EU Takes a Bite Out of Apple: Brussels ordered APPLE to repay £11billion – the biggest tax bill in European history — Apple says it Will Cut Jobs in Europe

Apple holds Europe to ransom: Tech giant threatens to cut jobs in EU after Brussels orders it to pay back £11BILLION in tax over ‘illegal’ sweetheart deal with Irish government 

  • £11billion penalty issued today is 40 times higher than previous EU record
  • Ireland will be asked to claw back billions but will refuse cash and appeal
  • Apple paid as little as 0.005% tax a year on its profits outside the US
  • In 2011 it made $22bn profits but just 50m euros was taxed in Ireland
  • European Commission says Irish sales HQ  had no staff and no offices
  • McDonald’s  and Amazon could be next with EU rulings due in the next year

Apple has already threatened to cut jobs after Brussels ordered it to repay £11billion – the biggest tax bill in European history.

The European Commission’s three-year investigation into Apple’s sweetheart deal with Ireland has found it amounted to illegal state aid.

In a damning report published today it emerged the tech giant paid as little as 0.005 per cent tax by funnelling worldwide profits through a ‘so-called headquarters’ in Ireland with no staff or premises.

In 2011 Apple’s profits outside the US were 22 billion US dollars but Ireland agreed that only about 50 million euros was considered taxable.

The £11billion (13billion euro) tax bill will not be difficult for the company to pay because it has amassed a huge £120billion offshore cash fund and last year made £35billion – the biggest profit in corporate history.

But Apple will appeal and the tech giant’s CEO Tim Cook, who previously called the probe ‘political c**p’, is threatening EU job losses if they don’t back down.

Ireland has also already rejected the chance to recoup £11billion in tax, equivalent to more than £2,000 for each of their 4.5million population.

Big bill: Apple, which has a base in Cork, pictured, must repay £11billion (13billion euros) in unpaid tax because the EU says its sweetheart tax deal with Ireland amounted to state aid

Big bill: Apple, which has a base in Cork, pictured, must repay £11billion (13billion euros) in unpaid tax because the EU says its sweetheart tax deal with Ireland amounted to state aid

Damning: Competition commissioner Margrethe Vestager unveiled a 130-page report into Apple's Irish tax affairs today and said it allowed Apple to pay as little as 0.005% tax

Damning: Competition commissioner Margrethe Vestager unveiled a 130-page report into Apple’s Irish tax affairs today and said it allowed Apple to pay as little as 0.005% tax

 Between 2003 and 2014 it paid a rock bottom Irish tax rate on most of its profits outside the US before sending it to a tax haven where it paid no tax at all. It has more than £120billion stashed in offshore accounts.

EU Competition Commissioner Margrethe Vestager said: ‘Member states cannot give tax benefits to selected companies-this is illegal under EU state aid rules.’

EU Competition Commissioner Margrethe Vestager said: ‘Member states cannot give tax benefits to selected companies-this is illegal under EU state aid rules.’

HOW APPLE’S £11BN TAX BILL WILL BARELY MAKE A DENT

Annual revenue: $650bn (£428.5 bn)

Annual profits: $53.4bn (£35bn)

Offshore cash fund: $53.4bn (£35bn)

Sales: 34,000 iPhones every hour

The EC says its Irish arrangements allowed them to pay just 500 euros in tax on every one million euros they made.

But in a hard-hitting defence of its tax planning and corporate structure, Apple warned of the ramifications for future investment in Europe, where it employs 22,000 people.

‘The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and up-end the international tax system in the process,’ Apple said.

‘The Commission’s case is not about how much Apple pays in taxes, it’s about which government collects the money.

‘It will have a profound and harmful effect on investment and job creation in Europe.

‘Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned.’

Today’s  huge penalty, imposed after a three-year investigation into the firm’s tax affairs, is 40 times bigger than any tax demand issued by the European Commission.

Ireland will today be ordered to claw back billions in backdated tax – but extraordinarily the government will appeal the decision and reject the money.

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.

