, California. 60 Minutes airs on CBS this Sunday, December 20 at 7:30 p.m. Eastern Time and 7 p.m. Pacific Time.

Note: Due to the political nature of the discussion regarding this topic, the discussion thread is located in our Politics, Religion, Social Issues forum. All forum members and site visitors are welcome to read and follow the thread, but posting is limited to forum members with at least 100 posts.

Tags: Tim Cook, CBS, corporate tax, Charlie Rose, 60 Minutes
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European Probe of Apple’s Irish Tax Policies Extended to 2016

A decision in the European Commission probe of Ireland’s alleged „sweetheart tax deal“ with Apple will likely be delayed until after the Irish elections in early 2016, as Financial Times reports the executive cabinet has now requested supplementary questionnaires in the lengthy investigation.

The European Commission began Apple’s Irish tax probe in June 2014, and the Brussels-based executive body formally accused the iPhone maker of receiving illegal state aid from Ireland in September 2014. A decision was originally expected earlier this year, but the additional information requested will likely cause further delays.

Apple’s tax policies have been scrutinized on numerous occasions over the past three years, as the company is said to utilize multiple subsidiary companies located in the Irish city of Cork to move money around without significant tax penalties. Apple continues to deny any wrongdoing, and Ireland vows to take the European Commission to court over any negative ruling, according to the report.

Apple’s Irish tax probe is part of a larger crackdown by the European Commission on possible corporate tax avoidance in EU countries. Earlier this month, the commission reportedly accused McDonald’s of „benefiting from arrangements that allowed it to pay no tax on European royalties in Luxembourg,“ and Fiat and Starbucks were ordered in October to repay up to €30 million in back taxes.

Tags: Apple, European Union, corporate tax, European Commission, Ireland
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Apple must wait until 2016 for tax break verdict

Having previously said that he expected to receive the European Commission’s verdict on Apple’s Irish tax arrangements by Christmas, Ireland’s Finance Minister Michael Noonan now claims that an announcement is likely to be delayed util next year. The delay in the long-running investigation is the result of regulators asking for additional information from the Irish government, which will […]

(via Cult of Mac – Tech and culture through an Apple lens)


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EU Inquiry Finds No Evidence Apple Colluded With Record Labels to End Freemium Music

The European Commission has failed to find evidence that Apple conspired with record labels to put a stop to free music streaming services, reports Re/code, citing sources with knowledge of the investigation.

The European Commission spoke with multiple digital music services and record labels, but was not able to find evidence of illegal activity, putting an end to the probe. Investigators’ „files will remain open,“ however, as Spotify continues with licensing talks with major labels.

European regulators began scrutinizing Apple’s discussions with record labels in April, over concerns Apple would use its influence to persuade music companies to put an end to free ad-supported music services such as Spotify. Apple Music, unlike Spotify, does not offer a free listening tier.

Rumors later suggested Apple was indeed leveraging its power in the music industry to push record labels to stop offering licensing options for freemium music tiers, leading to investigations by the U.S. Department of Justice and the Federal Trade Commission, both of which are ongoing.

According to Re/code‘s sources, while the European Commission has found no evidence of collusion between Apple and record labels, it has also launched a separate investigation into Apple’s App Store policies concerning competing music services.

Separately, the EU has asked Spotify and other music streaming services for information pertaining to Apple’s mobile App Store, according to people with knowledge of the situation. Regulators are seeking information on the restrictions Apple places on apps offered through the store.

Apple’s App Store policies are also currently being looked at by the U.S. Federal Trade Commission, due to the 30 percent fee the company collects on app and subscription revenue. The FTC is concerned that Apple’s fee and its policies, such as a ban on links to outside stores, are illegal under antitrust law.



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FTC Also Investigating Apple’s Upcoming Music Streaming Service

The Federal Trade Commission is investigating Apple’s efforts to set up deals with record labels as it prepares to launch its new music streaming service, a rebranded version of Beats Music, according to Bloomberg. This would make the FTC the third government body to look into the new music service after the U. S. Department of Justice and European Commission.

The FTC’s investigators, still in the early stages, of their inquiry, are asking whether Apple’s efforts will change the way music labels work with other streaming services, for example curtailing ad-supported music and pushing more songs into paid tiers of service at higher rates, according to one of the people.

A couple days ago, a report emerged that Apple was utilizing its power within the music industry to push record labels to stop licensing freemium tiers offered by Spotify and other music services. The Cupertino company also reportedly offered to pay YouTube’s licensing fee to Universal Music Group if the label stopped allowing its music on the website, which is a popular destination for music videos.

The FTC is speaking to multiple record labels about Apple’s practices. However, music-industry executives told Bloomberg that Apple has made no such demands. Similarly, the Department of Justice is also interviewing high-ranking music executives about Apple’s practices. The European Commission is doing the same, concerned that Apple will use its size to force record labels to stop supporting freemium music tiers.

Apple’s Beats-based music streaming service will reportedly launch in June at WWDC, though the company is still finalizing several streaming deals. It will reportedly be deeply integrated into iTunes for Mac and the stock music app for iPhone, iPad and iPod touch while apps will also be available for Apple TV and Android, and Apple is aiming to offer exclusive content in the hopes of drawing people from other services. Last month, the company seeded iOS 8.4 beta to developers with a redesigned Music app featuring a new MiniPlayer, a redesigned look for „Now Playing“, and more.




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EU launches formal antitrust investigation into Android

After years of examining the Android operating system, the European Commission has launched a formal antitrust investigation into claims that Google unfairly forces competitors into bundling its own apps on their devices. “The investigation will focus on whether Google has entered…Read more ›



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Apple’s music streaming plans are already under antitrust scrutiny

Apple’s not even announced its rebranded Beats Music streaming rival to Spotify yet, and already it’s under investigation from regulators. According to a new report, multiple record labels and digital music companies have been contacted for questioning by the European…Read more ›



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