
Amazon and Apple hit by EU tax crackdown - T-zex
http://www.bbc.co.uk/news/uk-41497459
======
Tyrannosaur
What I don't understand is why Amazon and Apple are getting the punishment.
They were abiding by the laws of the country they were in, and now getting
punishment. Surely if any party were to be punished it would be the
governments of Ireland and Luxembourg which sanctioned these agreements in the
first place? It seems that the EU is less interested in law-abiding and more
interested in that sweet, sweet U$D. Ex post facto law at its finest.

~~~
foepys
You clearly only read the headline because it fits your agenda. The article
clearly states that the EU is ordering Ireland and Luxembourg to tax Apple and
Amazon correctly instead of giving them special tax rates.

~~~
kodablah
Did you read the comment you are replying to? Op said "I don't understand is
why Amazon and Apple are getting the punishment" and you essentially said "The
article clearly states that countries are ordered to enforce the punishment".
You are talking past each other. The question is why the companies are being
punished and why the states are not, not about the enforcement. What keeps
Ireland and Luxembourg from doing this again? If the EU is going to strike
down state-mandated tax deals, why not just require the tax deals to have
approval from them in the first place?

~~~
Fnoord
> Did you read the comment you are replying to? [..] The question is why the
> companies are being punished and why the states are not, not about the
> enforcement.

It isn't a punishment, stop calling it like a punishment. There is no
additional fine. The only thing which has to be paid is the due tax plus
interest.

It is you who has to read. From the article:

"Meanwhile, the Commission said it planned to refer Ireland to the European
Court of Justice for failing to recover €13bn in back taxes from tech giant
Apple."

> What keeps Ireland and Luxembourg from doing this again? If the EU is going
> to strike down state-mandated tax deals, why not just require the tax deals
> to have approval from them in the first place?

Hopefully Ireland or Luxembourg won't let themselves be allowed to avoid taxes
anymore. But since neither Apple, nor Amazon, nor Ireland, nor Luxembourg is
being fined (again, there is no punishment) I'd speculate that it might still
be lucrative. After all, being able to invest > interest.

~~~
kodablah
> It isn't a punishment, stop calling it like a punishment.

I'm sorry, but a selectively enforced law, only applied retroactively with NO
attempt to curb the practice proactively is definitely punishment for whomever
they arbitrarily choose to apply it to. Were there an attempt to actually
punish the offenders (the states making illegal laws), one could believe they
are making an attempt at preventing this law breaking. Otherwise, one can't
help but see this as one of those laws left on the book to build offenders.

> Hopefully [...]

Exactly...hopefully. The EU doesn't enforce this evenly, they don't attempt to
proactively prevent it, etc. To understand the real reason these enforcements
occur, ask yourself why the EU doesn't take preventative action. You'll
eventually arrive at the real answer.

~~~
Fnoord
> I'm sorry, but a selectively enforced law, only applied retroactively with
> NO attempt to curb the practice proactively is definitely punishment for
> whomever they arbitrarily choose to apply it to. Were there an attempt to
> actually punish the offenders (the states making illegal laws), one could
> believe they are making an attempt at preventing this law breaking.
> Otherwise, one can't help but see this as one of those laws left on the book
> to build offenders.

Do you think it is easy to prevent? Could you describe how you'd do it, by
citing the laws? If you can't, why do you assume it is so easy to prevent? Why
do you assume malice?

> Exactly...hopefully. The EU doesn't enforce this evenly, they don't attempt
> to proactively prevent it, etc. To understand the real reason these
> enforcements occur, ask yourself why the EU doesn't take preventative
> action. You'll eventually arrive at the real answer.

If I see someone breaking the law, and there are no proactive measures in
place to prevent the law, then that means that the intend of the lawmaker is
illicit?

What makes you think the EU can enforce this evenly? The whole structure of
double Irish with a Dutch sandwich isn't even available to EU companies to
begin with.

You gotta start somewhere, if you want to fight it. Same with the war against
drugs. Would the drugs baron's defense be: "but the others are frolicking
around freely?" Would your response still be when the first action is being
taken: "they're not doing enough to prevent?"

As for other tax avoidance, yes, the EU and its states are most definitely
looking into those. Starbucks is an example I already mentioned elsewhere
throughout the thread (hint: Ctrl+F). Here's another example regarding the
Dutch railroad company [1]. That's also an Irish construction, btw.

[1] [https://www.ad.nl/economie/fiscus-onderzoekt-ierse-
belasting...](https://www.ad.nl/economie/fiscus-onderzoekt-ierse-
belastingconstructie-ns~a5f7c220/)

~~~
kodablah
> Do you think it is easy to prevent? Could you describe how you'd do it, by
> citing the laws? If you can't, why do you assume it is so easy to prevent?
> Why do you assume malice?

