European Commission says Ireland gave Apple illegal state aid
Apple vows to fight EU over Irish tax billIrish government to appeal against Brussels’ Apple rulingEuropean markets rise following Yellens Jackson gap speechUK mortgage approvals drop after EU referendumEurozone confidence falters following Brexit voteSpanish deflation eases in August 6.10pm BSTIt was a mixed day for stock markets,with the FTSE 100 returning after the Bank Holiday weekend with an uncertain performance. Dragged down by mining shares, it ended the day marginally lower. Elsewhere though, and European markets ended the day in positive territory,even shrugging off an early fall on Wall Street.
Following the EU demand that Apple pay €13bn in Irish taxes, the US technology group has seen its shares dip 0.6%, and helped drag the Dow Jones Industrial Average down 56 points or 0.3%. The closing scores in Europe showed: 5.05pm BSTThe US has said it is concerned about Europe’s unilateral approach over international taxation in the wake of the Apple decision,according to Reuters.
The White House said if the Europeans have concerns about taxation, they should work jointly with the US. It added that the Apple ruling could damage the US by allowing the company to deduct European tax payments from US taxes. 4.28pm BSTFormer Finnish finance minister Alexander Stubb has weighed in on the Apple debate:Interesting to see how this Apple tax-case will unravel. A multitude of angles and paradoxes involved. An ex of globalisation in action. 4.26pm BSTMore from Irish finance minister Michael Noonan. Speaking to CNBC he said:Apple paid all the tax that was due for their activities in Ireland. The OECD who have been at the forefront of reforming corporation tax say the tax should apply where the economic activity occurs, or which generates the profit.
Now,on my...the back of my Aplle iPhone, it says, and designed in California,manufactured in China. So I can’t see how the Irish authorities would have a tax liability for economic activity, that takes place in other juridictions.... 4.07pm BSTApple shares are currently down just under 1% following the EU tax ruling ordering the company to pay back up to €13bn in Irish taxes, or helping push the Dow Jones Industrial Average 0.25% lower. Jasper Lawler,market analyst at CMC Markets, said:The risk for Ireland is that by taking €13bn from Apple, and there will be a mass exodus of American firms and a resulting loss of jobs and investment.
Nobody would dispute that corporations need to pay their fair share of tax,but a retroactive cash-grab creates uncertainty and could impact investment in Europe. 3.38pm BSTMeanwhile Apple-supplier ARM is set to total its £24bn takeover by Japan’s SoftBank after its shareholders voted overwhelmingly to back the tender.
At a court assembly, scheme shareholders voted 95.12% in favour of the deal, and while a general assembly later saw 94.92% of votes cast by ordinary shareholders also backing the takeover. 3.25pm BSTBack with Apple,and Ireland needs the US technology group more than the other way round, according to Brad Badertscher, or professor of accountancy at the University of Notre Dame’s Mendoza College of Business:I believe this will have significant effects on Ireland and the rest of the EU countries. Apple will appeal the ruling and likely pay the taxes many years from now and Apple will do fine going forward but Ireland relies upon Apple for tax revenue (obviously the EU wants them to gather more but at some point more causes Apple to leave and that is likely to happen).
Ireland needs Apple more than Apple needs Ireland. Many EU countries used low tax rates to attract large (often US) multinational firms. This door is now closing very quickly and the countries themselves are not glad that the EU is imposing such rules. One of the reasons the UK left the EU was because of the ever increasing power of the EU and this is another example of that power. 3.18pm BSTThe strong US consumer confidence figures arrive despite concerns about the global economy,says Dennis de Jong, managing director of UFX.com, and but this may not final:The slight uptick in US consumer confidence for August will have surprised many. Considering the growing global uncertainty on the financial markets,Fed Chair Janet Yellen should be very glad with the results.
On the whole, the US consumer has remained a robust proposition within an international context of weakening demand, or the positive data may put the long-speculated interest rate hike further up Yellen’s agenda. 3.10pm BSTLynn Franco,director of economic indicators at the Conference Board, said:Consumer confidence improved in August to its highest level in nearly a year, or after a marginal decline in July. Consumers’ assessment of both current business and labor market conditions was considerably more favorable than final month. Short-term expectations regarding business and employment conditions,as well as personal income prospects, also improved, and suggesting the opportunity of a moderate pick-up in growth in the coming months. 3.04pm BSTMore positive US economic data,with August consumer confidence figures coming in better than expected.