Ireland’s Finance Minister Michael Noonan said he profoundly disagreed with the verdict and denied doing ‘deals’ with taxpayers.

‘Our tax system is founded on the strict application of the law … without exception,’ he said.

He added that it was necessary to fight the verdict in the courts ‘to defend the integrity of our tax system, to provide tax certainty to business, and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation’.

‘It is important that we send a strong message that Ireland remains an attractive and stable location of choice for long-term substantive investment,’ he said.

In the firing line: Tim Cook, Apple's chief executive, Hillary Clinton campaign chairman John Podesta last week, has previously called the investigation 'political crap' and has said his company will appeal against any ruling.

In the firing line: Tim Cook, Apple’s chief executive, Hillary Clinton campaign chairman John Podesta last week, has previously called the investigation ‘political crap’ and has said his company will appeal against any ruling.

The case is one of the most high-profile in the fight to redraw boundaries on aggressive tax avoidance, an issue which has put the EU at odds with the US government.

APPLE’S ROCK BOTTOM TAX BILL: HOW DOES IT DO IT?

Apple’s tax bill is so low thanks to the movement of profits to subsidiaries in Ireland and a ‘head office’ within Apple Sales International which was not based in any country, had no employees or premises and only had occasional board meetings.

The European Commission probe revealed only a small percentage of Apple Sales International’s profits were taxed in Ireland and the rest was not taxed anywhere.

The commissioner highlighted 2011, when Apple Sales International recorded profits of 22 billion US dollars.

Under the tax arrangement it had in Ireland, only about 50 million euro was considered taxable, leaving 15.95 billion euro of profits untaxed, the inquiry found.

That year, Apple Sales International paid less than 10 million euro of corporate tax in Ireland – an effective tax rate of about 0.05% despite the headline rate being 12.5%.

The Commission said that, in subsequent years, Apple Sales International’s recorded profits continued to increase but the profits considered taxable in Ireland under the terms of the tax ruling did not.

The arrangement was terminated last year when Apple Sales International and Apple Operations Europe changed their structures, the inquiry found.

The companies hold the rights to use Apple’s intellectual property to sell and manufacture its products outside North and South America and make yearly payments to Apple in the US for research and development.

The Commission found these expenses were deducted from the profits recorded by Apple Sales International and Apple Operations Europe in Ireland each year.

It also revealed that Apple set up its sales operations in Europe in such a way that customers were buying products from Apple Sales International in Ireland rather than from the shops that physically sold them. This way Apple recorded all sales and associated profits in Ireland.

Ms Vestager found two tax rulings issued by Ireland to Apple which she said substantially and artificially lowered the tax paid by the multinational.

She said the arrangements to establish the taxable profits for two Irish incorporated companies of the Apple group – Apple Sales International and Apple Operations Europe – did not reflect economic reality.

The commissioner said almost all sales profits recorded by the two companies were internally attributed to a ‘head office’ which only existed on paper and could not have generated such profits.

Her inquiry found the profits were not subject to tax anywhere.

Apple has had a base in Ireland since 1980, long before it became the global brand it is today thanks to its iPhones, iPads and App Store.

It employs around 5,500 people in the country, with its biggest operations in Cork.

Ms Vestager’s ruling also comes just a week before Apple’s biggest product launch of the year, with the iPhone 7 and a new version of the Apple Watch to be unveiled in San Francisco.

Her office’s investigations have also targeted aggressive tax planning by Starbucks and Fiat, both of which are appealing against rulings ordering them to pay back taxes to the Netherlands and Luxembourg.

Ms Vestager dismissed threatened court challenges from Apple and the Irish Government, saying she had a ‘very concrete case’.

The Commission said in a statement: ‘Ireland must now recover the unpaid taxes in Ireland from Apple for the years 2003 to 2014 of up to 13 billion euros ($14.5 billion), plus interest.’

The EC said the tax bill could be reduced if other countries also pursued more tax from Apple themselves.