While I cannot cite the specific laws, when a jurisdiction makes rules
regarding contractual arrangements like this, and they are continually broken,
I would expect they insert themselves into the process sooner rather than
later. Why not require all member state tax arrangements that are below a
required threshold be submitted to the EU tax regulators for approval? Instead
of waiting on the regulators to get around to them anyways? And put leverage
on the countries to be punished if they don't follow these rules? What
leverage can the EU put on a country to abide by EU law? Why is that leverage
not being applied here?

I think the analogies with burglary and drug war and what not aren't really
helpful. When I say "evenly" I don't mean they have to have the resources to
apply to everyone. I just mean sans prejudice. I'll just take a statement
saying what their priority order is? If they just come out and say "largest
offenders first", I think that's ok.

To reiterate a point I made in the above paragraph, what leverage does the EU
have to keep member states from flaunting their laws? Why is that leverage not
applied to Ireland and Luxembourg in this instance? I am a bit unfamiliar, so
I will take any information on what the EU is doing to stop countries from
doing this.

~~~
Fnoord
> While I cannot cite the specific laws, when a jurisdiction makes rules
> regarding contractual arrangements like this, and they are continually
> broken, I would expect they insert themselves into the process sooner rather
> than later.

Because it isn't in their benefit to, just like the interests of California
might not align with those from Delaware, or those from California or Delaware
might not align with those from the federal government. Ireland benefited as
well from these deals via more tax income, and more jobs. So it is in the
benefit of the Irish government to stall this process as much as they can. It
buys them time, and there's seemingly no fine anyway. At least, not yet.

> I'll just take a statement saying what their priority order is? If they just
> come out and say "largest offenders first", I think that's ok.

They don't even know which company is the largest offender before they
researched it. Looking at the article, it says: "The decision on Amazon
follows a three-year long investigation by the European Commission, which said
in 2014 that it had suspicions the arrangement had broken EU rules" 3 years of
investigation, yet not even a fine. Do you think the EU is making money here,
paying people for 3 years for investigating? The clear loser is the European
taxpayer. In the long run, the European taxpayer is better off with companies
paying tax than without.

I linked you the list of companies following this construction. They're all US
companies. If your argument is they should go for EU companies first, well,
there are none following _this_ construction.

I'm curious where you're from, so I can get a picture about your news bubble.
I assume your native language is English? If you think only US companies are
being targeted by tax departments, then you're probably sitting in some kind
of bubble, sorry. I already linked various articles throughout this thread. I
gave you information regarding Shell and Nationale Spoorwegen (Dutch raidroad
company). Allegations, reactions, and investigations to the Panama Papers are
another example [1] [2]. If we look specifically at Britain, we can notice
football clubs, real estate, but also politicians themselves. That could
certainly explain their lack of action towards their own avoidance. However,
that doesn't justify it (no "tu quoque"), nor does it mean all politicians
resort to tax avoidance.

> To reiterate a point I made in the above paragraph, what leverage does the
> EU have to keep member states from flaunting their laws? Why is that
> leverage not applied to Ireland and Luxembourg in this instance? I am a bit
> unfamiliar, so I will take any information on what the EU is doing to stop
> countries from doing this.

It is in the article:

"Meanwhile, the Commission said it planned to refer Ireland to the European
Court of Justice for failing to recover €13bn in back taxes from tech giant
Apple."

The leverage just got escalated. The wheels of justice grind slowly...

I've seen my country (NL) getting reprimanded about various things by the EC.
An example is that downloading copyright infringed content was legal in NL. In
a court case though, NL got reprimanded that it is illegal, so it is now by
Dutch law (since 2014 or so IIRC). The Dutch government also got a slap on the
wrist regarding Starbucks. Eventually, if local governments don't comply,
there are going to be financial consequences. We don't know the outcome here
yet. We're 3 years in, still no outcome. Does that mean its unjustified? Seems
according to your line of reasoning: Yes.

[1]
[https://en.wikipedia.org/wiki/Panama_Papers#Allegations.2C_r...](https://en.wikipedia.org/wiki/Panama_Papers#Allegations.2C_reactions.2C_and_investigations)

[2]
[https://www.theguardian.com/business/taxavoidance](https://www.theguardian.com/business/taxavoidance)

------
danmaz74
It's good that the EU is taking steps against these unfair deals, but IMHO
it's not enough. In this "web era", we just can't accept that it's enough to
open your headquarters in Luxembourg to only pay Luxembourg corporate taxes,
when actually your EU operation is like 97% outside of Luxembourg. It's just
not sustainable, it needs to change - Luxembourg is just stealing taxes from
all other EU countries, that's all.

