And with another quirk - this time in US tax laws - the do not even have to pay taxed in the US on those earnings, as they have not repatriated the funds.
How to pay dividends/fund buybacks, without repatriating those funds? Easy: Just issue debt (which your own subsidiary in the British Virgin islands making a killing on IP licensing might want to buy) or have your BVI IP trust fund buy those shares.
Now why would other EU countries let Ireland and the Netherlands get away with these accepted loopholes is a mystery to me, especially since Ireland had to ask for a bailout lifeline, and was in no position to negotiate firmly.
Why the US would allow their truffle pigs to not pay taxes on oversea earnings is clearly the result of expert lobbying.
You don't need expert lobbying. Look at this forum, full of tax-evasion apologists who conflate pragmatism with pedantry.
Pedantry is the one of the most intellectually and emotionally bankrupt moral frameworks. It basically states that if you just think about the rules a lot, then you will find the solution.
I mean, obviously all these politicians and normal people, they've just been getting it wrong all along! To quote other commenters, "Apple did nothing illegal!" The "Tax law is a system of rules!" Just look more carefully at those random tiny rules and then, we don't have to have a discussion anymore! People who don't read the rules carefully enough: "it makes my brain hurt!" Then blame the people who write the rules, or petition for the rules.
Pedantry is the disease, not lobbyists.
I don't know how to convince the pedants though that sometimes, it's ethical to reinterpret the rules.
To clarify, I think we should be asking whether or not what Apple does is ethical. And the answer to that question shouldn't depend on whether or not we're wondering the same about other corporations.
The answer is obviously no, tax evasion / avoidance isn't ethical.
If I ask someone on the street if its okay to steal from the rich, he says "yes" and I steal from the rich, no one would bat an eye if the courts didn't agree with my "interpretation" of the law and put me behind bars. And no one would accept it as a legal defense if I said "but hey, that guy over there said it is okay to do this!" - why should it be different for companies?
1. They have applied their own laws in a way that amounts to subsidies, and
2. The corporate structure turned out to be fictional, and allocations of profits were therefore also fictional. ("Arm's length" and all that.)
They even open the door for national tax authorities to use their findings and evaluate for profit shifting.
This is an inspirational moment - too long have tax treaties favoured those willing to break the spirit of the law and weigh down the little man with the consequences!
I'm assailing this line of thinking in general.
Instead, can we discuss whether or not giant corporations avoiding taxes is ethical, rather than whether or not there's something up with the rules? Do you seriously believe that what Apple and other large corporations do with respect to taxes is ethical?
It's not like there are pre-existing moral rules in the case of taxes -- taxes exist only because of tax law; tax law defines what taxes are, who is to pay them, and how much they ought to pay. Tax law is the only authoritative standard to which someone's behavior re: taxes can be submitted.
For example, some parts of tax law were passed by politicians who wanted to help corporations avoid paying taxes, and other parts were passed by politicians who wanted corporations to stop avoiding taxes. Both of these contradictory intentions are embodied in our current tax law. The spirit of the law is confused at best.
I hate Walmart for their ruinous development patterns, but I don't fault them for working within the system they're given. Don't hate the player, hate the game.
Said every gangster ever.
For all the Apple stockholders, it is ethical to follow the rule and reduce taxes. For all the handme-something EU bums it is not.
This is not a 'quirk' as you think. No country in the world, other than the US, tax their corporations on already taxed profits in a different jurisdiction. This actually ends up hurting the US because corporations cannot repatriate already-taxed funds without being taxed again.
First, Apple did nothing illegal. There is no wrong doing here. They pay tax in every country they owe tax. Period.
Second, perhaps it's not Apple that's the problem? Perhaps it's the tax that is the problem.
If you have mega corps building entities outside its main jurisdiction to avoid the main jurisdictions tax burden, perhaps you need to revamp your insane tax code. Hmm?
As companies benefit from this incentive, they lobby to keep it around. Very successfully.
So no, revamping the US tax code is (quite obviously) not an answer to Apple not paying tax in the EU. Having enforced taxation rules that prevent the race to the bottom is. Unfortunately taxation is not in the remit of the EU at the moment. Hence the back door approach through "unfair tax benefits".
We don't need trade deals that harmonize things so countries can, we really need tax deals that harmonize, or at least put minimum standards on taxes.
Why wouldn't something like that fly? Well because if the impression European observers have gotten over the last years is correct, then Apple et.al. basically own US policy on that point, to such a degree that the US actually threatened the Commission against ruling as it did.
So no, Apple did nothing illegal, but what is happening is clearly wrong, and Apple is lobbying to keep it that way. Heavily and successfully. And that is wrong.
For an example of an ethical stance a corporation could take here: IBM was, at least for a while, lobbying for abolishing software patents while at the same time owning a massive amount of them and registering new ones.
A structural fix would be to work towards making the US (and the EU, and all other) political system more resilient to lobbying pressure from powerful corporations.
But that is about as hard a problem as you are likely to find.
There are hundreds of different ways to tax. Taxing corporate profit is controversial because it's very hard to determine what exactly constitutes profit and for multinational firms like Apple deciding in what jurisdiction profit occurs is highly arbitrary (your iPhone has parts from half a dozen countries). The most logical conclusion is to simply get rid of corporate tax and make up the shortfall by increasing other taxes. Several countries already do this, countries like the US that stubbornly persist in trying to levy such arbitrary taxes will simply chase away international business.
The cost of goods inside airports would be significantly lower if business travelers couldn't just expense everything they buy. As long as it's max 1/3rd of the usual food allowance businesses can charge that amount and be assured that business travelers will pay.
If you take away corporate taxes then "expensing" will go away entirely. Along with all those receipts you have to save and the entire industries and businesses that profit from it (e.g. fake receipt producers, Concur, etc).
Wealthy individuals wouldn't be able to expense their purchases through subsidiary corporations anymore which would necessitate collection via sales tax. If you think that's an awful lot like the Fair Tax system you're not far off.
