French activists storm Paris Apple Store over EU tax dispute French activists on Saturday occupied a Paris Apple Store as part of a campaign to try and shame Cupertino into paying local taxes. According to local reports, around 100 members of an anti-globalisation group called Attac occupied the store, near the Paris Opera, for “several hours”. Agence France Presse quoted Attac's …
I sometimes think there is a tradition in England to speak a lot of rubbish about France, old habits die hard. If they are that bad, how come they have passed Britain to become the second largest economy in the EU.
Anything you build they don't build, on a post card, please.
Lars,
When did French GDP pass British?
According to the last figures from the World Bank, UN and IMF the UK is 5th, and France 6th - and nothing has changed in several years.
Although I believe the IMF predicts India will surpass France this year - to take 6th place from them.
@ I ain't Spartacus
No matter how much I like the Brits I have studied, worked, met and sailed with, I just cannot understand this odd ability to claim you are <insert number> largest <insert anything> in the <world/Europe/EU>.
Most always wrong and without any reference. sometimes absolutely ridiculous claims. A few resent claims - second in aeronautics only to the USA - second largest contributor to the UN. I don't give a shit but I find it very odd. Perhaps you have a better insight into the British brain complexity.
About the GDP. What makes you think India (a country with a slightly larger population) should as a country have a smaller GDP than Britain or France. There are other methods to compare too*.
Anyway using:
https://www.cia.gov/library/publications/the-world-factbook/geos/uk.html
"The UK, a leading trading power and financial center, is the third largest economy in Europe after Germany and France."
COUNTRY COMPARISON :: GDP (PURCHASING POWER PARITY)
1 China $21,290,000,000,000 2016 est
2 European Union $19,970,000,000,000 2016 est
3 United States $18,570,000,000,000 2016 est.
4 India $8,662,000,000,000 2016 est.
5 Japan $5,238,000,000,000 2016 est.
6 Germany $3,980,000,000,000 2016 est.
7 Russia $3,751,000,000,000 2016 est.
8 Brazil $3,141,000,000,000 2016 est.
9 Indonesia $3,032,000,000,000 2016 est.
10 United Kingdom $2,786,000,000,000 2016 est.
11 France $2,734,000,000,000 2016 est.
Unsurprisingly the UK and France have now change position.
*https://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html#uk
So where do you get your numbers, share them with us and do they really change the reality at all. (if your father is alive he's bigger than my father, and all of that).
Lars,
I don't think there's anything unusual about various British people making comments on how Britain compares to other countries. And this being the internet, many of those will be innaccurate.
If you'd read my post, you'd have noticed that I gave my sources, which were the IMF, World Bank and UN. I was lazy and just picked the Wikipedia link at the top of Google - though I'd already seen the figures at some point and so knew they were broadly correct.
However I did just pick straight 2016 GDP in dollars. Which figures you use, depends on what you want to compare - or what political point you want to make.
So you picked PPP, which showed that France hadn't surpassed the UK - but then said it was expected to. Still not backing up your claim though, which was that it had already happened.
So I've done a better search and can give you a World Bank linky.
My original comment was only to correct an error, probably because it's become a Brexit talking point to claim that this cause the UK economy to instantly become smaller than France's - due to exchange rate fluctuations. Which isn't actually true.
India will be passing both the UK and France soon enough hopefully, given the size of their population. Although obviously China and India are way up the table on size of population, but a long way from catching up on GDP per capita.
The UK and France will compared to nauseating extent over the next few years, being similar sized, neighbouring economies, with similar populations who are about to take an interestingly diverging path due to Brexit.
France has suffered comparitively to the UK in the last 15-20 years - much of which I suspect is down to having joined the Euro. Though both countries have their own specific economic and social problems.
For example France has much better productivity than the UK, but at the same time has had and seems willing to tolerate much higher levels of unemployment - which are interlinked. Which all makes grist for the mill of economic comparisons. And people do rather pick their stats to support their pre-existing opinions.
One thing I can agree with you on is that there is a tradition in the UK of speaking rubbish about France. Being rude about the french is an ancient custom, which we seem unlikely to be changing in the next few years...
