Apple cash tied up in Ireland--will they ever bring it here?

Factual Questions
1

So Apple has tons of cash in Ireland that is sheltered from US taxes. If they bring it here they’ll have to pay tax on it.

Is this a strategy to *defer *US taxes but not permanently avoid them (like individuals can do with IRAs and 401(k)s), or is there some way they can use that money without *ever *bringing it to the US?

2

Just to be clear about the tax issue, here’s the deal for most US companies:

  1. They have to pay taxes when they earn abroad to the country they’re in
  2. If they bring the money back to the US, they have to pay taxes again, but get a credit for the taxes paid in the other country
  3. If the amount of the taxes were equal to the difference in the taxes in the other country and what would be owed if earned in the US, companies would, for the most part, have no problem with it
  4. Because of the complexity of the tax code, most companies actually have to pay more than the difference in quesiton, making repatriation of cash a poor decision, since you don’t get to keep as much of it as if you just earned it domestically

For example, a company might make $1000 in profit and in the US, taxes on this might be 350. In some other country when they earn the $1000, they might pay $300 in taxes. If the US tax code required another $50 in taxes for repatriation, most copmpanies wouldn’t be thrileld about paying it, but it wouldn’t be a big deal because a dollar eanred abroad would still be just as good as a dollar earned at home. But if repatriation required a payment of $100, then at that point the dollar of earnings is worth less than either a dollar earned at home or a dollar earned abroad and kept there. So it becomes very difficult to justify repatriation.

Typically, a company has 3 options in this case:

  1. Wait for a tax holiday
  2. Reinvest the money abroad
  3. Take the tax hit (this really is a last ditch option)

If the problem is ongoing, the company needs to rethink how it invests and operates abroad.

3

Also, if Apple later wanted to build or buy something in Ireland (or any other country), there would be fees on converting US dollars to the local currency. By keeping a stockpile where it was earned, they avoid that fee, which for some countries is substantial.

I’ve heard that Apple has a habit of keeping stockpiles of cash, even in the US. If that’s true, then it could be a corporate habit. Earn cash - stockpile cash.

4

Hmmm…

Pay extra taxes, bring money home… or … keep money in Ireland, hire iOS programmers over there, just as smart and probably lower paid.

Note then, if the new version of iOS is owned by the Ireland subsidiary, then other subsidiaries (USA, Canada, Australia, UK, Germany…?) pay Ireland Apple in future for the right to use it in the iPhones sold in those countries. More money piles up in Ireland at a lower tax. Money well spent. Jobs’ heirs move to Ireland, buy a mansion there, hire more servants at a lower wage…

5

Not sure if the OP was inspired by the blurb on NPR yesterday, but they said Apple’s Irish companies had zero employees (in most years), and that they either paid zero taxes or a fraction of 1%.

6

There’s a thread on this over in IMHO at the moment, too:

7

Yeah, the Irish subsidiary is a shell company. 100% tax avoidance, 0% actual work or investment.

8

I did hear that story but I was actually inspired by a short article in the Washington Post about it a few weeks ago, which I linked in another SDMB thread where someone asked why companies with cash would take on debt. At that time, the controversy had not quite emerged and the article was a simple discussion of cash management.

9

For reference, the number I heard on NPR yesterday was $100 billion held by the Irish branch. Right or wrong, a few percent here and there are going to add to a huge amount of money.