I'm actually not an advocate of the Fair Tax or even a Federal-level sales tax because it would be very regressive: Vastly unfair to the bottom 50% of society. Having said that, if you abolish corporate taxes it's one of the only ways to obtain tax revenue.
Because that is what abolishing corporate profit tax comes down to. The only substantial tax most states have are consumer taxes, and we all know that these taxes disproportionately hurt people that are already poor.
I don't see the EU giving Microsoft grief. It'd seem they're paying EU taxes differently than Apple.
Apple paid 0.0005% tax on its European profita. There is no non-'insane' tax code that could compete with that.
"Oh, it's not tax evasion, it's tax avoidance!"
And now "oh, it's not tax avoidance, it's tax-friendly jurisdictions".
Let's just agree to close the loopholes so that everyone pays their fair share.
Apple's international tax structure was thoroughly documented when they were called up to testify before the Senate, which you can read about in the Senate Subcommittee Memo on Offshore Profit Shifting and Apple, and while they do have several Irish subsidiaries, they do not have any subsidiaries in the Caribbean or move any money into the Caribbean.
This is further reinforced in Apple's testimony before the Senate:
> Apple does not move its intellectual property into offshore tax havens and use it to sell products back into the US in order to avoid US tax; it does not use revolving loans from foreign subsidiaries to fund its domestic operations; it does not hold money on a Caribbean island; and it does not have a bank account in the Cayman Islands. Apple has substantial foreign cash because it sells the majority of its products outside the US. International operations accounted for 61% of Apple’s revenue last year and two-thirds of its revenue last quarter. These foreign earnings are taxed in the jurisdiction where they are earned (“foreign, post-tax income”).
So replace my BVI sub with that "fairy tale green island of tax cheat's dreams... "
Edit: Actually, "special rate" is a bit misleading, as it implies Apple went to Ireland and said "hey, we'd only like to pay .05% instead of 12.5%" and Ireland said okay. The way it actually works (as described in the previously mentioned Senate memo) is that ASI (the Irish subsidiary) buys an iPhone from its manufacturer in China at cost for $200, marks it up to $600, and then sells the iPhone to Apple Italy for $600. Apple Italy sells the iPhone to a customer for $600 and recognizes $0 in profit, while ASI records $400 in profit. But ASI claims to not be a tax resident of Ireland and therefore when it buys an iPhone from China and sells it to Italy, that transaction shouldn't be subject to Irish taxes since no economic activity actually occurred in Ireland.
Therefore, the only taxes that ASI pays Ireland are from transactions where they actually sold products in Ireland itself. In 2011 ASI recognized profits of $22 billion, of which $50 million occurred in Ireland, and so they only paid ~$10 million in Irish taxes on that $50 million, leading to an effective tax rate of .05%.
Reading the complaint there is a lot in it about valuation of the intra-company transfers and arms length principle in establishing valuation numbers. I suspect it is there where Ireland and Apple colluded to enable Apple to avoid paying taxed in other EU states. Apple may be saying it is legal but they must know that the deal they got from the Irish Government was too good to be true.
While the volume was small it did not raise alarm bells but the volume Apple is doing it eventually pushed the envelope too far.
Just regulated the transfer of IP rights. If you sell say a patent portfolio for $50m to your British Virgin Island subsidiary, and then make $20bn in profits in the decade thereafter on that BVI sub, it appears the IP transfer was waaaaay below market value. And should retroactively be taxed in the US where we engineers had developed that stuff in the first place.
Problem solved. US tax base restored. Government deficit fixed.
In the current situation, the company placed a bet on those patents. They took risks, every year, for 10 years. And ended up being rewarded for it after some struggle and a lot of research.
In your proposed situation, the company would put as much risk in buying the patents. Would still struggle for 10 years. Then, once the ground breaking product comes along and starts generating sales, authorities come in and ask for retroactive taxation because their crown jewel was "clearly under market value"
That honest company would probably not stay in business for very long. Or would not even exist if the founders knew that would be the outcome.
I love US companies making boatloads of cash. I just hate them to get around paying normal taxes here.
It's intended as quite the opposite of a token of respect: the purpose of referring to Ireland as 'Eire' (omitting the accent on the initial 'é' too) is to delegitimise the use of the term 'Ireland' to refer to the Irish state.
If actual Irish people wanted the state to be referred to as 'Éire' in English, it'd be one thing, but we don't. In English, it's name is 'Ireland', and in Irish, it's name is 'Éire'. There's also a diplomatic fudge in that there's an 'official description of the state', which is 'Republic of Ireland', which isn't its official name, but which is an acceptable substitute. And yet, incorrect terminology is still used to refer to the Irish state, such as 'Éire' (being used in English) or 'Irish Republic', and sometimes you find particularly ignorant types refer to it as 'Southern Ireland' (which was the name of a failed attempt at a counterpart to Northern Ireland within the UK, but which never gained any legitimacy) and 'The Freestate' (which carries the implication of British dominion over Ireland).
The norm is to use 'native' names where those people want those names to be used. Both Ireland and Éire are native names of Ireland, just in two different languages.
Or we could have just burned the various EU and international bondholders...
Are there any other countries that tax already taxed overseas earnings? If the sale was made in say China and taxes were paid in China, why does Apple need to pay US taxes?
(This is an honest question, I really don't understand this. I understand _that_ it's US law, I don't understand why)
The correct way of saying this is by 2020 the loophole will be gone for real. Happy tax saving in the interim...
An effective tax rate of 0.005% - when your next door business neighbour is paying 20% - is morally wrong and damaging to society and the common good.
Tax law is a system of rules. There should be no second arbitrary standard people (and companies) should be expected to follow.
But, to your point, laws are the non-arbitrary manifestation of those morals. Indeed there should be no unwritten standard as well. In this case, there wasn't: the Irish laws did not comply with EU law, and EU law take precedence in this matter. Apple should have known that was a possibility, and probably did know but hoped (and lobbied) for the best.
ah, the capitalist angle. unfortunately, the consequences of acting this way are poor for the rest of society.
Rigid adherence to rules without consideration of what's going on doesn't usually end up with a better place.