@ I ain't Spartacus
France overtakes Britain as world’s fifth largest economy as Brexit fears hit markets
Pound falls against the euro, putting France ahead of Britain for first time since 2014
From:
http://www.independent.co.uk/news/uk/home-news/france-britain-uk-world-s-fifth-largest-economy-brexit-eu-referendum-a7123761.html
Wednesday 6 July 2016 20:00 BST
Yes, in France it's a tradition to not work. That's why the few French high-tech companies in existence do it outside of France.
Those lazy french eh. I mean what high tech industries have they got, eh I mean apart from Airbus, Thales, Alcatel-Lucent, Ubisoft, Alstom, Dx0 Labs, etc
"Airbus, Thales, Alcatel-Lucent, Ubisoft, Alstom, Dx0 Labs, etc"
Great list, but you missed a biggie, in cultural as much as business terms.... the present-day "Atari" is a French company too.
Granted, it's really just the French company founded in the 1980s as "Infogrames" under a new name- after they acquired the Atari brand and IP from Hasbro- and has no connection with the original "Atari Inc." (nor its also-defunct descendants).
But it's undeniably ironic that around the time the French were being disparaged as "cheese eating surrender monkeys" et al by the Dubya-led Yanks that they bought out the rights to a US institution and are still exploiting that All-American nostalgia by masquerading as "Atari" to this day...
" Airbus, Thales, Alcatel-Lucent, Ubisoft, Alstom, Dx0 Labs"
I think you'll find a lot of the profitable bits of those companies are outside of France and much of them came from UK companies which the French bought. Thales for example makes good profits in the UK but the French side are basket cases. they keep the Uk bits to fund French pensions. Airbus is great in Germany and the UK - but in France - Non. Alstom is mostly ex-GEC heavy industry businesses from the UK apart from its Nuclear business and rolling stock businesses. Alcatel Lucent is more Lucent than Alcatel, and Ubisoft - well, nobody goes to France to write software do they ?
"Yes, in France it's a tradition to not work."
No, in France it's a tradition to get miffed and actually try to do something about it. Here, it's simply a case of getting miffed.
Not working? Oh you mean like we did in the 1970's here in the UK with the "3 day week" that ultimately lead to the collapse of our manufacturing industry, leaving us with just service sector jobs in the finance industry? A service sector that keeps a heck of a lot of we IT workers employed and which, if the French and/or Germans have their way, will also be shipped off to mainland Europe once we cut our ties leaving us with spiriling unemloyment and heading towards 3rd world nation status.
It may be a tradition not to work in the French public sector, but multinational tax arrangements really should be reformed to make multinationals pay taxes where they make their profits.
The current system is a farce and unfit for purpose. It, obviously, does not benefit the people where most of the goods are purchased and profits are made. It encourages shady dealings by big companies. Finally, it leaves a rather sour taste about free and fair markets and increases the risks of knee jerk populist backlashes rather than prudent and equitable taxation and regulation. Besides the tax avoiders, the one category of people who benefit are highly paid tax professionals.
If the US ever did reform their corporate taxes, some of the incentives to play games would be lessened, at least for US multinationals. Not holding my breath that this administration will be achieving anything truly useful, but there's plenty of opportunity for bipartisan reform if they wanted to.
As far as France goes - if, and that's a huge if, Macron ever manages to push through effective reforms, this is a country whose top companies already do quite well in international markets. Seeing what they've achieved under the current French economy, they could do much better given a more dynamic home base to work from. It can be done - Germany took specific steps to correct their economic flaws about 10-15 years ago and have reaped pretty big benefits from doing it - they used to suffer from many of the same labor issues as France back then.
@JLV
It is odd to see someone decrying tax evasion and supporting the ridiculous Micron’s reforms which encourage it and reward those who practise it. Your lazy analysis of the industrial and social problems in both France and Germany is thoroughly ill-informed, but just to give two points: German wages have stagnated since the Hartz “reforms” (which did actually tackle some weaknesses in labour markets and the benefits system), and inequality has not improved, but the changes were not the reason for the economic recovery, though helping slightly to bring down unemployment and prevent excess early retirement. What brought about the change were: the change in German business style, adapting to globalization, outsourcing and building extensive supply chains, continued wage restraint cooperation between unions and management, the end of the building slump – and massive worldwide economic growth.