Apple has been probed for the way it channels profits made across Europe through a subsidiary company in Ireland. It is claimed the firm was able to pay 1 per cent tax on its European sales for two years, instead of the 12.5 per cent rate on profits that is typically used in Ireland.

The lower tax bills came following two tax assessments by authorities in Ireland.

This, the Commission has asserted, effectively allowed Apple to receive state aid because it was benefiting from a financial advantage other firms were not able to receive.

Low bill: In 2011 Apple's international profits generated by iPhones, iPads and Macs was 22 billion US dollars, but under the tax arrangement it had in Ireland, only about 50 million euros was considered taxable

Low bill: In 2011 Apple’s international profits generated by iPhones, iPads and Macs was 22 billion US dollars, but under the tax arrangement it had in Ireland, only about 50 million euros was considered taxable

Fianna Fáil finance spokesman Michael McGrath said yesterday that his party would read the ruling before making a decision but he added that Apple will soon employ close to 6,000 people in Cork so the company was not ‘a brass-plate operation where monies are coming into Ireland through some intricate funding system’.

He said: ‘This is a real operation, but the question is have they been treated fairly and consistently with other companies in relation to Ireland’s corporation tax. We have been reassured so far that they have, so that remains our position and we will read the report very carefully and the Government response.’ But Sinn Féin said an appeal would be ‘farcical’.

MEP Matt Carthy said: ‘The majority of Irish citizens are looking on with disgust as Fine Gael and Fianna Fáil go to such great lengths to facilitate a multinational corporation to avoid paying its fair share of tax.

‘Government and Fianna Fáil representatives have lined up in recent days to assure Apple and other multinationals that they will immediately challenge any ruling against the Appletax deal in the European Court of Justice.

‘They refuse to even wait to read the content of the ruling before announcing such assurances.’ In a similar ruling against the Netherlands, the commission previously required the coffee chain Starbucks to pay up to €30million in back taxes.

Eoghan Murphy, junior finance minister in Ireland, said: ‘We don’t believe we gave any state aid to Apple. It’s in the national interest that we defend our international reputation in this regard.’

Investment bank JP Morgan has previously estimated the total cost for Apple could be as much as £15billion.

Barrister Jolyon Maugham QC of Devereux Chambers said: ‘This decision jeopardises Ireland’s business model as a country that attracts businesses to be based there on a basis of lower tax. This is an example of political activism by the commissioner. The commissioner is trying to make sure the single market function is maintained and member states do not win business at the cost of others’ tax base.

‘There is a technical point where tax incentives stop and state aid begins.’

Apple employs about 5,500 people in Ireland, and has argued that its tax bill reflects its operations of procurement, distribution and sales.

Ireland and Apple can now appeal these tax bills. Both have denied any wrongdoing.

The commission investigation relates to two rulings given to Apple in 1991 and 2007.

APPLE’S £11BILLION TAX BILL IS THE BIGGEST IN EU HISTORY – AND MCDONALDS AND AMAZON COULD NOW BE NEXT

What sort of arrangement did Apple have with Irish authorities?

The EU Commission’s investigation was launched in 2014 under the suspicion that Irish authorities were purposefully miscalculating and ultimately underestimating Apple’s taxable profit on products like iPhone and iPads.

The multinational corporation is said to have secured a tax advantage not available to other companies, which ultimately amounted to state aid and breached EU antitrust law. Both Irish authorities and Apple have repeatedly denied breaching these rules.

Why does the EU’s ruling on Apple matter?

The sheer size of the case is drawing attention. In October, the EU Commission ordered Starbucks and Fiat to pay 20 to 30 million euro for benefiting from so-called sweetheart tax deals in the Netherlands and Luxembourg.

That is compared with the latest ruling, which is calling on Ireland to recoup 13 billion euro (£11 billion) in unpaid taxes from Apple.

The case has also irked the US Treasury, which earlier this month published a paper accusing EU authorities of unfairly targeting US companies in antitrust probes.

Lewis Crofts, global chief correspondent at antitrust trade publication Mlex, explained that the US is worried that Apple’s cash won’t make it back to the US. ‘They say ‘it’s our money, you have no right to take it’. That’s the big fight.’