> Apple creates more, and better, jobs than the book store they shut down to open a showroom.
It's not about Apple's showroom vs book store. Its about Apple's massive cash pile vs hospital services/fire brigade/police dept/infrastructure etc. Those are essential services, and jobs, too.
They are doing nothing of the sort. They are demanding 'resources' (money) from the shareholders. So please, don't be mad.
The US government came out against this ruling, suggesting that US corporations are disproportionately targeted by the EC tax rulings.
>The commission has initiated investigations into tax rulings that Apple, Starbucks Corp., Amazon.com Inc. and Fiat Chrysler Automobiles NV. received in separate EU nations. U.S. Treasury Secretary Jacob J. Lew has written previously that the investigations appear “to be targeting U.S. companies disproportionately.”
>“There is a possibility that any repayments ordered by the Commission will be considered foreign income taxes that are creditable against U.S. taxes owed by the companies in the United States,” the paper said. “If so, the companies’ U.S. tax liability would be reduced dollar for dollar by these recoveries when their offshore earnings are repatriated or treated as repatriated as part of possible U.S. tax reform.”
The reduction in tax liability happens when the earnings are repatriated per this quote. If these companies are storing this cash overseas in a bid to avoid paying taxes on it with no intention of repatriation until a tax holiday then why should we care?
It's great that there is a supra-national authority forcing the states to cooperate on getting multinationals to pay reasonable taxes, because it wouldn't happen otherwise.
According to Wikipedia (just listing the IT-companies):
* Adobe Systems
* Apple Inc.
* Oracle Corp.
Competing on tax rates and negotiating tax deals were a huge MNC like Apple pays a ridiculous 0.005% is bad: morally wrong, cuts to public services, increases unjustifiable economic inequality and is just not fair on other much smaller firms who have to pay full whack on the tax.
Apple, FBK, etc don't see it like that - they will engage in aggressive tax planning to minimise their tax, hoarding billions of dollars. And its not like they do anything productive with their cash pile; its not like it goes to higher pay checks for their Asian workers. Instead, its spent on share buybacks to prop up sagging share prices and keep Wall St happy.
Here's a better approach: tax companies on their profits and remove or reduce income tax and capital gains tax. This aligns incentives to:
1. encourage and reward founders to start new business
2. the most valuable employees tend to be mobile ones - a core EU principle is free movement so compete for the best employees by lowering taxes and giving them great public services. Companies will follow.
3. tax company profits and everyone is on the same level playing field: provides an incentive for companies to reinvest their profits into growth (and indirectly jobs).
And share buybacks are returning capital to the owners of the business, which is why they invested in it in the first place. The owners can then make their own choices about how to allocate capital productively.
We are having this debate because in practice some are taxed at 20% and others practically nil.
I'm arguing for no negotiated tax arrangements, indeed I have been giving thought to a progressive tax regime for companies. That would be interesting to evaluate.
> And share buybacks are returning capital to the owners of the business
Which is why I am not sure buy backs should be taxed. Either a company invests its earnings, or else it returns them to shareholders who can decide to identify growth opportunities, as you suggest.
I think I'd rather see lower unemployment than higher corporation tax take if that was the choice.
I wonder how much Irelands payroll taxes would have been were the corporations not to have set up shop in Ireland, they would have just gone somewhere with a decent tax arrangement.
Unemployment in the 70's and 80's was brutal in Ireland, personally, I think the government at the time made the right choice, however, this "selective treatment" allowed Apple to pay tax rate of 1% on European Union profits in 2003 down to 0.005% in 2014, FFS.
A better question is where the world would be if nation states wouldn't allow multinational companies to pay only negligible taxes by taking part in a race to the bottom.
With tax deals like this one you're just ripping other countries off.
You mean countries competing for business? Why is that bad?
It would sound ridiculous if you applied it to companies "Car companies offering lower and lower prices is just a race to the bottom! If this keeps up we'll have no car companies as they'll all be bankrupt!".
Also your comparison is pretty bad. The direct cost per unit is pretty high for a car in a car company, the one for a company in a country is negligible. So it's more like a publisher selling digital goods, except that there's no copyright, preventing the others from selling exactly the same for a lower price.
I think it's a bad idea to tell a country that they can't charge a lower price (taxes) in order to sell more business (have companies move there).
And you can go lower than that amount if you attract an abnormal amount of companies through an abnormally low tax.
Overall I'm happy that gov'ts have to compete for companies. It's a great way to force them to be more efficient. If they never have to worry about their spending, why would they ever control it?
My only point is that countries competing for business is a good thing, not a bad thing.
Even without competition Governments have the drive to keep taxes as low as possible to boost the economy and keep local businessmen happy.
That constant pressure to do more with less... deadly.
With "beneficial" (sic) mutations like this one you're just ripping other organisms off.
Ireland isn't somehow magically fitter than other countries and thus able to offer 0.005% corporate tax. It's only relying on attracting an above-normal amount of companies by having low taxes and draining other countries of their tax benefits in the same turn. It wouldn't work if everybody was doing it. In fact countries would just turn to shit.
It seems to fit like a glove, with ruthless disregard for any kind of sustainability, draining parasitic/symbiotic relationships and all.
Next, Luxembourg and Netherlands.
Unemployment is still high in certain areas. The bank bailout crippled the country, forced really high taxes on those who really shouldn't have been held accountable (low income earners).
That said, Apple (and many other mult-nationals) seized an opportunity and ran with it. The moral responsibility to pay taxes should be on the CEO and the board.
In 2014, Apple made a profit of $78.5 billion.
That would explain why the percentage went a lot lower.
The ruling, as far as the EU are concerned, is that Ireland gave Apple a deal more beneficial than anyone else. But the basis for this claim is how the tax was charged. Instead of charging Irish tax for all income for the company, they charged what was reported in Ireland. The issue that needs to be resolved is did they pay tax anywhere else on the remaining profits. The US said they did but the EU say they dont think so.
Taxes (at least personal taxes) are a user fee. Every time an employee snuffs at an offer in Missouri or Bangladesh, they are implicitly signalling a preference for quality-of-life elements.