In France, just to give one instance: this year, INSEE showed that wage costs were not the main obstacle to employment, but lack of skilled workers. Regulations –of all kinds, not just HR ones – and economic uncertainty were the others cited, though an equal number said there were no barriers or that the question was meaningless. (Note de conjuncture, April 2017
I am not in the tech industry, so maybe you know something I don't. But the main reason I have seen for companies to move outside France is not that they are all fainéants, workshy scroungers, but the state administration morass, so that it is very hard to get a decision. And on the other hand there are quite a few successful start-ups - look at the Montpellies nexus for instance.
I presume that Apple products are priced locally with local taxes in mind ?
If they are escaping paying local taxes by paying less elsewhere should this not be considered as actually stealing from the customer?
I agree that they do actually pay tax , just not to the right government, so we can't fault them for not paying taxes.
But the delta should surely be returned to the customer, after all it did actually come out of pocket. Or else France in this example should request the tax from Ireland or wherever Apple plays it's tax avoidance trickery.
Apple are Alos not alone, Google et Al are in the same evil bag.
It's a question not a statement , would like to hear a sensible answer.
I presume that Apple products are priced locally with local taxes in mind ?
If they are escaping paying local taxes by paying less elsewhere should this not be considered as actually stealing from the customer?
I'm not quite sure what you mean. Apple can charge whatever they want in whatever country they want. They of course have to also charge VAT of the local country, and they certainly do that. The VAT gets paid back in complex ways to and by different countries, but there's little doubt that they're doing that correctly.
But if Apple decides, say, to charge twice the price in UK than in Ireland for the same phone, it's their right. They don't have to connect the price to the local tax, whether VAT or corporate.
If they are escaping paying local taxes by paying less elsewhere should this not be considered as actually stealing from the customer?
I'm not quite sure what you mean. If they are escaping paying local taxes by paying less elsewhere should this not be considered as actually stealing from the customer?
I'm not quite sure what you mean.
I imagine the following:
The product has a value of 800 €.
Apple add the local French Tax of 20% ( they price in accordance with local taxes)
The product is sold at 960 € to the end customer.
Apple pay 3% tax or whatever in Ireland.
What happens to that 17% of tax that does NOT belong to Apple ?
I think you're confusing two different sets of taxes.
Apple are certainly required to charge 20% local VAT (like sales tax), and that is fully declared and paid, as are all the usual taxes and charges paid by employers on employees.
Corporately, though, they also make overall profits as a business, and they are required to pay corporate taxes on those. They, quite legally, play games to move those profits to appear in countries with lower tax rates. That's what pisses off countries like France, they see Apple as operating corporately in the country, but not paying the same corporate tax as French companies do.
Apple are merely taking advantage of the over-complex web of tax legislation within the EU, and the fix lies solely in the hands of the EU. There is no good reason why Apple, or any other company, should pay more tax then they are legally required to just because it would be "more fair". If the EU wants them to pay more tax, the EU just has to change the tax laws to make it happen. It could also, perhaps, remove the status of "French company" or "German company" and require any business operating in the EU to define itself as an "EU company" under a common set of rules.
Of course, that's impossible, tax law in the EU is a mismash of compromise and ambiguity because there isn't a snowball's chance in hell of all EU members agreeing to a common, centrally-managed, tax code or business structure.
"VAT is not paid by the company, it is paid by the end customer. The company just acts as a tax collector and forwards the VAT collected to the government."
Sort of. If there were no VAT in the UK, do you think all products (for which VAT is payable) would be 18% cheaper? I think not. Some things yes, but those prices that miraculously become £9.99 once VAT is added on? You think will be £8.92? As someone else above said, Apple charges the market rate, and the market rate has VAT included. Take off VAT, and all that happens is the price at which MR=MC (marginal revenue = marginal cost) moves a little bit. The price will not drop by 18%, just like it didn't drop the correct amount when VAT was reduced to 15%, it just went in companies' pockets.
"Corporately, though, they also make overall profits as a business, and they are required to pay corporate taxes on those"
As a shareholder I would expect that money to be distributed amongst the shareholders , and we will pay tax on it.
Why dosent that happen? Are Apple stealing from me?
This post has been deleted by its author
"Of course, that's impossible, tax law in the EU is a mismash of compromise and ambiguity because there isn't a snowball's chance in hell of all EU members agreeing to a common, centrally-managed, tax code or business structure."
