Ondrej Holzman In earlier years, Apple allegedly used a complex and corporate-friendly tax system in Luxembourg, where it diverted over two-thirds of its iTunes revenues to its subsidiary iTunes Sàrl. Apple thus achieved the payment of minimum taxes of around one percent.
The finding comes from documents published by the International Consortium of Investigative Journalists (ICIJ), which pro Australian Business Review analyzed Neil Chenoweth, a member of the original ICIJ investigative team. According to his findings, Apple transferred two-thirds of the European revenue from iTunes to its subsidiary iTunes Sàrl from September 2008 to December last year, and paid only $2,5 million in taxes in 2013 out of a total revenue of $25 billion.
Apple in Luxembourg uses a complex revenue transfer system for European iTunes revenue, which is explained in the video below. According to Chenoweth, the tax rate of around one percent was far from the lowest, for example Amazon used even lower rates in Luxembourg.
Apple has long used similar practices in Ireland, where it transfers its overseas revenue from sales of iPhones, iPads and computers and pays less than 1 percent tax there. But as the massive leak of tax documents in Luxembourg led by the ICIJ investigation showed, Luxembourg was even more efficient at removing taxes from iTunes than Ireland, which operates with much larger amounts. The turnover of the subsidiary iTunes Sàrl grew massively - in 2009 it was 439 million dollars, four years later it was already 2,5 billion dollars, but while the revenue from sales grew, Apple's tax payments continued to fall (for comparison, in 2011 it was 33 million euros , two years later despite the doubling of revenues only 25 million euros).
[youtube id=”DTB90Ulu_5E” width=”620″ height=”360″]
Apple also uses similar tax benefits in Ireland, where it is currently facing accusations that the Irish government provided illegal state aid. At the same time, Ireland announced that will end the so-called "double Irish" tax system, but it won't be fully operational until six years from now, so until then Apple can continue to enjoy less than a one percent tax on revenue from the sale of its devices. This is probably also the reason why Apple moved its American holding company, which includes iTunes Snàrl, to Ireland last December.
Updated 12/11/2014 17:10. The original version of the article reported that Apple had moved its iTunes subsidiary Snàrl from Luxembourg to Ireland. However, that did not happen, iTunes Snàrl continues to operate in Luxembourg.
"Currently iTunes Sàrl no longer operates in Luxembourg" - I think this is not true, iTunes for EMEA still sends invoices from the Luxembourg branch
all these 'analyses' are just butter on the heads of states that have overcomplicated tax systems or various historical advantages of this or that country, Apple and other corporations just play within the existing rules, and the main problem is that many politicians would like to spend more money than they do now. Instead of harmonizing tax laws and reducing taxes (hand in hand with reducing spending on food), I will rather spend money on such analyses....
There are bastards at Apple! I pay the taxes, I send them a Euro for a Dollar (because there are big taxes here) and lo and behold…. they are as small here as in the US, so the user pays the tax and Apple keeps it!!!!
You obviously don't understand what's going on here... it's not about VAT, but profit tax, and you as an end user have nothing to do with it, that's a matter for Apple and the tax authorities
So why do we pay 1 Euro per dollar in iTunes?
it's probably their decision what exchange rate I'll use, isn't it? it still changes (even if not often)
profit from exchange rate differences is certainly not why Cook and company go to work in the morning
I really don't like their latest decisions to focus on users and focus on money.
welcome to capitalism ;)
Please..at least don't post nonsense here. An application that costs 0,89 EUR in our country costs 0,99 USD in the US
But to complement myself, there are also applications that cost 0,99 EUR here and 0,99 USD in the US. The point is that "alternative pricing" is not implemented in the US Store. I.e. the developer has the choice whether his application will cost 0,89 EUR or 0,99 EUR - but in the US it will still be 0,99 USD.
My point is that I pay more than if I paid in dollars and only thanks to that Apple has its tax evasions... er, concessions.
It's not so much about who sells what for how much, it's just about the fact that we pay more than in the USA and the last justification I heard was because of taxes.... Then it seems to me that it is not quite so true.
You tube probably discovered America, didn't you?