~~~
dogma1138
Luxembourg has a 29% corporate tax rate the 4th highest in Europe. This isn't
Liechtenstein, Ireland or Estonia... Unlike Ireland Luxembourg also did not
hand out tax credits.

Shell paid less than 1 bln US in tax last year in the EU, and less than 5 bln
US globally, and overall it's by far much more subsidized than Apple or
Amazon, the difference being it's a European corporation.

Most of not all of the largest European corporations excel at Tax avoidance,
in fact they are the ones Google, Apple and Amazon learned the tricks of the
trade from, heck the EU was just fine establishing tax heavens for their own
corporations and canonizing them in EU law as long as they are the ones
benefiting from them.

~~~
noelwelsh
One corporation doing something morally wrong and getting away with it doesn't
excuse another company for doing the same. "He did it first" doesn't work on
the playground and neither should it work in corporate law.

~~~
bmmayer1
There's nothing morally wrong with reducing one's tax burden to the extent
that is legally permissible. From Judge Learned Hand: "Anyone may arrange his
affairs so that his taxes shall be as low as possible; he is not bound to
choose that pattern which best pays the treasury. There is not even a
patriotic duty to increase one's taxes. Over and over again the Courts have
said that there is nothing sinister in so arranging affairs as to keep taxes
as low as possible. Everyone does it, rich and poor alike and all do right,
for nobody owes any public duty to pay more than the law demands"

~~~
andrepd
>There's nothing morally wrong with reducing one's tax burden to the extent
that is legally permissible.

Yes there is. It may not be _legally_ wrong, but it sure is _morally_ wrong.
What matters is the spirit of the law. The fact that big corporations can hire
squads of lawyers and search and identify loopholes that allow them to pay
outrageously low taxes on outrageously high revenues doesn't make it morally
acceptable, even if they technically are following the letter of the law.

Add to that the fact that these loopholes and exploits are kept in place by
fierce (and expensive) lobbying efforts from those very same companies and
people.

~~~
Y_Y
> It may not be legally wrong, but it sure is morally wrong.

Ah now. Governments don't just use taxes to raise revenue, but also for
incentives. If they tax moving cash abroad to help with the balance of
payments and you restructure your company to avoid doing this then everyone is
happy. It doesn't excuse manipulating the government to make favourable tax
laws however.

------
simonebrunozzi
Not enough.

A 250M fine is almost a joke. Companies like Amazon, Google, Facebook, etc,
save Billions of dollars every single year by setting up "creative" tax
schemes.

A 250M fine is almost an incentive to keep doing it.

~~~
Cthulhu_
The EU needs to find a balance though - too little and they'll just keep doing
it, like what you're saying. Too much though, and a few things will happen:

* They will spend 10+ years in courts to fight it; paying a team of lawyers to fight the ruling or at least postpone having to pay it will be cheaper than paying it. * They'll get out and find a new tax haven.

250 - 500 million seems to be a figure that gets paid eventually (see also
EU/RealPlayer vs MS). Higher than that and they'll find a way to not have to
pay it and annoy a lot of people - legally.

~~~
pbhjpbhj
Amazon will leave the EU to find a tax haven? Like stop trading?? Because if
they're tradinging here then they've not left the jurisdiction of the EU -
we're talking about Amazon, whose zero-hour workers have to be supported by
social care, making slightly less profit.

They reportedly paid £15M tax on profit of c.£20 Billion.

------
ksec
I have always this question in my mind, If Amazon never made any profits, (
They are ALL invested back to somewhere ), or they decide to borrow $50
Billion, and have any profits left over from investment being paid to the
loan's interest.

Basically there are Zero profits.

Why would there be Tax?