And if the EU members did agree to a common tax code, then Apple and many other business their regional headquarters to an European country not in the EU. Even when the Brexit happens, the EU cannot boycott the UK without severe consequences. So Apple could just easily move the offices to Northern Ireland in such a situation.
+1. But it's not just the EU tax system. This shell game really is taking place all over.
The goal should NOT be to harmonize tax rates - it is totally reasonable, more, it is desirable, for governments to experiment with different tax rates. However, profits earned in a country should be taxed at that country's rate. Not artificially transferred to the jurisdiction with the lowest tax rate with weird inter-subsidiary transfers that reflect no real world economic activity whatsoever.
"I agree that they do actually pay tax".
I don't actually agree "those" actually pay tax. Lots of companies in the USA pay absolutely no tax and on average it's more like 5% than what some like Trump claim. Will the dear old man show his tax return before having to leave office, that is the question.
Came to think of it, we would need somebody like P.G.Wodehouse to describe Trump. As far as I remember Wodehouse went to Germany to write about stuff and Hitler like - is he going to shave his muostache or not, the question of the day.
I suppose it didn't make any difference but I would so very much like to be able to laugh at Trump and I am sure he would love to be laughed at too. Not enough of that around these days.
> "Lots of companies in the USA pay absolutely no tax and on average it's more like 5% than what some like Trump claim."
Sooo, I assume from this sweeping statement that you have actual facts and figures to back it up? I'll wager not as such. You just needed some quasi-plausible hook as an intro to your personal Trump bashing session.
Was it real good for you? ;-/
"Sooo, I assume from this sweeping statement that you have actual facts and figures to back it up".
A sweeping statement perhaps, but don't underestimate your country, there are actual fact and figures if you care to read the "fake news".
Yes I dislike Trump, I think he is a disaster, and to be as kind as only I can be, unfit to be the president of any country.
However, Big John, you have to remember that we elsewhere in the world are not forced to compare him to that one other alternative. We measure him just for what he is and what we feel a country like the USA would deserve.
In a two party system you Americans had, in the end, just those two to choose from. It's not your fault and you are not accused of anything here. Only Trump will be able to change your opinion about him.
You need to remember some things when you read those "US companies don't pay taxes" stories."
First, the vast majority of "companies" in the US are small businesses, and a lot of those companies are basically just one or two people and some incorporation paperwork. A majority of those companies don't pay taxes because they're basically placeholders - companies that either never did business or that are getting ready to start up.
Second, a lot of the rest of the corporations don't make a profit in a given year. A bunch of those are ones that are getting ready to go out of business, and a number of others are ones that don't make a profit in a given year (due to acquisitions or other financial reasons), but make a profit and pay taxes in other years. Quite a few of them also don't pay corporate taxes because they report their taxes under the individual tax codes (quite a few contractors do this).
Third, foreign and US-owned companies often shield their income by keeping their profits overseas, or counter their US taxes by losses in other markets. This is "encouraged" by US tax codes that double-tax US companies that bring their overseas profits back home. The current tax reform bill is supposed to address this.
You also have the situation where a reporter writes "X company didn't pay taxes" when the real story is "X company didn't pay taxes in the second quarter of the year," which is pretty normal.
@cirby: Part of your explanation is a bit confused - e.g. "A majority of those companies don't pay taxes because they're basically placeholders", where you seem to be including a lot of zombie companies s if they were real; and you do not seem to have a clear view of the PME structure in the US.
But I cannot understand people voting you down just on that account: are there a lot of idiots here opposed to spelling out that companies shield taxes from profits ? Because they do it themselves, perhaps ?
> "A sweeping statement perhaps, but don't underestimate your country, there are actual fact and figures if you care to read the "fake news"."
That's it, Lars? I asked for facts and figures and you direct me to the media in general?
Do you always blow off people this way when called out on your fabrications?
@Big John: Your request is a reasonable one. I will spare you the thousands of US accountants and investment analysts who have commented on this, and the economists (who do not just include Stiglitz and Krugman): her is a reference: https://www.marketwatch.com/story/these-companies-may-enjoy-a-windfall-under-trumps-tax-plan-2017-09-29
Property Taxes (rates etc)?