For a person who has a calculator and knows how to work with it, I can tell you something:
My bank takes 0.89 Czech crowns for 25.25 Euro.
On the same day, the price for 1 US dollar is 22.96 Czech crowns
That is I will pay more from Apple than in dollars.
The difference is especially noticeable in the case of music and movies, where the prices are even overpriced compared to the US...
Is there any downside to switching to the us store?
There is some convention that you have to confirm and if you break it, everything is illegal. That is minimal risk that you have it all illegally....
And the film may not have a Czech version, subtitles, etc.
PS: In case the seller wants to solve it, you have a problem with the fact that you would have to have a credit card or Paypal account for the USA. I don't see if even Apple can solve this.
"What is not forbidden by law is permitted."
Apple only used what was allowed by the laws, or the offer of the given state.
well, it just looks like it wasn't all that clean
otherwise it would not be possible to investigate it in a big way now
that is, e.g. VAT is primarily to be paid in the EU where the sale was made, or service, the fact that the company circumvents this by reselling through x intermediaries is simply a violation of the law
it's just like you're advocating tax havens in Belize, etc., which I hope you're not advocating
Thanks for the heads up, I checked iTunes Sarl's jurisdiction and indeed it should be in Luxembourg at this point as well. It was obviously a bad takeover by the foreign sites I was drawing from. Apparently, Apple has moved the holding company under which iTunes Sarl falls to Ireland.
I agree. I find it terribly funny just that we are in the EU, the single market, etc. But basically, because Luxembourg has the lowest VAT in the EU, Apple collects all VAT for the App Store there. Similarly, MS did it for Marketplace (or still does, I don't know now). So, although we are a single market, the state that has the lowest VAT benefits, and the Czech Republic is strict about it.
Accusing Apple of 'packing up' is complete nonsense - from a shareholder and management point of view, their job is to maximize profit from what they do.
This is the butter of politicians, the EU and other Saxons without IQ and economic education for the 21st century who fart into chairs (except for the way) in the EU parliament.
Each of us would do exactly the same in Cook's position - not only because we had to, but also because we wanted to.
I didn't mean that the companies were to blame. What I meant was that the rules are set up rather strangely and it doesn't make a whole lot of sense.
Apple is just a bunch of crooks. A closed system to protect you, and they themselves steal and make money from us as much as possible.
So you're a real fool, I'm not surprised that you slave for change like a pauper. You won't have that kind of thinking anymore :)
My passive income from websites is more than your annual salary. But dude you're here. I'm not going to let Apple rob me anymore, just because I have money doesn't mean I'm going to be milked.
so please let yourself be 'robbed' by Samsung, Google, Microsoft and don't spread the discussion on the web about the company that irritates them
thank you!
:-D Made my day!
If Apple doesn't steal from you, it will be Google, it steals every time, and if it's not them, then the State is stealing from you, and that's the team that collects income taxes and health insurance contributions. He is the one who robs us the most in this world!!!!! and what about me I give Apple for a year is an imperceptible amount compared to what I give monthly from my salary to the stupid State, and even if I had to buy an iPhone every year, there is nothing against this, so what I give Apple for a year is somehow not worth it to me. But you probably you don't pay taxes from your salary, you don't pay contributions to the insurance company, you don't buy overpriced food or drive a car where you pay overpriced gasoline or diesel, and I'm not writing about other things. Do the math and you'll find out who steals the most, but most importantly, if you say that Apple is stealing, at least they don't force you to buy with their products, but the state forces you to pay this, then again this, think a little about who is forcing whom to do something and trust me it's not Apple and I think you're intelligent enough to understand this
So avoiding stealing from the state (paying taxes) is theft? That is very twisted thinking…
Wrong title of the article, or misleading - something tabloid style. After all, it follows from the article that he practically paid taxes, only in an embarrassingly small amount. However, he used only what could be used - pissed off, but it was possible. I'm not saying it's all right, but we have to be mad at someone else for it.
Does anyone here speak Czech?
When I see the EUSSR, where tax money flows only to /dev/null, I'm not at all surprised by Apple, and honestly, it won't be the only company...