It's always the Achiles' Heel of the One Simple Trick that laissez-faire capitalists continually propose: that the world is more messy and complicated than: make countries = businesses.
1. Negotiate special tax privileges for a company
2. Have them set up shop in your country
3. Allow them to pay little tax for several years
4. Have federal authority sue saying that the deal in #1 is illegal
5. Collect back taxes based on normal tax rate and not the special deal in #1
Question is: Did politicians, who created such laws, received bribes?
> The amount of unpaid taxes to be recovered by the Irish authorities would also be reduced if the US authorities were to require Apple to pay larger amounts of money to their US parent company for this period to finance research and development efforts.
I wonder how much of the 14B could be offset by this? I suppose there's a chance that it all might be.
I have no love in my heart for Apple.
At the same time, it's not like they don't have enough lawyers. So I have to assume that anything involving billions of dollars would be strenuously vetted. I might be wrong, but I'm starting from there.
And if they were supposed to pay taxes, they were supposed to pay them. Purposefully evading taxes is wrong. Avoiding taxes is another matter. Complex tax codes to change society work because we assume that people will be actively avoiding them. So good for them. They're playing the carrot and stick game that governments like us all to play.
If true, this means that they did the right thing that the best-informed legal minds could offer in order to legally avoid taxes. It worked for a while then suddenly the rules changed. And they changed not just for the future, but retroactively.
What occurred to cause a rules change? It wasn't the law. It wasn't Apple's behavior. It became a story in the U.S. about how companies are getting away without paying their "fair share". The EC was the one that acted, and the only thing that makes sense to me is that the EC saw an opportunity and appointed a commission. Not arbitration, not a criminal or civil trial. A commission.
Quite frankly, this looks like a stick-up. Apple's a big company and can take care of itself. I really hope that the same kind of thing doesn't happen to mid-sized and smaller companies trying to eek it out in the EU. It's not just bad for the companies involved: it's bad for the reputation of the union as a whole. You can't keep changing the rules up if you're trying to tweak regulatory issues to promote long-term growth. Nobody with any sense is going to trust you.
What I am sure of is that anytime the company with the biggest market cap takes a hit like this? Ten thousand other companies are paying very close attention. Even if Apple took a gamble and lost, other folks have to ask themselves when it comes to regulatory issues in the EU, what kinds of gambles they are taking without even knowing it.
Of course, I simplified the story to make my general point. In the version with more details, Ireland even had their own investigation and worked everything out with Apple. But the EC decided that wasn't good enough.
It's really quite breathtaking. They had to pay 11 years of taxes. How many companies would be able to do that?
The article says that it will be paid back to Ireland, yet it looks like Ireland was somewhat complicit in allowing this fraud to continue for so long?
Is this just how it works, money goes to Ireland, and then recovered by Europe?
The EU has now determined this was an illegal tax benefit provided by Ireland, so Ireland must now collect the tax as if it had done so at the time. There is no penalty but interest must be paid.
This is not your normal run of the mill tax avoidance case (or a fraud as you've mentioned) although it appears to look the same. This was Apple benefiting from decisions taken by Ireland that Ireland should not have made.
Edit: Maybe "fined" is not the correct term for this, but my understanding is that Ireland had granted Apple tax benefits which they shouldn't have granted. Isn't Ireland in the wrong here, rather than Apple?
The EU has now stepped in and clarified that Ireland should not have allowed this in the first place.
There is no direct impact for Ireland e.g. a fine but it will create uncertainty for others already operating in Ireland and those considering investment. This uncertainty can be very bad for Ireland for years to come, so there will almost certainly be a penalty, albeit an indirect one.
Would you feel that it is fair that you have to pay up, instead of the institution that wrongfully offered you tax refunds?
1) Apple would have sold their stuff in Europe whether they had to pay full taxes or not, they only wanted a discount. I would probably not pay for the solar panels because I can't afford them.
2) Solar panels are very expensive and would make a huge dent in my balance. That's not the case for Apple.
That said, I think Ireland owes the ECB money too, so they'll probably use that money to repay their debt?
EDIT: Corrected EU->ECB as pointed out below.
Even a patent troll could do better than Ireland...
Also, do you really think that Apple made only 50 million in Europe in 2014? What is it? A startup?
Also the income statement says: All numbers in thousands
So you need to add 000 to the end of those numbers
Regardless, that's their global financial accounting. It doesn't detail out the EU revenue/taxes in particular. The article linked discusses that specifically. That's where the 0.005% number comes from.
Find me those numbers, not those of the US parent company Apple, and you have an argument.
I wonder how much of that is due to tax avoidance, whether legal or "unexpectedly illegal" (as in Apple's case).
If governments around the world follow the lead of the EC, I would expect a noticeable decline in corporate profitability over the next five to 10 years.
Note: I just generated the plot above as a png at the St. Louis Fed's FRED website, and I don't know how long the image will remain available. To recreate it, plot the "Corporate Profits, Adjusted" series divided by the "Gross Domestic Product" series, using the same units for both series (e.g., nominal billions).
Excerpts from: http://www.washingtonpost.com/sf/business/wp/2016/08/13/2016...
Q: What do you say in response to Nobel economist Joseph Stiglitz’s comments on Bloomberg [television], where he called Apple’s profit reporting in Ireland a “fraud”?
Tim Cooks answer: I didn’t hear it. But if anybody said that, they don’t know what they’re talking about. [...]
Apple evaded taxes and consider it right :(
If people want companies to pay certain taxes, they should vote for politicians that pass laws that require companies to pay those taxes..
In any case, we should be taxing land value. That's harder to avoid: you can't hide land.
The EU treaty is Irish law as well and lawyers from all over the union (myself included) have been looking on at this blatant violation of EU rules for years wondering how long multinational companies would be able to keep the schemes alive.
The Irish people have voted for politicians who adopted the EU treaty which bans subsidies to large corporations. The Irish people benefits when subsidies to French, British or German corporations are curbed. Under EU law, Apple has been obliged to pay ordinary Irish taxes all along. The whole arrangement has clearly been illegal and it is hardly a surprise to Apple and its army of lawyers and accountants that sooner or later justice would catch up.
