Apple sentenced to cough up €5m for iPad 'private copy tax'

Apple sentenced to cough up €5m for iPad 'private copy tax'

Summary: The district court of Paris just sentenced Apple to pay €5m as compensation for private copies of media made using its iPad in 2011.

TOPICS: Hardware, Apple, Legal, EU
The iPad 2, one of the devices that would have been liable to the disputed private copy tax.
The iPad 2, one of the devices that would have been liable to the private copy tax. Image: CNET

The showdown started in January last year, when Apple decided to take issue with the amount of tax it had to pay on iPad sales to compensate for private copies of music, films and the like made with the device.

In France, all electronic devices that can be used to store and copy "cultural works" are subject to the levy — known as a fair use tax. The amount of tax attached to each device depends on its storage capabilities, and it's collected at source by hardware manufacturers and then paid to right holders' union Copie France.

Apple collected the tax on its iPad sales throughout 2011 — up to €14 on an iPad 2 with 64GB of storage — but didn't give it to the union. According to the French newspaper Les Echos, the company is thought to have collected as much as €4.74m of fair-use tax for that year, which it did not pass on.

Apple had filed a case disputing the size of the levy on tablets, hoping to get France's Council of State to cancel it altogether. The size of the levy was meant to be set temporarily — lasting from January to December 2011 — while Copie France conducted a study into how tablets are used in order to set the tax level. It's carried out similar studies as for other electronic devices, though its research has been regularly criticized by consumers and manufacturers.

It's been argued for example that the tax doesn't take into account business use of electronic devices — it's thought enterprise hardware isn’t likely to be used for making private copies of media. Now workers can now ask for the tax they paid when buying their hardware to be reimbursed; however, such reimbursements are hardly ever requested, as most retailers don't explicitly highlight the tax on receipts.

New levels of fair use tax were set back in December 2012, and are once again being queried by consumers unions and manufacturers. 

However, the district court of Paris last week ruled that the amount of tax Apple had to cough up for iPad sales in 2011 is still enforceable until Council of State ruled otherwise, according to the French rights owners association Sacem. Consequently, Apple now had to pay Copie France €5m.

It's not known yet when the Council of State will give its ruling on the issue.

Topics: Hardware, Apple, Legal, EU

Valéry Marchive

About Valéry Marchive

A graduate in networking and databases and an author of several books about Apple gear, Valéry Marchive has been covering the French IT landscape since the late 90s, both for the consumer and enterprise sectors.

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  • France is such a joke

    Hey, let's use government to force businessmen to pay for the art that people look at on their devices!

    Atlas Shrugged reads more like a current events book every single day.
    • Ayn Rand's ode to selfishness

      is as vile today as it was when it was written.
      • Calling Atlas Shrugged an "ode to selfishness" . . .

        . . . is proof positive that you haven't read a page of it.
  • Kudos to the French

    Once again apple stands alone thinking the normal rules don't apply because, well, because they're apple. Roll on the ebook verdict, hope they hurry up, popcorn levels are getting low.
    Little Old Man
  • Apple can't afford

    Apple can't afford too many more judgments like this. It would only take 28,000 such penalties to drain the company's cash reserves.
    • You are right but cash isn't the issue

      The thin veneer of apple's untouchable status is rubbing off. Microsoft has been able to afford every fine thrown at it but their reputation has suffered. It is apple's reputation that is worth far more and it is that reputation that gets damaged when apple is caught evading taxes or forming anti competitive cartels with the goal of punishing consumers or blatantly stealing Samsung innovation to the point where the government says "ENOUGH" and starts banning apple products.

      apple does a ton of evil and it is now impossible to defend them if you have a conscience.
    • Apple can't afford

      to continue behaving like petty thieves, flaunting the laws of the land, while picking and choosing whichever one they like, since it is beneficial or advantageous to them.

      As a matter of fact, isn't that what criminals do?
    • this is not a penalty

      It is a tax. Apple collected the tax (that is deducted it from their sales) and now the court has ruled their disputing the tax (which made sense as it was declared experimental) is rejected. So Apple will just remit the collected tax.

      This precedent will make that tax mandatory for all tablet manufacturers, even those who unlike Apple did not collect or account for this tax. From 2011 onwards that is.
  • You can't make many friends in EU

    Without respecting the local law. Just sayin.
  • We have this same moronic tax in my country

    and a tax on burnable media (like CD and DVD) even though these are now largely used for songs and movies we've already paid for. Culture industries need to learn to stand on their own two feet, and live off the avails of their product like everyone else.
    • At least the MPAA + RIAA gets denied

      when they attempt to troll on; as the local authorities and judges say: "You can't have it both ways".

      Since the levy is paid for blank media, including HDD and USB memory keys, and other flashable/recordable 'media' devices (Not only Apple's).

      It then becomes legal to record whatever, off YouTube for instance? Speaking of which, how come YouTube gets off scott-free?
  • socialism + apple greed

    not a good combination for the paying French.
    LlNUX Geek
    • Re: socialism

      Is copyright socialist?
  • What's the fee for?

    I couldn't quite tell. Is the €5m the penalty for not paying the tax, or is it what they have to pay instead of the €14m they collected?
    • It's not a fine.

      Much like in the US, where customers pay a sales tax which is then forwarded to the government, Apple collects a use tax in France.

      Apple felt that tax was too high, and appealed for a reduction. They lost the appeal.

      It should be noted that the tax is not levied on Apple, but on users. Apple is merely the middleman in this arrangement.
      • Not a middleman

        apple took payment from one side but didn't pass it on to the other side. That isn't being in the middle at all.

        With apple "the buck stops here". Literally.
        • pills time

          Toddy, your hate for Apple is making you say plain stupid things.

          Or, you might just not know how taxation works.
  • The level of reading comprehension here is sad.

    Apple is not paying a fine. Apple collected taxes on iPads based on France's belief that all users steal content (much like Microsoft paid the RIAA for every Zune sold). Apple disputed that their customers were thieves, and disputed the amount owed.

    France (like the posters above) decided that all tablet users as thieves, and demanded the full amount.
    • Thanks for the clarification.

      This isn't a fine. What happened is that apple collected taxes from apple consumers and then pocketed those taxes instead of remitting them to the government.

      "Apple collected the tax on its iPad sales throughout 2011 — up to €14 on an iPad 2 with 64GB of storage — but didn't give it to the union. According to the French newspaper Les Echos, the company is thought to have collected as much as €4.74m of fair-use tax for that year, which it did not pass on."

      Totally defensible. /s

      But not a fine.

      Regardless, one thing is for sure: dishonesty and tax evasion is clearly a part of apple's culture. Well, apple evades HALF the taxes. They don't evade the collecting half, only the paying half.
      • No, NonZealot, you're wrong again.

        Apple collected the taxes as required, but appealed the amount. If the appeal had been successful, the money would have been refunded to the customer. Instead, the money will be forwarded.