It doesn't matter if you are in US, EU, or anywhere else in the world. Surely
No Profits = No Collected tax, or am i missing something obvious?

~~~
_rpd
Tax law is quite complex. Even for taxes based on profits, it is non-trivial
to tie patterns of revenue and expense to particular tax jurisdictions (much
less particular geographical locations).

This is particularly true in the age of e-commerce - did the revenue occur
where the purchaser clicked an icon, where a server received the buy message,
where a server recorded/confirmed the transaction, where a bank sent/received
currency, where a warehouse dispatched an item (what if it's a digital item),
where the item was received, all of the above, some of the above depending on
ever shifting tax law in multiple jurisdictions? There are more and different
questions related to expenses. For example, should it have some relationship
to where employees are located?

Armies of people work every day to prevent upsetting some tax jurisdiction
while minimizing tax expense. It's a sisyphean task. Compared to Amazon's
revenues, $250m is a rounding error, so they have very good accountants
working for them.

------
pwtweet
I see all the EU state aid and Single Market specialists are on here giving
there expert opinions.

------
glasz
eu tax crackdown.

just another smoke screen while "the union" is on fire to keep the sheep calm
and comfy on their fucking couch. greece? nobody's talking about that anymore.
britain's decision to leave in peace? they're screwing around with that.
catalonia? shows you the "values" of this great europe.

votes have shown that people are greatly unhappy and the clowns in brussels
have nothing better to do than to pretend a few corporate bucks will benefit
the people.

~~~
cinquemb
Well one thing is for certain, it is becoming easier to time shorts on certain
European asset classes exposed to these political games…

------
bobcostas55
When Caesar divorced Pompeia, he said "my wife ought not even to be under
suspicion". As a European I feel the same about the way the EU is plundering
US tech companies. Maybe they really broke the law, but you should be above
suspicion. When VW has not paid any fines in Europe for the emissions scandal,
it's hard not to be suspicious about what's going on.

The Eurostoxx 50 is still below its 2007 peak (and that peak was below the
2000 peak). GDP growth has been pathetic. Almost a decade into the Greek
crisis they're still just kicking the can down the road. Is the EU trying to
be a productive economic system or a kleptocracy that survives on the scraps
it can extract from the Americans? Get your house in order, then maybe these
fines would not look as bad.

~~~
rbehrends
This is not how this works at all. The issue at hand is "illegal state aid".
Briefly, in the EU, member states may not unfairly favor local businesses by
subsidizing them [1]. This includes subsidies via tax breaks that favor some
companies over others.

Now, you can have reasonable disagreement about whether those tax breaks are
indeed illegal state aid or not (in the case of Apple in Ireland, reasonable
arguments have been advanced for both sides). But this is not about plundering
US companies: it's about large companies not getting special favors from the
state. The tax breaks would not be owed to the EU, but to the member state
that gave them the illegal tax break.

The Volkswagen situation is different, as this is not about antitrust law, and
the EU has much less power outside antitrust cases [2]. That does not mean
that the European Commission hasn't tried to exert political pressure on
Volkswagen [3] and the member states [4], but it is bound by the powers
granted by the EU treaties.

[1] There are exemptions in the treaties, such as for charities or in response
to a crisis or natural disaster. It also only affects state aid that distorts
or risks distortion of competition.

[2] European carmakers _have_ been hammered hard in the past for antitrust
violations, too, such as: [http://europa.eu/rapid/press-
release_IP-16-2582_en.htm](http://europa.eu/rapid/press-
release_IP-16-2582_en.htm)

[3] [http://www.politico.eu/article/how-not-to-lobby-juncker-
the-...](http://www.politico.eu/article/how-not-to-lobby-juncker-the-
volkswagen-way/)

[4] [https://www.reuters.com/article/us-volkswagen-emissions-
eu/e...](https://www.reuters.com/article/us-volkswagen-emissions-eu/eu-takes-
legal-action-against-germany-uk-over-vw-scandal-idUSKBN13X14N)

~~~
bobcostas55
>But this is not about plundering US companies

Starbucks, Apple, Amazon, McDonald's...do you notice a pattern? The suggestion
that the Commission is not targeting big US companies is comical (especially
in the light of similar actions with other justifications, like the 2.7b fine
on Google for their shopping search), as is their interpretation of both tax
law and illegal state aid.

The commission doesn't even challenge the transfer pricing laws, they just
interpret them differently and based on their interpretation they decide that
the tax authorities have granted a selective advantage. The procedure is
completely arbitrary as its entire basis is the disagreement between the
commission and the tax authorities. Given the complexity of corporate
structures and tax law, and the inherent ambiguities of things like transfer
pricing, such disagreements can be generated wherever the commission wants to
find them. If they wanted to target Chinese companies it would be trivial to
conjure up similar issues.