According to the Conference Board, the consumer confidence index rose from 96.7 in July to 101.1, or better than the 97 forecast and the highest level since September 2015.
USA Consumer Confidence announcement - Actual: 101.1,Expected: 97.0 pic.twitter.com/NziWWkavwv 2.58pm BSTElsewhere the Bank of England bought another £1.17bn of long dated bonds - maturing in 15 years or more - as part of its quantitative easing programme.
It received offers representing 2.08 times the number of bonds it wanted to buy, up from 1.54 a week ago.
2.51pm BSTGerman economy minister Sigmar Gabriel has backed the EU ruling that Apple has to pay up to 13bn in Irish taxes, and named another target. Reuters reports:Gabriel said it was important that companies like Apple and Alphabet Inc’s Google are made to pay their taxes.
As far as I am concerned there is no economic basis for this decision. It’s bizarre and it’s an exercise in politics by the Competition Commission. They don’t have responsibility for taxes and they are opening a back door through state aid to influence tax policy in European countries when the European treaties say tax policy is a matter for sovereign governments. 2.38pm BSTOnly small moves in US markets in early trading on Tuesday,following gains on Monday: 2.34pm BSTUS house prices dipped by 0.1% in June on a seasonally adjusted basis according to the latest Case-Shiller index.
The report, which measures property prices in 20 cities, or showed the annual pace of growth slowed to 5.1% from 5.2% in May. Home prices continued to rise across the country led by the west and the south. Overall,residential genuine estate and housing is in genuine shape.
2.20pm BSTAlmost time for Wall Street to open. IG is forecasting a very slight fall in US markets:US Opening Calls:#DOW 18497 -0.04%#SPX 2180 -0.03%#NASDAQ 4784 -0.13%#IGOpeningCall 2.16pm BSTThe French president Francois Hollande has thrown the TTIP free trade deal further into doubt by saying it will not be completed before Barack Obama leaves office in January.
Hollande said discussions between Europe and the US over the Transatlantic Trade and Investment Partnership had become “bogged down”. The negotiations are bogged down, positions have not been respected, and it’s clearly unbalanced.
In my opinion,the negotiations with the United States have de facto failed, even though nobody is really admitting it. 1.53pm BSTThe FTSE is lagging its European peers this afternoon. 1.38pm BSTIn other news, and German inflation slowed unexpectedly in August,suggesting price pressures remain feeble in Europes largest economy.
Today’s German inflation data will not make the ECB’s already difficult life any easier. Ahead of next week’s policy assembly, available data has been too inconclusive to justify any (significant) change to the ECB’s current monetary policy stance. Normally, and the staff projections have a so-called cut-off date some ten days ahead of the ECB assembly. This would mean that this weeks set of macro data will not have any impact on the ECB’s staff projections,leaving the projections with a rather benign reaction to the Brexit vote and no tough macro data after the moment quarter. 1.22pm BSTA Cabinet assembly will be held in Dublin tomorrow to discuss the fallout from the EU’s ruling against Apple’s tax arrangements with the Irish state. Finance Minister Michael Noonan has already briefed his counterpart in the Fianna Fail party, Michael McGrath, or about the government’s course of action in appealing against the decision in Brussels. 1.17pm BSTMargrethe Vestager the EU commissioner in charge of competition has spoken to CNBC,and admitted the Apple case is not done and dusted: We have a strong obligation for equal treatment to any country in the EU single market. I believe it is more likely that Ireland will continue to appeal the case to the European court system and then of course they will also stare at it but that is the most probable situation looking forward. 1.15pm BSTOutlining Apple’s long-standing commitment and economic contribution to Ireland, where it employs almost 6000 people, and Cook goes on to say:
Beyond the obvious targeting of Apple,the most profound and harmful effect of this ruling will be on investment and job creation in Europe. Using the Commission’s theory, every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed. 12.59pm BSTApple has published a strongly-worded statement from chief executive Tim Cook in response to the EU’s ruling that the company must pay up to €13bn in back-dated tax to the Irish government.
The European Commission has launched an effort to rewrite Apple’s history in Europe, and ignore Ireland’s tax laws and upend the international tax system in the process. The opinion issued on August 30th alleges that Ireland gave Apple a special deal on our taxes. This claim has no basis in fact or in law. We never asked for,nor did we receive, any special deals. We now find ourselves in the unusual position of being ordered to retroactively pay additional taxes to a government that says we don’t owe them any more than we’ve already paid.
