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Apple Hit with Tax Bill

Apple Exec Sells $36 Million In Stock Compensation; Apple Is Hit With A $14.5 Billion Retroactive Tax Bill By The EU Investigative Commission.

By now you’ve heard that Apple in Ireland was dealt a brutal $14.5 Billion tax blow by the European Union. Other Apple News headlines shriek that Tim Cook, Apple CEO sold $35.8 million in stock.

Wondering about the timing? Here is the background. Tim Cook’s reign at Apple just reached the five-year benchmark, freeing up 1.32 million shares of vested RSU of Apple stock(AAPL). The

The sold stocks were about a third of Cook’s total Apple Shares. Since the sale, the value of Apple Shares (AAPL) has dropped, following news of a $14.5 billion dollar tax recovery demand from the European Union.

Other international firms in EU states may enjoy a tax shelter, but the EU has recently departed from prior rulings and sought multiple US targets. EU Competition commissioner Margrethe Vestager called Apple’s tax deal with Ireland “illegal,” saying it enabled Apple to pay “substantially less tax” than other businesses over many years. “Member states cannot give tax benefits to selected companies — this is illegal under EU state aid rules,” she said in a statement on Tuesday.
“In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1% on its European profits in 2003, down to 0.005% in 2014,” she added.

    United States Treasury issued white paper on the EU investigations, noting that

  • The Investigative commission’s approach is new and that it departs from Prior EU case law and commission decisions.
  • The commission should not seek retroactive recoveries… Because this new approach departs from prior practice, the EU commission should not seek retroactive restitutions, or recoveries.
  • The commission’s new approach is inconsistent with international norms and undermines the international tax system.

The EU commission’s new approach to international tax responsibilities is also a potential risk to the federal budget. Under current law, US companies are required to pay US taxes on the profits they earn around the world and those companies get tax credits for payments to foreign governments. Though it is more complex than stated, If companies pay more in Europe, they may owe less in the US.

Apple CEO Tim Cook said in a letter out early August 30, 2016 that his company will appeal the (European Commission tax shelter) ruling, adding he is “confident that the commission’s order will be reversed.”

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