Income Tax (and N.I)?
VAT on goods sold
or
just
Corporation Tax?
Difficult to avoid the first two no matter how many shell companies are used.
VAT has some scope for Fraud by moving it between jurisdictions (remember Google and where their 'orders' were completed, in Ireland even though the sale was in the UK)
With Corporation Tax there is the greatest scope for avoidance which is legal as opposed to evasion which is not.
"Property Taxes (rates etc)?
;...
Difficult to avoid the first two no matter how many shell companies are used."
Not necessarily ... on a recent BBC4 documentary on Silicon Valley companies a representative of Santa Clara couinty explained how they were in dispute over the valuation of Apple's property in the countty (on which a 1% county tax would be levied) - the county estiamted the value at $6 billion but Apple claimed it was only $60 million.
For their activism to change the world for the better, and not being indoctrinated by the Wall Street owned press that it is "good" that the average employee gets squeezed dry by the government with 40% income taxes, VAT around 20%, high taxes on gas and booze, while US corporate mobsters like Apple, Google and MS get away with 5% profit tax in "special deals" with ratty countries like Belgium, Ireland, Luxembourg and the Netherlands.
@Frank:
"These 'corporations' have a legal corporate presence in Europe and operate in Europe. They trade in Europe, engage in corporate activity and make a profit in Europe. I thought that European law would apply to anyone who did that."
They make a profit in Europe, but a lot of the costs associated with that profit (R&D, manufacturing) are in other countries. The tax system has to recognize that and that's where the problems of complexity, politics and places to hide come from.
Taxes are not paid on costs, but on profits. Hence, they artificially inflate the IP each country subsidiary has to pay, in order to reduce profits. Then they move the 'owner' of the IP to a country like Ireland, where they sign a sweetheart deal. It's actually sickening how these companies get away with it. I worked for Apple in Ireland, and calculated I personally paid more taxes than them ... sickening, really. I now have my own company and see this behavior from ALL of the multinationals, and I really feel this should be an EU priority. If you are doing business in the EU, you get taxed on the profits in each country. End of story. We the people went through years of government-imposed austerity; due to severe budgetary issues; many of them created by US multinationals and investment banks. The money these companies should have been paying in taxes have been robbed from the citizenry of these countries, forcing them to make up the difference. In no way am I a Marxist, I just feel there should be a fair playing field.
"Corporation tax for US corporations is due in the US."
No it isn't, don't lie. Corporation tax is due wherever the company is trading. (EU is a bit more complicated, as it only has to have a single headquarters in one of the member states.) For example, Facebook pays (not enough, but some) UK corporation tax.
"Dunno why some people find this so hard to grasp?"
I don't know why you didn't get it. Hopefully you will learn from this new information.
not being indoctrinated by the Wall Street owned press that it is "good" that the average employee gets squeezed dry by the government with 40% income taxes, VAT around 20%, high taxes on gas and booze
Seriously? Did you forget the sarcasm tag? France is the highest-taxed country in Europe. High-earning employees would love to only pay 40% tax. Not to mention that in in order to keep a promise of "no tax increases" a previous government added 15.5% "social charges" to everyone's tax bills, and then claimed it "wasn't a tax".
Source, please? French sites don't count!
Sure, what would you prefer:
A US site: https://qz.com/743249/guess-which-country-pays-the-highest-taxes-in-europe/
An EU site: http://ec.europa.eu/eurostat/statistics-explained/index.php/Tax_revenue_statistics
Molinari: http://www.institutmolinari.org/IMG/pdf/tax-burden-eu-2016.pdf
The Guardian: https://www.theguardian.com/money/2017/may/27/tax-britons-pay-europe-australia-us
Here you go. Current figures. France pips Sweden.
https://www.economist.com/news/europe/21731825-good-deficit-timid-structural-reform-frances-budget-less-bold-emmanuel-macron
France is also carrying a hefting amount of national debt, which is deferred tax in all but name,
"France is the highest-taxed country in Europe". It's not that easy, try:
https://en.wikipedia.org/wiki/Tax_rates_in_Europe
https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates
https://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_to_GDP_ratio
And then there is the question of what you get for the tax you pay, cost of living etc. Not easy at all.
