Apple ordered to pay Ireland €13bn in unpaid tax

[stud muffin]

http://www.bbc.co.uk/news/business-37220799

The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years," she added.

The standard rate of Irish corporate tax is 12.5%. The Commission's investigation concluded that Apple had effectively paid 1% tax on its European profits in 2003 and about 0.005% in 2014.

Ms Vestager said that the tax agreement reached between Ireland and Apple meant that the company's taxable profits "did not correspond to economic reality

A windfall for Ireland, but they are going to appeal against the decision!!

When a government appeals against a €13bn windfall you know there's something very dodgy going on.

The fact that apple paid 0.005% tax in 2014 is criminal.

[stud muffin]

Apple CEO Tim Cook has criticised the international tax system as "not good," and previously vowed to appeal the decision if he feels that Apple didn't "get a fair hearing."

"Let me explain what goes on with our international taxes. The money that's in Ireland...is money that is subject to US taxes. The tax law right now says we can keep that in Ireland or we can bring it back,"

If Apple win their appeal and the profit generated in Europe is subject to UStax, then the EU should slam a tariff on all apple goods. I bet the US would do it if the roles were reversed.

[Sandydragon]

http://www.bbc.co.uk/news/business-37220799

The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years," she added.

The standard rate of Irish corporate tax is 12.5%. The Commission's investigation concluded that Apple had effectively paid 1% tax on its European profits in 2003 and about 0.005% in 2014.

Ms Vestager said that the tax agreement reached between Ireland and Apple meant that the company's taxable profits "did not correspond to economic reality

A windfall for Ireland, but they are going to appeal against the decision!!

When a government appeals against a €13bn windfall you know there's something very dodgy going on.

The fact that apple paid 0.005% tax in 2014 is criminal.

It is a spectacularly low level of tax. Yet, it was the rate agreed by the company and Irish government, so why hammer the company years down the line? Unless there is evidence of a criminal conspiracy (in which case all bets are off) the Irish government were probably looking to Apple to create jobs in their country and use an ultra low tax rate to tempt them in. Its probably not going to encourage competition, but I can see why the Irish government did it and why it now looks unfair to retrospectively change the amount that should be paid.

International tax law is confusing and does need clarification. I personally think however that if the EU had a major problem with this, then they should have imposed a new rate for transactions hereafter rather than rip up an agreement with a national government.

[stud muffin]

Apple employs 5,500, or about a quarter of its Europe-based staff, in the Irish city of Cork, where it is the largest private sector employer. It has said it paid Ireland's 12.5 percent rate on all the income that it generates in the country.

The Commission said the rulings were "reverse engineered" to ensure Apple had a minimal Irish bill and that minutes of meetings between Apple representatives and Irish tax officials showed the company's tax treatment had been "motivated by employment considerations.

It seems like it pays tax on all profits in Ireland at 12.5%, but the rest of the profits from not just Europe but elsewhere in the world just go through Ireland and don't seem to be taxed at all it all.

[Sandydragon]

Not sure why employment considerations should be a bad thing.

The payment of taxes in other Euro countries is a valid point for the EU, but I suspect Apple is not the only one who has an issue here. Unless you are physically located in one country and only trade within the borders of that country then working out what tax you owe where is a bit of a bugger. It can be difficult enough where physical good transit across borders, but across the internet!

Legislation hasn't kept pace with technology in this instance.

[morepork]

Not sure why employment considerations should be a bad thing.

The payment of taxes in other Euro countries is a valid point for the EU, but I suspect Apple is not the only one who has an issue here. Unless you are physically located in one country and only trade within the borders of that country then working out what tax you owe where is a bit of a bugger. It can be difficult enough where physical good transit across borders, but across the internet!

Legislation hasn't kept pace with technology in this instance.

The fuck it hasn't. The legislation is designed to drive a bus through. Is Ireland a wee bit of a tax haven?

[Sandydragon]

Not sure why employment considerations should be a bad thing.

The payment of taxes in other Euro countries is a valid point for the EU, but I suspect Apple is not the only one who has an issue here. Unless you are physically located in one country and only trade within the borders of that country then working out what tax you owe where is a bit of a bugger. It can be difficult enough where physical good transit across borders, but across the internet!