It's particularly ironic that a law against selective treatment of
corporations is being used to selectively punish some of them.

~~~
rbehrends
> Starbucks, Apple, Amazon, McDonald's...do you notice a pattern? The
> suggestion that the Commission is not targeting big US companies is comical,
> as is their interpretation of both tax law and illegal state aid.

If you selectively only pick the cases against US companies because that's
what you hear about in the US media, but ignore the cases against EU
companies, then I can see how you can get that impression. But it's not really
the full picture.

More importantly, and regardless of what you think of the merits, the EU is
not the beneficiary, since those tax breaks are to be paid to the respective
member state. The benefit for the EU – one way or another – is a more
competitive environment, not the money it does not even get. So, "plundered"
is an inaccurate term either way.

And you hear a lot about big US companies, because (1) smaller US companies
are less likely to operate in the EU and (2) US antitrust law has been watered
down since the late 1970s (starting with Bork's "Antitrust Paradox"), leading
to a concentration of corporate power that's simply not present in Europe [1].
As a result, antitrust cases against EU companies tend to be more about
collusion, while antitrust cases against US companies in the EU tend to be
more about abuse of a dominant market position.

[1] See, for example, OECD self-employment rates and how America is near the
bottom: [https://data.oecd.org/emp/self-employment-
rate.htm](https://data.oecd.org/emp/self-employment-rate.htm)

~~~
asr
Do you have any idea of a good data source showing the total amount of state
aid fines imposed by the EC? One source I've found [0] suggests that total
state aid fines by the Commission from 2005-2015 were somewhere on the order
of 2.5 billion euro, which is dwarfed by the 13-15 billion euro fine Apple is
facing. But I may be misreading the report I found/missing some better data.

[0] rlegutko.pl/download/en-nieuczciwa-konkurencja-polityka-
insight-270320171.pdf, see Chart 8 on page 18.

~~~
rbehrends
There is no such thing as a fine for state aid. Member states are required to
recover illegal state aid from the beneficiaries, with interest.

Recovery of state aid is uncommon, since most governments simply seek approval
for exemptions beforehand (such as the UK for Hinkley Point) and so there are
relatively few large incidents of illegal state aid. Especially as it's rare
for a government to throw that much money at a single company without great
need, illegal or not.

~~~
asr
Thanks, that's helpful. Although, from your answer I take it that U.S.
companies are, in fact, the major subjects of these high-profile EC
enforcement actions and there are not actions of similar magnitude against EU
companies that I've missed. (That could be entirely just and appropriate, of
course.)

~~~
rbehrends
It's mostly Apple that's an outlier here, with €13 billion owed (contingent
upon the ECJ not overturning that), and that's over a period of 12 years.

Amazon has to pay back €250 million, which is a pittance compared to their
annual EU revenue of over €20 billion, and that was originally triggered by
the LuxLeaks revelations, which are also hitting (say) IKEA, which is
reportedly being investigated for over €1 billions in illegal tax breaks [1].

One interesting aspect of the Apple case is that the American federal
government may not actually mind Apple getting slapped around a bit; Apple not
repatriating its foreign profits has been an issue for quite some time, and
that only works out for Apple because Apple can park those in tax havens
abroad.

[1] [http://www.reuters.com/article/us-eu-ikea-taxavoidance/eu-
re...](http://www.reuters.com/article/us-eu-ikea-taxavoidance/eu-regulators-
to-examine-lawmakers-report-on-ikea-taxes-idUSKCN0VO19C)

------
easytiger
I'm actually quite pro europe, but the insidious influence of the French in
particular and, to a geat extent in other ways, the Germans, over their desire
for economic imperialistic dominion (now enriched tenfold with GB no longer
party to anything going on) is a problem.

Ireland is a very small country with no natural resources. Its way of
participating in the EU's drive for growth was the nation's economic policy
and its well educated population as a base for American companies to bridge
into Europe.

France clearly is bent out of shape because if other EU members can survive
without gouging business, citizens et al with incredible levels of punitive
taxation, then they can't continue their own shakedown forever without seeing
business flight. Sooner or later they will have to relent and reduce their own
taxes.

Same with the pursuit of Google, MS, Facebook et al. by Eurocrats with open
portfolios.

Its an old fashioned shake down by the biggest self protecting bureaucracy
outside of China. In my opinion.

~~~
3pt14159
What?

The internet is global and taxes are local. Why should governments allow a
race to the bottom on tax rates?

~~~
easytiger
There are more variables than tax rate behind business decisions.

~~~
sgift
> Ireland is a very small country with no natural resources. Its way of
> participating in the EU's drive for growth was the nation's economic policy

Irelands economic policy is "no taxes, make your EU HQ here!", so you just
argued for the exact opposite position a few minutes before. Which one is it?

~~~
easytiger
It isn't no taxes. And yes certain deals were struck, still supported by the
democratically elected government.

You will have noticed every company in the world hasn't relocated... so yes,
there are other variables.