Will Apple pay?

Apple is expected to appeal against the ruling in European General Courts and take it to the Court of Justice if the first appeal fails.

While the ruling would ultimately benefit Irish government coffers, Mr Crofts says Ireland will also appeal against the EU Commission’s decision.

The irony is that there will be domestic pressure to accept this money, but what Ireland knows is that, in this instance, the decision makes it much less attractive to invest in,’ Mr Crofts said.

Which companies will be targeted next?

A case this size is unlikely to come up again, but there are other US companies in the firing line.

EU authorities are currently investigating Amazon and McDonald’s for similar tax deals it deems illegal. Those rulings could be doled out in the next six to 12 months.

The iPhone 7 is coming in September: Apple reveals launch event and hints it will have a radical dual lens camera

Apple has sent out invites for a September 7th event where it is expected to unveil the iPhone 7.

The firm sent the cryptic invite today – and some Apple watchers say it reveals what appears to be the much rumoured double camera lens of its upcoming handset.

The event will be held in San Francisco, and could also see the release of new MacBooks and a second generation Apple watch.

Scroll down for video 

The event will be held in San Francisco at the Bill Graham Civic Auditorium, and could also see the release of new MacBooks and a second generation Apple watch.

The event will be held in San Francisco at the Bill Graham Civic Auditorium, and could also see the release of new MacBooks and a second generation Apple watch.

Apple watchers say this part of the invite reveals what appears to be the much rumoured double camera lens of its upcoming handset.

Apple watchers say this part of the invite reveals what appears to be the much rumoured double camera lens of its upcoming handset.

nother rumor regarding Apple’s much-awaited iPhone 7 has surfaced.

According to a Bloomberg source, the next-generation versions of the iPhone are due to debut on September 7.

This information coincides with news from last month that pre-orders for the new handsets will begin on September 9. 

WHAT WE KNOW ABOUT THE IPHONE 7

According to several leaks, the iPhone 7 will be equipped with a dual-camera system capable of capturing brighter photos with more detail and cameras that can merge two images into one.

Users will also have to throw out their white iconic headphones, as there will not be a headphone jack – sources say it will be replaced by a second speaker.

The home button will be designed to read different inputs, using Force Touch technology

And the iPhone 7 and 7 Plus will have the same 4.7-inch and 5.5-inc screens as their predecessors.

Speaking to Bloomberg about the MacBook Pros, a source said these laptops ‘aren’t likely to debut at an event currently scheduled for September 7 to introduce next-generation versions of the iPhone’.

Forbes was the first to spot this leaked information from Mark Gurman, who has made a name for himself with accurate Apple leaks for 9to5Mac and is now a journalist for Bloomberg.

This comes just a month after Evan Blass tweeted Apple owners should get ready to place their pre-orders on September 9.

Blass has also made claims that the iPhone 7 line should hit shelves as soon as September 16.

This statement is the second time this week that Bloomberg released explicit news about the design of Apple’s next-generation iPhones.

Earlier this week, Bloomberg release information that suggests next month’s iPhone is expected to be much different from what is in your hand.

Although this could be another one of the many rumors, September 7 coincides with Evan Blass’s tweet from last month that reveals pre-orders for the iPhone 7 will start on September 9.

Although this could be another one of the many rumors, September 7 coincides with Evan Blass’s tweet from last month that reveals pre-orders for the iPhone 7 will start on September 9.

The larger iPhone 7 will be equipped with a dual-camera system designed to capture brighter photos with more detail.

This upgrade is just one of many rumors surrounding the iPhone 7 designs, as both models are set to have a home button that reads different inputs, but will be missing the traditional headphone jack. 

‘The standout features will be a dual-camera system on the larger iPhone, a re-engineered home button that responds to pressure with a vibrating sensation rather than a true physical click and the removal of the devices’ headphone jack, said the people, who didn’t want to be identified discussing unannounced features,’ reports Mark Gurman from Bloomberg.

DailyMail.com has contacted Apple for comment and has yet to hear a response.

