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Apple Appeals EU Tax Ruling: What Investors Should Know
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On Monday, tech giant Apple Inc. (AAPL - Free Report) took a legal stand against European Union competition authorities, formally appealing the EU’s August decision ordering the iPhone maker to pay back 13 billion euros, or $13.6 billion, in unpaid taxes.
The European Commission had previously accused Apple of accepting illegal state aid in addition to its tax arrangements in Ireland, where its European headquarters are located. Ireland contested the original decision against Apple, saying the EU was interfering with its sovereignty.
Even the U.S. Treasury said the EU was making itself a “supra-national tax authority” that may jeopardize any future global tax reform efforts.
"It's been clear since the start of this case there was a pre-determined outcome. The Commission took unilateral action and retroactively changed the rules, disregarding decades of Irish tax law, US tax law, as well as global consensus on tax policy, that everyone has relied on," Apple said.
The Brussels-based Commission, however, made a filing of its own, disclosing more details of a two-year investigation and reiterating its stance that Ireland offered preferential tax treatment to Apple, which is illegal in the EU.
It also pointed out specific Irish tax practices, like the matter of Apple paying taxes on the profits its reported in Ireland and sending money back to the U.S. to pay for research and development. An arrangement like this could be seen as a “cost-sharing agreement,” and could change Apple’s tax status in Ireland.
Margarethe Vestager, the EU’s commissioner for competition, argued that the two tax rulings significantly reduced the amount of taxes paid by Apple since 1991. Apple is apparently only paying a corporate tax rate of just 0.05% in Ireland. Ms. Vestager has often argued that these special tax treatments harm companies that do not receive such advantages.
According to Bloomberg, Apple will officially have to pay back the takes within a matter of weeks, though the money will be held in escrow. The appeals process could take several years to resolve.
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Apple Appeals EU Tax Ruling: What Investors Should Know
On Monday, tech giant Apple Inc. (AAPL - Free Report) took a legal stand against European Union competition authorities, formally appealing the EU’s August decision ordering the iPhone maker to pay back 13 billion euros, or $13.6 billion, in unpaid taxes.
The European Commission had previously accused Apple of accepting illegal state aid in addition to its tax arrangements in Ireland, where its European headquarters are located. Ireland contested the original decision against Apple, saying the EU was interfering with its sovereignty.
Even the U.S. Treasury said the EU was making itself a “supra-national tax authority” that may jeopardize any future global tax reform efforts.
"It's been clear since the start of this case there was a pre-determined outcome. The Commission took unilateral action and retroactively changed the rules, disregarding decades of Irish tax law, US tax law, as well as global consensus on tax policy, that everyone has relied on," Apple said.
The Brussels-based Commission, however, made a filing of its own, disclosing more details of a two-year investigation and reiterating its stance that Ireland offered preferential tax treatment to Apple, which is illegal in the EU.
It also pointed out specific Irish tax practices, like the matter of Apple paying taxes on the profits its reported in Ireland and sending money back to the U.S. to pay for research and development. An arrangement like this could be seen as a “cost-sharing agreement,” and could change Apple’s tax status in Ireland.
Margarethe Vestager, the EU’s commissioner for competition, argued that the two tax rulings significantly reduced the amount of taxes paid by Apple since 1991. Apple is apparently only paying a corporate tax rate of just 0.05% in Ireland. Ms. Vestager has often argued that these special tax treatments harm companies that do not receive such advantages.
According to Bloomberg, Apple will officially have to pay back the takes within a matter of weeks, though the money will be held in escrow. The appeals process could take several years to resolve.
Stocks that Aren't in the News…Yet
You are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. Many of these companies are almost unheard of by the general public and just starting to get noticed by Wall Street. They have been pinpointed by the Zacks system that nearly tripled the market from 1988 through 2015, with a stellar average gain of +26% per year. See these high-potential stocks now >>