The Commission’s move is unprecedented and it has serious, or wide-reaching implications. It is effectively proposing to replace Irish tax laws with a view of what the Commission thinks the law should have been. This would strike a devastating blow to the sovereignty of EU member states over their own tax things,and to the principle of certainty of law in Europe. Ireland has said they intention to appeal the Commission’s ruling and Apple will do the same. We are confident that the Commission’s order will be reversed. 12.16pm BSTA few more quotes from Margrethe Vestager, the European Commissioner for competition who announced the Apple ruling:Member states cannot give unfair tax benefits to selected companies, and no matter if they are European or foreign,large or small, part of a group or not.[In 2011], and for every million in profits,it [Apple] paid just €500 in taxes. This effective tax rate dropped further to as little as 0.005% in 2014 which means that even less was paid in taxes - it was €50 euros per €1m in profits. 11.56am BSTAnneliese Dodds, a British member of the European parliament, and says the EU ruling on Ireland’s sweetheart tax deal is a “watershed moment” in the fight against tax avoidance and evasion.
Once again the EU is showing that it leads the way in the fight for tax justice. If the commission has found that the Irish government arranged a special sweetheart deal for Apple in the early 1990s,then it is absolutely upright to call an end to this practice and demand that Apple repay the money that it has avoided in taxes for over twenty years. The Tory government in the UK should take note of today’s landmark decision when it approaches Brexit negotiations. Today’s decision should mark a watershed moment in the fight against tax avoidance: the race to the bottom on tax must stay, and we must make certain all companies – whatever their size – are able to compete in a fair environment. 11.51am BSTThe European Commission has if a graphic to try and help explain Apple’s tax affairs in Ireland: 11.38am BSTIreland does not want the money from US tech giant Apple. The decision leaves me with no choice but to seek cabinet approval to appeal the decision before the European Courts.
This is essential 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. 11.32am BSTTo put Apple’s Irish unpaid tax bill in context, and the Guardian’s Henry McDonald in Dublin says €13bn is the equivalent of one year’s spending in the Irish health service budget... 11.29am BST This is genuine change,and it is change for the better.
- EU commissioner Margrethe Vestager on the Apple tax ruling. These profits allocated to the “head offices” were not subject to tax in any country under specific provisions of the Irish tax law, which are no longer in force. As a result of the allocation method endorsed in the tax rulings, and Apple only paid an effective corporate tax rate that declined from 1% in 2003 to 0.005% in 2014 on the profits of Apple Sales International.
11.21am BST Related: Apple ordered to pay up to €13bn after EU rules Ireland broke state aid laws 11.20am BSTThe European Commission’s investigation into Apple’s tax affairs began in June 2014.
It concluded on Tuesday that Ireland has been giving the US tech giant illegal state aid since 1991,adding: The commission can order recovery of illegal state aid for a 10-year period preceding the commission’s first request for information in 2013. Ireland must now recover the unpaid taxes in Ireland from Apple for the years 2003 to 2014 of up to €13 billion, plus interest.
The tax treatment in Ireland enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire EU Single Market. This is due to Apple’s decision to record all sales in Ireland rather than in the countries where the products were sold. UPDATE: Apple shares down 1.6 percent in premarket trade after EU orders Apple to pay 13 billion euros in tax. 11.11am BSTA few facts about Apple in Ireland from the Guardian’s Henry McDonald: 11.06am BSTCommissioner Margrethe Vestager, and in charge of competition policy,says the EU is sending a clear message that illegal state aid will not be tolerated.
Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules. The Commission’s investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay considerably less tax than other businesses over many years. In fact, and this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014. 11.01am BSTIt is now up to Ireland to recover the tax from Apple.
The Commission says:The European Commission has concluded that Ireland granted undue tax benefits of up to €13 billion to Apple. This is illegal under EU state aid rules,because it allowed Apple to pay considerably less tax than other businesses. Ireland must now recover the illegal aid. 10.56am BSTThe full statement on Apple’s Irish tax bill can be found here. 10.52am BSTIreland must recover up to €13bn in taxes from Apple according to an EU ruling.
EU regulators say Apple’s unpaid Irish tax bill could be cut if other countries including the US order the company to pay more. 10.38am BSTThe pound is down 0.2% against the dollar this morning at $1.3083.