Competitors that cannot secure such individual tax agreements are hurt by this. I sincerely hope that other multinationals with similar schemes will be next.
Apple will likely bring this ruling before the European Court of Justice but it is very unlikely that they will succeed in changing the outcome. From a legal point of view this is a very simple matter and it is an embarrassment to the whole EU system that it took so long to do something about it and that other multinationals still enjoy tax subsidies in Ireland (and likely elsewhere in the union).
The EU has decided that all revenue income for that company should be charged in Ireland, although the US say they have also paid tax in the US.
Fundamentally Ireland is saying it did not give a "deal", the EU is saying it calculated the tax incorrectly and the US is saying that the EU's findings are based on no tax being paid elsewhere which was not the case.
As was also pointed oout, Ireland seems to be the scape-goat for all EU decisions. The Irish bail out has already been mentioned in this thread, but for those who are unaware of what happened here is a simple break down.
German companies bought binds in banks (like shares). When the banks started to fail, Germany told Ireland that the tax payer had to pay the bond holders all the investment money and the interest. However if the tax payer had purchased these bonds, they would have never received anything back. They also told Ireland that if they tried to burn the bond holders they would incur trade embargo's to stop Ireland trading in the common market (Ireland makes a loot of money from exports to Europe). So basically it was pay the bond holders or you will have no income.
Whether or not there is an agreement between Apple and Ireland or just an understanding that Ireland would not tax them on almost any income is irrelevant. The point of the matter is that the effect of the scheme has been that Apple has paid next to nothing in tax on all European profits in more than a decade, spanning from the sale of your first iPod to your newest iPhone. That income has been channeled through the Irish companies and Ireland has not taxed it with it's usual corporate tax (which, by the way is now merely 12.5 percent). It is appalling.
That's the crux of the overall matter, from a political point of view. Ireland benefits from the European market disproportionately more than the EU benefits from Ireland. This is why Ireland ends up being "a scapegoat" - because nobody is particularly happy about their status as the onshore tax-haven of choice for healthy US multinationals, so every time they end in a pickle, they have very few friends (and with Brexit, they effectively lost their biggest one).
Here Ireland is clearly complicit with Apple in the tax evasion scheme and thus isn't a "scapegoat".
Are you serious? Subsidies to German and French corporations were not curbed they were replaced by the ludicrous loans that the Germans and the French give out to the "poorer" and "less industrious" EU member states so they in term can go around and buy German goodies.
And when this Ponzi scheme blows up because of a financial crisis they force you to take on even more loans to pay back the debt you own all while preventing you from writing off debt or going bankrupt with threats of shutting off your banks because you do not control your own currency.
During the bailout term the EU/ECB adopted a far harder stance against the country than the IMF advocated.
And doubtless on the back of this case there will be a legal action in Europe and a resulting large fine on Ireland.
You just don't get the feeling that this sort of treatment would be given to Germany or France.
It did not control its currency or banks which are effectively controlled by the ECB.
It could not repay some or all of its loans with its own currency by simply printing more of it and the only way of getting more currency was taking on more loans.
What people also don't understand is that the laws preventing incentives aren't protecting the weak they are protecting the strong.
Germany can set its corporate tax rate at 40-50% and while people would bitch and moan it would do nothing.
It's a huge market, it has a huge and highly developed workforce and it's one of the most industrialized nations on the planet with a highly developed and diverse industry.
It doesn't need incentives to lure corporations to set up shop and it doesn't need incentives to grow its own indigenous corporations and businesses.
If everything would be equal as far as cost of setting shop, employment and taxation between Germany and Ireland.
Neither Apple not anyone else would give 2 cents about Ireland when they have countries like Germany available to them.
Many of these laws aren't protecting the smaller nations they are restricting them and preventing them from being competitive forcing them to be effectively dependent on the bigger nations for loans/credit which they give out to allow their industry to keep producing in excess.
Anyone who thinks that Germany loaning money to Ireland so they can go around and buy Volkswagen and BMWs isn't a subsidy are blind or clueless.
That's not entirely correct. These norms were introduced to open up nationalised markets like telecoms, mail etc, which would otherwise remain forever locked on national boundaries. This allowed an equal field for businesses across the Union. Of course, established markets tend to favor the richest players.
This approach is supposed to be complemented by infrastructural funds, where German and French taxpayers effectively pick up the bill for rebuilding Ireland or Romania to a state where they can compete on an equal foot.
> Neither Apple not anyone else would give 2 cents about Ireland
That's very unfair to Ireland. Ireland has a natural advantage nobody can take away: sharing a language with the richest and most powerful nation on the planet. That's worth a lot, in this day and age.
Well it sure helped Deutsche Telecom and PostNL(TNT), everyone else is mostly still locked within their own countries, setting up the same rules isn't allowing an equal field of opportunity where you are at a disadvantage out of the gate and you can't adjust the rules you want to play by you will always lose. Established markets tend to favor the richest players, but to compete against them you have to be able to set up a competitive advantage and that requires you to be able to set you own policies under the current EU law you can't set up policies which are "disadvantageous" to other member states which means you will constantly get run over there is simply no way of competing. There is a reason why we split boxing into weight categories going up against a 300 lbs gorilla as a featherweight won't end up well for you.
>This approach is supposed to be complemented by infrastructural funds, where German and French taxpayers effectively pick up the bill for rebuilding Ireland or Romania to a state where they can compete on an equal foot.
The German taxpayer isn't really picking up the bill (although the Irish taxpayer kinda does, since the ECB forced the Irish taxpayer to take on the debt of private bondholders and investment banks, this is pretty darn unprecedented. This would be analogous to if Capital One would go under and the Fed/USG would not bail it out, and would not allow it to declare bankruptcy and then they would go and force Virginia and it's residents alone to take on all of Capital One's debts as their own) and many of the policies that Germany leads are also causing these cycles.