Legislation hasn't kept pace with technology in this instance.

The fuck it hasn't. The legislation is designed to drive a bus through. Is Ireland a wee bit of a tax haven?

It has the lowest tax for corporations in the EU, as far as I'm aware. That in itself is anti-competitive if you take the EU's view of the world. I'm not necessarily arguing over the right or wrongs of low corporation tax here, more the right of a national government to set its own rates and why a corporation should be retrospectively held accountable for a rate change that is in excess of what was agreed with the national government concerned.

[Eugene Wrayburn]

Not sure why employment considerations should be a bad thing.

The payment of taxes in other Euro countries is a valid point for the EU, but I suspect Apple is not the only one who has an issue here. Unless you are physically located in one country and only trade within the borders of that country then working out what tax you owe where is a bit of a bugger. It can be difficult enough where physical good transit across borders, but across the internet!

Legislation hasn't kept pace with technology in this instance.

The fuck it hasn't. The legislation is designed to drive a bus through. Is Ireland a wee bit of a tax haven?

It has the lowest tax for corporations in the EU, as far as I'm aware. That in itself is anti-competitive if you take the EU's view of the world. I'm not necessarily arguing over the right or wrongs of low corporation tax here, more the right of a national government to set its own rates and why a corporation should be retrospectively held accountable for a rate change that is in excess of what was agreed with the national government concerned.

Because it's state aid. You can't pick and choose which company is going to have which rates of taxation if you are going to be part of a moderately fair market.

[Digby]

The fuck it hasn't. The legislation is designed to drive a bus through. Is Ireland a wee bit of a tax haven?

It has the lowest tax for corporations in the EU, as far as I'm aware. That in itself is anti-competitive if you take the EU's view of the world. I'm not necessarily arguing over the right or wrongs of low corporation tax here, more the right of a national government to set its own rates and why a corporation should be retrospectively held accountable for a rate change that is in excess of what was agreed with the national government concerned.

Because it's state aid. You can't pick and choose which company is going to have which rates of taxation if you are going to be part of a moderately fair market.

Indeed.

[canta_brian]

So, will apple leave Ireland? Expect they need a site within Europe for some reason or other, can they leave the Eu for tax reasons and still access the European markets without any tariffs?

[belgarion]

So, will apple leave Ireland? Expect they need a site within Europe for some reason or other, can they leave the Eu for tax reasons and still access the European markets without any tariffs?

AFAIK Apple cokud just up sticks from Eire & move to another country, however, if it was an EU country they'd still have to abide by EU rules
governing state aid while moving to a non-EU country they wouldn't have to & just trade with the EU as a non-EU partner

[Digby]

Could Ireland refund everyone who paid tax at the full rate such they paid an equivalent rate to Apple? Ignoring if they could afford it.

[Mellsblue]

Going by the info on here it seems the issue is that, although Apple paid the required tax on income generated in Ireland, the Irish govt allowed them to book income generated elsewhere through their Irish office at minimal/neglible rates. If that is the issue then pick an inordinately large number, stick a zero on the end and fine the feckers.

If it's a case that the Irish govt have given them a favourable rate for income generated Ireland, based on the large numbers they would employ and the amount of tax and spending those employees would generate, then good luck to them. The Irish Treasury's coffers and those employed by them are better off than with no Apple presence at all, and how domestic tax is levied should be that country's decision and no-one else's.

[Sandydragon]

The fuck it hasn't. The legislation is designed to drive a bus through. Is Ireland a wee bit of a tax haven?

It has the lowest tax for corporations in the EU, as far as I'm aware. That in itself is anti-competitive if you take the EU's view of the world. I'm not necessarily arguing over the right or wrongs of low corporation tax here, more the right of a national government to set its own rates and why a corporation should be retrospectively held accountable for a rate change that is in excess of what was agreed with the national government concerned.

Because it's state aid. You can't pick and choose which company is going to have which rates of taxation if you are going to be part of a moderately fair market.

