Apple wins $15B tax fight with Ireland

Yahoo Finance’s Dan Howley joins The First Trade with Brian Sozzi to discuss Apple's landmark win in court on Wednesday against the European Union over a dispute that Ireland allowed Apple to pay "substantially less tax than other business over many years."

Video Transcript

BRIAN SOZZI: Apple CEO Tim Cook probably woke up to an iPhone alert that should have brought a smile to his face. That is, the iPhone maker won a massive case in the EU regarding taxes. Let's break it down with our tech editor Dan Howley. Dan, big win for Apple.

DAN HOWLEY: Huge, huge win-- $14.9 billion of a win. That's how much Apple was told to pay by the European Commission initially, with regards to its taxes in Ireland. Now, basically, this issue comes down to the fact that when Apple is taxed on all of its profits throughout the European Union, it goes through Ireland. And based on agreements that Apple and Ireland came to at previous years, they were paying an effective tax rate of 0.5% and 1%.

So, obviously, not a huge amount of taxation there. And that got the ire of the European Commission. And so they had this decision a few years back basically saying to Apple, look, you owe this much in back taxes-- this $14.9 billion. It's 13 billion euros, basically.

And Apple clearly wanted to fight back on that. And they won today in their lower court, basically saying that the Apple tax laws couldn't be applied to what the European Commission was saying. The European Commission now saying internally that they want to go back and look at corporate taxes. And, really, the impetus for this was the idea that the countries could be giving special treatment to companies over competitors.

Obviously, Apple, one of the richest companies in the world, closing in on being the richest company in the world as far as market cap goes, as they continue to see their stocks just run completely wild. They want to get that tax money. And so Apple wanted to fight back, ended up winning here.

Tim Cook is going to probably pop a bottle of champagne this morning. He previously called the European Commission's ruling on this political crap. So he feels strongly about this enough to come out and criticize the European Commission. And with this win, obviously, the US will obviously be singing praise because at the time, Obama-- the Obama administration-- and then speaker Paul Ryan had said that this would end up hurting jobs in the US. And it was completely unpredictable tax structure-- Ireland saying that it gives them kind of the independence that they wanted in their tax structure as well.

But there could be an appeal on this. It's not completely done until the European Commission fully drops the case and walks away.

BRIAN SOZZI: So Tim Cook, popping that bubbly. But Dan, what does this mean for Apple's business in Europe moving forward?

DAN HOWLEY: For Apple's business in Europe going forward, I think it's fine. You know, they restructured their taxes in Ireland in 2015. This really had to do with those back taxes that the European Commission said that they were entitled to or said that the EU was entitled to.

These have been an ongoing series of cases with companies-- Nike, Starbucks, Amazon, Chrysler-Fiat. They've all been involved in these kinds of discussions with the European Commission. This is also the same commission that has gone after Google for antitrust matters. Google is currently pushing back on fines upwards of more than a billion dollars.

So it's going to be something that I think we're going to continue to see this back and forth with tech companies and US companies and the European Commission for some time. It really is going to be an ongoing battle, I think, until there's some kind of resolution between the US and the EU, as far as these taxes go on these companies. We've talked about how there would be a digital tax implemented from the European Commission. France has already gone ahead and put a digital tax in place or has been talking about putting a digital tax in place. So I we're going to continue to see this kind of acrimonious relationship [INAUDIBLE] those in the US and the European Union for some time.

BRIAN SOZZI: Dan, while I have you, we just had Wedbush Tech Analyst Dan Ives on. And he said Apple, by the end of the year, might have a two trillion dollar market cap. What do you think about that?

DAN HOWLEY: Yeah, I mean, look, they're just-- their stock price continues to rise, basically, on the hopes of the next generation iPhone as well as the performance of their services and accessories department. And I think that's really where people should be looking. What I think is left untapped by Apple is Apple TV right now-- or Apple TV Plus-- really not a lot of subscribers going in there.

We don't know how many actual number-- the number of actual subscribers because they don't release that. But it would be interesting to see how that pairs up with the likes of a Netflix or an Amazon Prime Video-- Disney Plus, obviously. But we haven't really heard that much hay made from Apple about Apple TV Plus, in terms of subscriber numbers.

I think, really, that's the untapped market for them. Apple Music is still doing very well. We saw issues with Apple News plus, but I think services and accessories beyond that continue to be kind of the driving force going forward.

BRIAN SOZZI: Yeah, Dan, if Apple share shares those Apple Plus numbers, I'll get you a used first-gen iPad. Mark it down. Save his date. Thanks so much.