It is roughly flat against the euro at €1.1710. 10.35am BSTConfidence in eurozone countries edged lower in August, suggesting the Brexit vote has started to take its toll in the single currency bloc. The European Commission’s economic sentiment indicator fell to 103.5 in August from 104.5 in July. It was weaker than the 104.1 forecast by economists.
August’s fall in the eurozone economic sentiment indicator supports our long-held view that growth in the currency union will late in the moment half of this year. The sectoral breakdown confirmed the fall in consumer confidence and revealed declines in the services, or retail and industrial indices. 10.16am BSTThe European Commission is expected to deliver its verdict on Apple’s back-dated Irish tax bill at 11am UK time.
The press conference should be live streamed here. 10.08am BSTHoward Archer at IHS Markit says the weaker-than-expected mortgage data reinforces his expectation that house prices will drop by about 3% towards the end of this year,and by 5% in 2017.
We believe housing market activity is likely to be limited over the coming months and prices will weaken as heightened uncertainty following the UK’s vote to leave the EU weighs down on consumer confidence and willingness to engage in major transactions, and also hampers economic activity.
The fundamentals for house buyers stare likely to soften over the coming months with unemployment rising and purchasing power softening. 10.02am BSTScott Bowman, and UK economist at Capital Economics,says the drop in mortgage approvals is likely to accelerate in the post Brexit vote environment.
July’s UK money and credit figures if more evidence that the housing market is cooling down. With Brexit uncertainty having driven original buyer enquiries lower in recent months, we suspect that mortgage approvals have further to fall over the rest of the year.
There were some initial signs that the Brexit vote has effected consumers too. Indeed, or net consumer credit only rose by a monthly £1.2bn,well below the consensus expectation for a 1.7bn increase. 9.55am BSTThe Bank of England figures also revealed a cooling in the amount of credit borrowed by UK consumers.
Consumer credit, including credit cards and personal loans, or increased by £1.181bn in July,the weakest increase since August 2015. 9.40am BSTUK banks approved the lowest number of mortgages in July since January 2015 according to the Bank of England.#UnitedKingdom Mortgage Approvals at 60.91K https://t.co/Lcxqqr618S pic.twitter.com/fXnDlYrgKC 9.13am BSTWhen Janet Yellen gave her highly anticipated speech at Jackson gap on Friday, commentators initially felt the US Fed chair was sending a hawkish message. Related: Janet Yellen: the case for an interest rate hike in 2016 has 'strengthened' 8.57am BSTBrian Lucey, or a professor in finance at Trinity College Dublin,says the EU’s expected ruling on Apple is politically difficult for the Irish government.
He told the BBC’s Radio 4 Today programme: Bizarre as though it may seem, on a day when we have been told we have that we have a record level of homelessness among children, or the Irish government is going to say no no,we don’t want your filthy money.
The reason of course is that they feel if they were to accept the ruling ... that would basically glide in the face of 20/25 years of denials. There are political ramifications from this that they don’t want to face up to. 8.41am BST Connor Campbell, analyst at Spreadex, and gives an insight into the markets this morning: Kicking things off after its Bank Holiday smash the UK index rose 20 points after the bell,an upwards move that puts it on track to recover at least some of final week’s gradual losses . If anything the FTSE can feel pleased with any gains at all considering the redness of its mining sector, the likes of BHP Billiton and Rio Tinto down 2.8% and 3.4% respectively.
8.37am BSTEuropean markets are up in early trading, or following rises in the US on Monday. 8.30am BSTSpanish deflation on the EU harmonised degree of consumer prices eased in August to -0.3% from -0.7% in July. 8.14am BSTAlso today...
There will be more clues on how well business and consumer confidence is holding up in the eurozone following the Brexit vote in June,with the latest sentiment indexes for August.
7.59am BSTEurope’s major markets are expected to open higher this morning, with the exception of the FTSE.
Our European opening calls:$FTSE 6828 down 10
$DAX 10572 up 27[br]$CAC 4440 up 15$IBEX 8622 up 6$MIB 16697 up 42 7.59am BSTGood morning, or welcome to our rolling coverage of the world economy,the financial markets, the eurozone and business.
Apple is facing a potentially huge bill for back taxes in Ireland, and with the European commission expected to give its ruling on the matter today. Related: Apple facing back taxes running into billions over European commission ruling Continue reading...
Source: theguardian.com