So a problem for the government, not the company? I'm not suggesting that Apple didn't lobby like mad to get the favourable rate, but it was the one agreed to by the government. Why should the company be penalised and why do much later on from the deal?

[Eugene Wrayburn]

It has the lowest tax for corporations in the EU, as far as I'm aware. That in itself is anti-competitive if you take the EU's view of the world. I'm not necessarily arguing over the right or wrongs of low corporation tax here, more the right of a national government to set its own rates and why a corporation should be retrospectively held accountable for a rate change that is in excess of what was agreed with the national government concerned.

Because it's state aid. You can't pick and choose which company is going to have which rates of taxation if you are going to be part of a moderately fair market.

So a problem for the government, not the company? I'm not suggesting that Apple didn't lobby like mad to get the favourable rate, but it was the one agreed to by the government. Why should the company be penalised and why do much later on from the deal?

It isn't being penalised. It's being asked to return the illegal state aid.

You repeatedly talk about delay. You get an offence, followed by suspicion, followed by investigation, followed by conclusion. These things take time.

[onlynameleft]

I don't really get the confusion over this. Irish govt offered 'special deal' to Apple for whatever reason. EU rules basically say you have to treat everyone equally. 'Special deal' whatever it's motive breaches EU law. Ireland could have offered same deal to all but they did not?

[Eugene Wrayburn]

I don't really get the confusion over this. Irish govt offered 'special deal' to Apple for whatever reason. EU rules basically say you have to treat everyone equally. 'Special deal' whatever it's motive breaches EU law. Ireland could have offered same deal to all but they did not?

I can't be certain but I doubt that they could have done that without actually changing the law to say that they weren't going to collect tax on earnings outside Ireland. However as I understand things that would have left Apple vulnerable to tax claims in the US and elsewhere as treaties prevent double taxation but not extra-territorial taxation where a country simply declines to tax.

[kk67]

Not sure why employment considerations should be a bad thing.

The payment of taxes in other Euro countries is a valid point for the EU, but I suspect Apple is not the only one who has an issue here. Unless you are physically located in one country and only trade within the borders of that country then working out what tax you owe where is a bit of a bugger. It can be difficult enough where physical good transit across borders, but across the internet!

Legislation hasn't kept pace with technology in this instance.

The fuck it hasn't. The legislation is designed to drive a bus through. Is Ireland a wee bit of a tax haven?

It's going to be interesting to see what qualifies as a tax haven in the years to come. The square Mile has been the centre of money laundering for the blue chip stocks since the 80's. But that was when they were able to manipulate the price.
Now not so much.

[Sandydragon]

Because it's state aid. You can't pick and choose which company is going to have which rates of taxation if you are going to be part of a moderately fair market.

So a problem for the government, not the company? I'm not suggesting that Apple didn't lobby like mad to get the favourable rate, but it was the one agreed to by the government. Why should the company be penalised and why do much later on from the deal?

It isn't being penalised. It's being asked to return the illegal state aid.

You repeatedly talk about delay. You get an offence, followed by suspicion, followed by investigation, followed by conclusion. These things take time.

Yet state aid is permitted under TFEU Article 107(3) where:

• aid categories that may be considered compatible: Article 107(3) allows the possibility of approving State aid to:
- Promote economic development of areas of abnormally low standard of living or serious unemployment;
.

Its not difficult to argue that Ireland was in that position in the early 1990s when the agreement was first fleshed out to bring Apple, and other tech companies, to Ireland.

And again, if the EU has a problem with this arrangement, it should be taking issue with the Irish government. Its easy to pick on a big multinational and Im not supporting the aggressive tax avoidance that Apple pursues, the principle here is the important aspect for me; this ruling could be applied to smaller national companies who don't have $100bn sat around in the bank. Yet that isn't the issue that the EU has, or at least admits to having. The issue is that a sovereign government made a deal with a corporation on tax. The Irish government will surely argue in the appeal that their actions were important to revitalize an economically downtrodden area, which is likely to within the constraints of Article 107.