Germany operates at a pretty big trade surplus, many if not all of the EU members are at a trade deficit with Germany to the German policy makers the policy of allocating loans and credit to countries that would not otherwise be able to afford german goods to keep the german people working is a no-brainer.
The problem is that it's effectively a pseudo ponzi scheme when it works it works extremely well (the US employed a similar policy with Europe to keep it's post WW2 level of production at high levels, the Marshall plan helped Europe a lot but it also helped the US even more) but like all of them when it starts to slow down it tends to break apart into a mess.
Now this wouldn't be bad if Ireland could set up it's own monetary policy, control it's own currency, restructure its debt but it couldn't and it wasn't allowed too.
Because of how the Euroblock/ECB is structured most of the normal debt relief tools that would be available to a "normal" country are not available to Ireland, the few that are are not under their own control.
You can't come to some one in debt and say - you aren't allowed to declare bankruptcy, you can't restructure your debt, you can't repay it in your own currency like every other nation, and you can't adjust the interest rates because the ECB controls the price stability within the Eurozone.
The overall problem with this isn't that the EU/Euroblock is bad is that they are trying to have the cake and eat it, they are intentionally structured as a non-Federated entity, they do not share the pain, this isn't the US.
And on the other hand they have a shared currency and a monetary policy that is dictated by an external body the ECB which to be fair no one really elects and the individual governments of the member states do not have any control over (if the head of the Fed goes to I don't know Alabama and says If you don't take loans from Cali I'm shutting your fed and all your banks and payment systems come monday morning Obama can fire him (or well her now since it's Janet Yellen), the Irish government can't do squat to the ECB and that's just what it did to them and Greece).
The EU/Euroblock will soon figure out that they'll have to go either to a fully or at least much more federated system with which they would share in each other's wealth and misery or step it down to the point of where individual countries get the power back to control their own monetary policy, inflation, interest rates and taxation at the same level as every other sovereign nation state does today.
>That's very unfair to Ireland. Ireland has a natural advantage nobody can take away: sharing a language with the richest and most powerful nation on the planet. That's worth a lot, in this day and age.
India... South Africa...
English is important but you overestimate it's worth by several orders of magnitude, if Ireland was as expensive as Germany to operate in, or even if it was almost as nearly as expensive as Germany tax wise Germany would be considerably better and cheaper to operate in, even if you have to bring a few 1000's Irish people to do tech support.
Before Ireland "whored itself out" India was and to some extent still is the call center and the remote dev shop of the world simply because it's cheap and people can learn English, you can't learn paying only 15% corporate tax and have incentives for every engineer you hire that bring that figure to 0 instead of 30%.
South Africa now is also doing the same thing, they are on GMT, speak English and now are a pretty lucrative alternative to Ireland, and this thing with Apple will only make it worse.
> everyone else is mostly still locked within their own countries
That's not really the case. In fact, in a lot of sectors purely-national players are now the exception, not the rule. You have Portuguese building companies winning UK contracts, and French companies outsourcing to Czech companies. All that wouldn't be possible if richer countries could just lock down their markets with state subsidies. In fact, the only market where this does not happen is agriculture, which is heavily regulated and planned at the EU level.
You keep reasoning on national terms, whereas the point of the EU is to overcome those terms.
> The German taxpayer isn't really picking up the bill
The numbers respectfully disagree: http://news.bbc.co.uk/1/hi/world/europe/8036097.stm#start
> Because of how the Euroblock/ECB is structured most of the normal debt relief tools that would be available to a "normal" country are not available to Ireland
Not just to Ireland, to anyone. Which is really the main problem with the Euro, to be honest. There are solutions, but they need a coordinated effort by Eurozone countries to overcome German diffidence towards potentially weakening the currency. This effort is slowly building, now that France and Italy have nothing left to lose.
> they are trying to have the cake and eat it
Well, it's what everyone wants, isn't it? :)
> they have a shared currency and a monetary policy that is dictated by an external body the ECB which to be fair no one really elects
FED heads are also not elected but rather nominated; and historically they are pretty independent as well. Politically, the ECB is under a similar amount of pressure; the Governing Board is nominated by the European Council, aka national governments, and include representatives from all countries; on top of that sits a restricted Executive team which traditionally includes at least one German, one French and one Italian, recognising the larger role of their economies.
> the Irish government can't do squat
The Irish government can apply political pressure much like the governor of Alabama; the difference is that, lacking an electoral lighting rod, nobody cares too much about Alabama here. If there were such a lighting rod (a powerful elected EU President with executive powers), countries would cry about loss of sovereignty. EU economists are not the only ones wanting to eat cake, it appears :)
> The EU/Euroblock will soon figure out that they'll have to go either to a fully or at least much more federated system
Absolutely. Fiscal harmonisation is the next step on that path, and this decision is coherent with that endgame.
> India... South Africa...
Neither of those has unfettered access to the largest market on the planet. I should have probably qualified my previous statement with something like "in the EU".
> Germany would be considerably better and cheaper to operate in
You're selling Ireland short, here. Tax is one element of policy, but not the only one. I'm pretty sure US companies would rather work with Irish unions than German ones, for example. Germany is also another hour away in timezone terms, two hours in flight terms, and more uncomfortable to access by sea. And of course, everyone suffers from competition from up-and-coming countries in the same way.
The Euro has been an absolute disaster for the PIGS - precisely because it has legitimised nationalist economic policies within a nominally (but disingenuously) open trade zone.
That's bad enough on its own, but the German and French right wing are immensely fond of couching this as a moral failure on the part of the feckless, lazy southerners who don't work hard enough to pay their bills.
That's criminally offensive to the economic reality, which is that the Euro has mostly become an excuse for loan sharking and economic exploitation.
Tax policy is a confused footnote. Juncker, who is so very very ashamed of Ireland, was in charge of putting in place very similar sweetheart deals in Luxembourg - a fact which he seems to be trying hard to deny.
My english teacher flashback: Long sentence -3 pt.