Although the handsets may be designed with new features, display sizes are not expected to change.

The iPhone 7 and 7 Plus will have the same 4.7-inch and 5.5-inch screens as their predecessors.

Sources also told Bloomberg that Apple removed the two innermost antenna lines that line the back of the current phones.

WHY WOULD APPLE DITCH THE HEADPHONE JACK?

Getting rid of the headphone jack would help Apple shrink the iPhone 7’s thickness considerably.

Its latest smartphone, the Phone 6s, is 7.1 mm (0.27) thick but removing the 3.5mm jack could drop this by a further by one mm (0.04 in).

Such a shift would also mean larger, stereo headphones using an internal battery would be able to draw power directly from the iPhone – or other devices, if the change is enforced across the Apple board.

Elsewhere, Lightning-based headphones would experience less ‘crosstalk’, or signal interference.

The dual camera has been a long running rumor for the iPhone 7 and just a few months ago, a patent surfaced that illustrates this technology – sending the internet into a frenzy over the iPhone 7 Plus having ‘superzoom’ capabilities.

According to Bloomberg’s sources, who claim to have used a prototype of the highly anticipated devices, this new system will snap brighter pictures in low-light environments and with more detail.

However, the dual-camera system will only be available to those who dish out the extra bucks for the larger iPhone.

The lenses, which each snap colour differently, will merge together to make one detailed image.

This technology would also allow users to zoom in on the object, place or person with more clarity, sources said.

The home button has not been discussed too much this year, but it seems Apple could have big plans for this mechanism in the new models.

‘Current home buttons are switches that physically press into the phone, but the new models will have a pressure-sensitive button that employs so-called haptic feedback,’ according to Bloomberg’s’ sources.

This technology is expected to be similar to the trackpads implemented in the latest MacBook line and what was reported by 9TO5Mac earlier this year.

Sources told the Ben Lovejoy that although the home button will still be a physical mechanism, it will ‘feature haptic feedback to simulate a click using the same approach as Force Touch’ – which was a new addition to the iPhone 6 line.

And the rumor that can be heard echoing all over the internet might actually be  true.

Numerous leaks and sources have surfaced over the past year reveaingl a major change in the the upcoming iPhones, no headphone jack, which Bloomberg says will be replaced with a second speaker.

WHAT DOES THE INTERNET SAY ABOUT THE IPHONE7?

One rumor has been debunked, which suggest there will be a single speaker instead of the dual speaker setup users had hoped for.

But one thing that has stayed consistent is the dimension of both models, which were first revealed last year.

According to reports, the iPhone 7 will have a 3,100mAh battery, which is 12.5 percent bigger than the iPhone 6S Plus.

But although your phone will stay powered longer, it could also mean the casing around it could be thicker.

What could be very exciting for iOS users is that Apple might be fixing the annoying ‘there is not enough available storage…’ issue with a 256GB this year.

Another annoying feature that might be on Apple’s to-do list is strengthening the phone’s water-resistance.

This doesn’t say the phone will be water-proof, but it could make a world of a difference if you drop your phone in liquid.

Users will also have to make use of connectivity using Bluetooth and the charging port to setup wireless headphones.

Another rumor hit the internet just last month that put an even bigger twist on the mystery, claiming next month’s Apple smartphones will not be called the iPhone 7 at all.

Instead, it will be called the iPhone 6SE – leaving the iPhone 7 for next year, when apple is expected to introduce a major overhaul of its iconic handset.

The report from Apfelpage comes from Chinese supply chain sources, who claim to have have seen packaging and labeling that indicates the new phone will be called the ‘iPhone 6SE’.

‘Given the more-iterative changes and similar design, it is not out of the question for Apple to brand the new iPhone as a continuation of the iPhone 6 line,’ says 9to5Mac.

Read more: http://www.dailymail.co.uk/news/article-3764393/Apple-faces-bill-billions-Irish-tax-affairs-EU-rules-company-effectively-received-state-aid.html#ixzz4Ip1hZtmF
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