(you will find the Nordic countries have a higher rate, but there is a reason for that too)
"So why aren't they demonstrating outside the places where the tax laws are made, instead of outside the businesses that are perfectly legally following those laws?"
You protest wherever you think it will do the most good. An organized boycott and sit in of Apple's nation-wide chain of tat shops would make more impact than sharply worded letters to your Deputies, which will result in nothing.
Of course it's more complicated than this but as many people don't seem to understand how companies like Apple move corporation tax profits offshore, I thought a simplistic example would help:
Company A in country X makes a widget for $100 and sells it for $150 making a profit of $50.
- Corporation tax in country X is 10% so they pay corp tax of ($150 - $100) x 10% = $5.
Company C in country Z buys the widget for $150 and sells it to the end-user for $250 making a profit of $100.
- Corporation tax in country Z is 20% so they pay corp tax of ($250 - $150) x 20% = $20.
With me so far? Now company C is unhappy about paying 20% corp tax, so opens a new company B in country Y. Country Y is a tax haven that charges no corporation tax. Now company B sits in the middle of this transaction so buys the widget from company A, like this:
Company B in country Y buys the widget for $150 and sells it for $250* to company C making a profit of $100.
- Corporation tax in country Y is 0% so they pay corp tax of $zero.
Now company C in country Z has bought the widget for $250* and sells it to the end-user for $250, making no profit.
- Corporation tax in country Z is 20%, but they've made no profit ($250 - $250) so they pay corp tax of $zero.
The same widget has been sold to the same end-user by the same company, but by putting a middle company in the way in a tax haven, and here's the crucial bit: inflating the price of the widget to company C, company C have made no profit from the sale. Therefore, there is no corporation tax to pay by company C and company B doesn't pay any, it's in a tax haven. Of course really they're same company group.
This is how Apple, Google, Starbucks, Microsoft etc etc all divert profits to low or zero corporation tax havens. It's why Ireland's 12.5% corp tax rate attracted so many IT companies. This is why Apple are sitting on $250Bn in cash, all of which is offshore in low / no tax havens. They've saved about $50Bn in tax doing it this way!
* In reality the figure charged from company B to C flexes enough to allow company C enough profit to pay it's staff and bills, but not enough to make anything more than a token taxable profit.
"Company B in country Y buys the widget for $150 and sells it for $250* to company C making a profit of $100."
Now company B is sitting on $100 in county Y. Country Y's domestic products consist of sheep and potatoes. There are only so many potatoes and sheep that the shareholders of company C can use. Alternatively, they can try to ship the profit from country Y to country Z. But the they are assessed a tax on that $100 at Z's tax rate of 20%.
Another thing: For this to work, executives at company C must have entered into an agreement with company B to source all their widgets through B. Otherwise, why not buy directly from A? An agreement like that is a contract. Just like any other security. And it has a value. If enough widgets are sold through this channel, the present value of that contract could be $100 Billion. When I travel, customs asks me if I am carrying any cash or securities with a value of $10,000 or more. I must declare them and maybe even pay duties.
When the executives from company C traveled from country Z to country Y with the contract to source their widgets, did they declare the value of that contract when passing through customs? If I sneak out with $10,000 undeclared, I earn a stay in the crowbar Hilton. Executives from C just crossed a border with a $100 Billion security.
This post has been deleted by its author
You can buy iPhones from other outlets than Apple stores - e.g. John Lewis here in the UK. While I'm sure the wholesale price that they pay, and hence the markup, are commercially sensitive and not publicly known, someone in the industry could make a good guess.
That wholesale price is what the transfer-price for iPhones between Apple (China) (Manufacturing) Ltd and Apple (UK) (Retail) Ltd should be. Then Apple UK's accounts should show profit = sales minus VAT minus transfer price minus staff, buildings etc. They can also legitimately show payments to Apple (US) for o-erating the web site and licensing the Apple Store branding, which is harder to quantify. Then there's the tricky question of ongoing costs, i.e. providing iCloud services to iPhone purchasers in future years.
Presumably HMRC have people who spend their time doing back-of-the-envelope calculations like this and judging whether companies' accounts look reasonable.
IMO, Apple, as a company who sell physical goods, are much easier to study in this way than Facebook, Google and even Microsoft.
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