>That's not really the case. In fact, in a lot of sectors purely-national players are now the exception, not the rule. You have Portuguese building companies winning UK contracts, and French companies outsourcing to Czech companies. All that wouldn't be possible if richer countries could just lock down their markets with state subsidies. In fact, the only market where this does not happen is agriculture, which is heavily regulated and planned at the EU level.
I think we were talking about slightly different things, you have more Chinese construction companies winning contracts in the UK than portuguese I was talking about the competitiveness of specific traditionally "national" companies in the grander EU scheme and this is set pretty darn poorly against the smaller countries, Ireland big problem is that it's small (<5M pop), It never had any real huge industry, it had a pretty bad conflict in Northern Ireland for decades and it's tied to the Euro.
Poland, Denmark, and the Eastern/Baltic states are really lucky that they held their currency.
>You keep reasoning on national terms, whereas the point of the EU is to overcome those terms.
Well problem is that it isn't the EU is explicitly "anti-federation" at least on paper, if the EU was structured like the US it would be a considerably more fairer place but the nation states within it are sticking to their national terms, borders, and sovereignty I only attempt represents the reality not an ideal some might hold.
> The German taxpayer isn't really picking up the bill; The numbers respectfully disagree: http://news.bbc.co.uk/1/hi/world/europe/8036097.stm#start
I thought that we were talking about the Euro Debt crisis which went pretty bad as far as the Irish taxpayer goes and pretty good for the German one.
But if this is pan-EU economics then while Germany does pay more it also receives more.
2007-2013 Germany's net contribution was negative meaning it got more money than it paid out (same goes for all the other big contributors into the EU).
Yes, Germany and the rest of the large economies do pay out more, but they also get considerably more and while we can all find a few years in which they are paying considerably more than they are getting if you look at the overall figures it's more or less a zero sum game, and if you look at economic crisis periods it tends to be negative.
The smaller EU member states on the other hand have positive net contribution to the EU, they can't afford not to have that, they don't have the political capital for that and the EU laws and regulations are not set up in their favor.
>Not just to Ireland, to anyone. Which is really the main problem with the Euro, to be honest. There are solutions, but they need a coordinated effort by Eurozone countries to overcome German diffidence towards potentially weakening the currency. This effort is slowly building, now that France and Italy have nothing left to lose.
Aye this is a pretty big issue, Germany treats the Euro like it was the Dutchmark (I don't fault them for that ;)) as they are the "biggest" economy in the EU (by a substantial margin) and if we are talking old-school industry only that margin is probably even bigger they are very keen on keeping their production surplus and they are doing everything they can to make sure that still is the case.
Germany is at a pretty tough spot since they are the factory of Europe and their economy is still set up around its Industry (they are post WW2 50's America).
The services sector is nearly 80% of the economy of the next 2 largest economies in the EU - France and the UK, while their industry share is 20% or lower (UK 20.4%, France 18.3%).
Unlike the UK, France and even the US (20.8%) Germany's industry is 30% of its GDP it produces tangible goods at a high surplus, this means that much more of its GDP isn't not only tied to the purchasing powers of its trading partners but is also considerably less "flexible" than a services oriented economy and Germany would resist any major financial policy changes with very very fierce opposition.
Simply because it's easier and quicker to shift the focus of retail jobs or even retrain them than it is to figure out what to do now with an automotive factory and the 30,000 people it employed.
>Well, it's what everyone wants, isn't it? :)
The cake is a lie ;)
>FED heads are also not elected but rather nominated; and historically they are pretty independent as well. Politically, the ECB is under a similar amount of pressure; the Governing Board is nominated by the European Council, aka national governments, and include representatives from all countries; on top of that sits a restricted Executive team which traditionally includes at least one German, one French and one Italian, recognising the larger role of their economies.
Yes but any US state will have more political pull over the the Federal government or any of its institutions (even tho the Fed is technically a separate entity but the head of the Fed is appointed by the President) than nearly any EU member state has within the EU parliament, EC, and various other institutions.
If Janet Yellen would say to Alabama what the ECB said to Ireland or Greece, the Congress would be up in arms calling for impeachment and she would be without a job before sundown, it seems that while the EU is very paranoid about national sovereignty it doesn't really act to protect it(mainly because it's structured against it, the EUP is very "anti-national" for the most part and is also hardly representative of the actual elected governments of the various member states, and the EC and other institutions that their members are appointed by the governments of the member states have different responsibilities and agendas).
>Absolutely. Fiscal harmonisation is the next step on that path, and this decision is coherent with that endgame.
Fiscal harmonisation is a "big no-no" most EU states do not want federalization they want to keep their national identity and sovereignty at least in this point in time.
This decision isn't really coherent with this, it's strong arming without the reach around and with no cuddles.
>Neither of those has unfettered access to the largest market on the planet. I should have probably qualified my previous statement with something like "in the EU".
Nowhere was it stated that it was, but it doesn't makes English the reason why Ireland is preferable to Germany, if English was an issue they would import Irish to Germany if it wasn't more lucrative for them to set up shop in Ireland.
>You're selling Ireland short, here. Tax is one element of policy, but not the only one. I'm pretty sure US companies would rather work with Irish unions than German ones, for example. Germany is also another hour away in timezone terms, two hours in flight terms, and more uncomfortable to access by sea. And of course, everyone suffers from competition from up-and-coming countries in the same way.
Taxes are only one aspect of the incentives Apple and the likes received in Ireland and that's the problem, if Ireland was setup as a tax haven like Luxembourg the EU wouldn't give a damn, but it set up specific preferential policies that didn't make Apple want to setup a shell holding company in Ireland they made Apple want to put 30% of it's employees in Ireland.
And I'm not selling Ireland short, it's an island with 5M people with a tiny local market an underdeveloped industrial and services sectors with all the logistical issues of being an island including having higher consumer prices than Germany.
And I don't understand what does naval access have to do with this argument, Ireland didn't went after MERSC, ZIM, GE or Shell, it went after the likes of Apple, Facebook, Google and Microsoft.
But even then last time I've checked the largest port in Europe and one of the largest in the world is in Rotterdam which is pretty well connected to Germany.
