The best defense is counter-attack. Ordered by the european Commission, on 30 August, to repay Ireland for the tidy sum of € 13 billion, Apple’s response. In an interview with Reuters, the maker of the iPhone announced that he was going to enter this week the general court of the Court of justice of the european Union. In the arms of iron, that undertakes, Apple will not fail to put forward the arguments brandis by the irish government to justify the tax regime granted to the multinational in california. The department of Finance irish judge that, in this case, the “the Commission has overstepped its powers and violated its sovereignty” about its rules of corporate income tax.
Rescripts tax
The executive in brussels and its dreaded commissioner, Competition, Danish Margrethe Vestager, accuses Apple in a document of 130 pages fully put online on its website of having violated eu law by developing a mounting tax in Ireland is based on two “tax rulings”. These rescripts tax consist of agreements between a State and a company setting out in advance the tax system that will benefit the latter. In the case of Apple, validated by the inland revenue, irish, apple is rapatriait in a first time the quasi-entirety of its profits in europe. A legal practice so far, that the services of the competition of Brussels do not dispute.
On the other hand, the Commission accuses Apple of having broken out part of the profits into multiple subsidiaries to be taxed in Ireland on a small part of them. The meager profits transferred in two subsidiaries to the laws of ireland were taxed at 12.5%, the tax rate in force in Ireland, which is one of the lowest in the EU and has allowed the “celtic tiger” to attract companies which have located their european headquarters.
0,005% tax in 2014
But the vast majority of these are, in reality, were assigned to both “pseudo-seats”, “with no employees or real activity”, according to Brussels, and exempt from taxation by the republic of Ireland. Apple will be able to pay in Ireland an imposition for an average of less than 1% annual. In 2014, it will not even been that of 0.005% ! A practice illegal according to Brussels, considered a “State aid” , and of a nature to distort competition.
Apple rejects block this interpretation. According to the high-tech manufacturer, he was given no preferential treatment in the island, but simply applied the law then in force in the “companies that are not resident”. This provision ultra-favourable removed in 2015 allowed to undertakings established on irish soil, but directed and controlled from another country, to pay their taxes than pay in Ireland. Except that Apple has not repatriated these earnings in the United States but housed in subsidiaries located in tax havens where would sleep a war chest of $ 230 billion (220 billion euros, approximately) in the form of cash or other investments. A technique known as “double Irish” or “sandwich irish”, revealed by the news agency Bloomberg at the end of a long investigation.
from the moment this law applied to all foreign companies in Ireland, Apple considers that there has been no State aid selective or competition distorted. A line of defense which is also that of Ireland. For Brussels, this argument does not hold : in particular, gains from sales in the european Union and must, therefore, give rise to the payment of taxes in Europe and not in the United States. A reasoning that denies the Apple, for which it is in California that is created the greater part of the value of its products in its laboratories of R&D in Silicon Valley. Ireland, where Apple account, all the same, 6,000 employees in the city of Cork – not to mention the thousands of induced jobs – is first of all a platform of logistics and sales planning in Europe and only account for a small part of the colossal profits made by Apple.
Donald Trump in ambush
“This is not a case that aims to determine whether Apple should pay more taxes, but where he must pay for them”, explained Luca Maestri, its chief financial officer, very tucked up against Brussels, in an interview with Echoes. Apple prefers playing shows in the meantime, like many other american multinationals that the United States drop their tax rate on profits, set at 35%. A rate that is among the strongest in the world – with France. The election of Donald Trump could make it easier for him, even though its CEO, Tim Cook, had taken to openly party for his rival Hillary Clinton during the presidential campaign, as nearly all of the Silicon Valley.
The president-elect announced his intention not to impose a tax of up to 10% 2 434 billion of profits of american multinationals invested abroad, which would be repatriated to the United States. A figure that has doubled since 2008. Trump, who has recently received 13 of the greatest figures of the Tech american at the Trump Tower (including Tim Cook), intends to bury the axe of war and also promised to drastically reduce taxes on profits overseas. A speech that contrasts with that of the republican candidate during the campaign, when it threatened the Apple of taxing – or block – all the iPhone returning to the u.s. if the giant of Cupertino no relocalisait not the entirety of its production. Cook has explained multiple times that he “would love” to bring back this money to the United States but that it was unrealistic in the state.“When we repatriate, we will pay 35% in federal income tax, but also of local taxes, by an average of 5%, which makes 40%, he explained. We will get not so much that there will not be a more reasonable rate.”
The european Commission, which was concerned that an arrangement on her back between the u.s. and Apple has taken the lead : in the meantime whether the Court of justice of the EU will validate or not his decision to demand the repayment of $ 13 billion by Apple to the tax authorities of ireland, the american group is going to have to pay this sum on a blocked account. Not a question of allow themselves to be overtaken by Donald Trump who is eyeing him as the fortune of Apple.
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