I suspect that this is an attempt to address the payment of tax by multinationals in the jurisdiction that they generate value. The attached offers a good reason why this approach of using state aid arguments instead of actual reform over tax laws is a mistake.

http://www.telegraph.co.uk/business/201 ... ules-crea/

[Sandydragon]

From today's Times

There are a few troubling aspects to the commission’s ruling that should be put to the test. According to the commission, all of the profits generated by ASI and AOE should have been taxed at the 12.5 per cent rate and the proceeds collected by the Irish tax authorities.

But this is not possible under Irish law. The Revenue can only collect taxes based on profits that were generated in Ireland.

The commission’s decision appears to be based on a different set of criteria. It found that the government cut special deals with Apple in 1991 and 2007 and consequently the tech giant was able to avoid paying its rightful corporate tax obligations in other EU member states.

On this basis the government has been ordered to recoup €13 billion plus interest from Apple. However, the government strenuously denies that it made any individual deal with Apple over the 36 years it has been in this country.

The appeals process is likely to be lengthy and complex.

[Eugene Wrayburn]

So a problem for the government, not the company? I'm not suggesting that Apple didn't lobby like mad to get the favourable rate, but it was the one agreed to by the government. Why should the company be penalised and why do much later on from the deal?

It isn't being penalised. It's being asked to return the illegal state aid.

You repeatedly talk about delay. You get an offence, followed by suspicion, followed by investigation, followed by conclusion. These things take time.

Yet state aid is permitted under TFEU Article 107(3) where:

• aid categories that may be considered compatible: Article 107(3) allows the possibility of approving State aid to:
- Promote economic development of areas of abnormally low standard of living or serious unemployment;
.

Its not difficult to argue that Ireland was in that position in the early 1990s when the agreement was first fleshed out to bring Apple, and other tech companies, to Ireland.

And again, if the EU has a problem with this arrangement, it should be taking issue with the Irish government. Its easy to pick on a big multinational and Im not supporting the aggressive tax avoidance that Apple pursues, the principle here is the important aspect for me; this ruling could be applied to smaller national companies who don't have $100bn sat around in the bank. Yet that isn't the issue that the EU has, or at least admits to having. The issue is that a sovereign government made a deal with a corporation on tax. The Irish government will surely argue in the appeal that their actions were important to revitalize an economically downtrodden area, which is likely to within the constraints of Article 107.

I suspect that this is an attempt to address the payment of tax by multinationals in the jurisdiction that they generate value. The attached offers a good reason why this approach of using state aid arguments instead of actual reform over tax laws is a mistake.

http://www.telegraph.co.uk/business/201 ... ules-crea/

Good luck to them in persuading the European Court that a sweetheart deal to enable Apple to evade 13billion of taxes was a proportionate way to regenerate. In fact the Irish government denies giving any state aid, so it won't even be trying to climb that particular Mons Olympus.

The Irish govt is sovereign, but it has both international and other obligations.

[Digby]

Who gets to administer the €13bn after Apple pays it and it then gets parked for the duration of the appeal?

[Eugene Wrayburn]

Who gets to administer the €13bn after Apple pays it and it then gets parked for the duration of the appeal?

I think it's more complicated than that, in that the EU has assessed that as the likely tax, but it's for Ireland to actually levy.

In England you would be unlikely to have to pay until final judgement. If you did it would be held in court subject to court interest rates.

[Digby]

Who gets to administer the €13bn after Apple pays it and it then gets parked for the duration of the appeal?

I think it's more complicated than that, in that the EU has assessed that as the likely tax, but it's for Ireland to actually levy.

In England you would be unlikely to have to pay until final judgement. If you did it would be held in court subject to court interest rates.

I was told in this case Apple would have to pay, and then the in the event of an appeal the money would have to remain untouched until the appeal was finished with.

Court interest rates, are they good or bad? This is sort of what I was wondering, as that's a lot of money to park for 2-3 years or maybe even longer with interest rates at some shockingly low levels.

[morepork]

So a big multinational, with it's enormous lobbying power should be allowed to "persuade" sovereign governments that they are special snowflakes and will help the poor and impoverished if only they be allowed exceptional tax leniency, not afforded to others. That is a massive pile of shit.

" Its easy to pick on a big multinational"

Bitch pleeze.