Poland will have to join the Euro or leave, eventually - that's what the treaties they signed force them to do. Considering their relationship with the UK, I think the "leave" option is pretty realistic at this point.
> the EU is explicitly "anti-federation" at least on paper
No, the EU is about "ever closer union". The maintenance of individual national identities is clearly a "necessary evil". The long-term objective is to have a permanent, harmonised union where countries can resolve their differences without ever resorting to war - in other words, a federation. Chances are that this federation will never be as culturally cohesive as the US are, that it will actually be smaller than it is today (possibly even smaller than the current Eurozone), and that it will be less centrally-manageable than the US... but it will be a federation regardless.
Otherwise we'd have kept the Common Market we had in the '80s, with all the instability that the multi-currency setup brought. For all its faults, the Euro kept inflation and borrowing rates extremely low and stable for almost 20 years now. The minute we manage to disentangle public-debt markets from nationalistic sensibilities, we are golden.
> Yes but any US state will have more political pull over the the Federal government or any of its institutions
No, I don't think so. States do suffer a lot even in the US setup. As I said, the difference is that at the top you have someone who cares deeply about electoral colleges, especially in marginal states. In the EU there is nothing of the sort, so all pressure has to come from coordinated alliances between member states in the Council.
> If Janet Yellen would say to Alabama what the ECB said to Ireland or Greece
California, one of the most powerful states in the US, has been on the verge of bankruptcy for several years now. The FED certainly won't alter their monetary policies to suit Californian public debt, it's totally out of the question. You don't see in the US what you see in EU because they don't even entertain the idea that California should have its own currency. The FED looks at the US economy as a whole and does what it needs to do to keep the overall system afloat; if that means Alabama gets screwed, so be it. That's also what the ECB does, more or less.
In fact, EU states have a nuclear option that US states don't: they can leave. Greece could (and IMHO should) have left, but they came to the duel underprepared and eventually blinked first. Ireland is not in that position because it relies too much on its status as "tax haven cum operational base" for companies entering the EU market. So you can't leave and you can't keep being a tax haven, but if you play fair you can keep all you got and keep building from there.
> is also hardly representative of the actual elected governments of the various member states
I disagree there, I personally think the opposite is true. National governments hold too much sway on EU policies. The Council (i.e. governments) sets the agenda and then hides behind the Commission tasked to implement it. Some Commissioners are little more than puppets doing their governments' bidding (one McCreevy comes to mind, as well as one Dijsselbloem more recently...). EC governments nominate ECB figures then hide behind them when they have to make unpopular choices. They vote for directives in political contexts ("I give you this so you give me that") then feign ignorance when obligations come due.
I think EU institutions represent EU governments all too well. EU people, that's a different story - they have EuroParliament, and a fairly sane justice system, but could do with more representation.
> most EU states do not want federalization
Most EU states say they don't, but in practice they do. It makes life easier for everyone, keeps the peace, and protects the block from US/Russian/Chinese power. There will always be critics, but hey, that's life.
> if Ireland was setup as a tax haven like Luxembourg the EU wouldn't give a damn
Actually Luxembourg was in a pickle not long ago, because of their tax affairs. The difference is that Luxembourg will never be a competitor to large countries "where it matters", so it's given a bit of leeway; plus, its representatives are first-class and know how to play the game. The Netherlands is the other country with iffy tax arrangements, and they compensate again by playing the game (which means, they take the hit for France or Germany when there are hard decisions to make).
> it's an island with 5M people
Norway has the same population. Actually, Norway has 5M and Ireland 6+M.
> I don't understand what does naval access have to do with this argument
I'm just saying there are many ways to attract business.
No, it hasn't. It was, until the supermajority budget requirement was removed, in perpetual legislative budget crises engineered by the legislative minority which had sufficient clout to prevent a supermajority, but it has never been "close to bankruptcy".
Not only doesn't it, but monetary policy isn't a suitable tool for that anyway. Even for the federal budget; in fact, one of the major reasons for independent central banking is to provide assurances to the private economy, currency users, and, particularly, those financing government debt that monetary policy will not be used to address the currency-issuing-government's fiscal condition (a trend that was distressingly common even in large, basically stable governments before independent central banking, and produced distrust in both government securities and currency.)
OTOH, the federal government's fiscal policy often directly addresses issues that may be particular pressures on state fiscal condition (and, indeed, many government programs -- including the big social benefit programs like Medicaid -- have regular adjustments to federal/state sharing ratios based on relative state economic conditions that are entirely designed around the premise that state economic conditions will drive state fiscal conditions and ability to participate.)
The ECB was out of line not only in regards to common sense but in it's essence in regards to it's mandate.
The FED would not have have messed with the state notes, and it would surely not have threatened to shut down it's banks by saying it would not guarantee their liquidity and cut Cali banks out of the dollar payment system if Cali dares to allow it's private investment banks and bond issuers to declare bankruptcy.
Again that's your "opinion" or ideal to be more exact, the facts on the ground that the EU was established on the grounds that the sovereignty of it's member states will be maintained at virtually every cost.
This is why there is so much contradiction for example each member state has it's own foreign policy but the EU as a whole also has one, on many occasions especially in regards to polarizing subjects the EU foreign policy and statements contradict the ones of individual member states.
>No, I don't think so. States do suffer a lot even in the US setup. As I said, the difference is that at the top you have someone who cares deeply about electoral colleges, especially in marginal states. In the EU there is nothing of the sort, so all pressure has to come from coordinated alliances between member states in the Council.
The states in the US are the legislative body which also holds the federal budget, oddly enough if you take the US federal model then states have more "sovereignty" in many aspects as well as more support and political influence over the federal government.
>The FED looks at the US economy as a whole and does what it needs to do to keep the overall system afloat; if that means Alabama gets screwed, so be it. That's also what the ECB does, more or less.
You are taking my analogy into the wrong direction.
The FED would not intervene in the case of California which is exactly what the ECB should have done in the case of Ireland, but it didn't it threatened to shut down their banks and cut them off from the payment system, the same threat was also issued to Greece.
This is no more in the mandate of the ECB than it is the mandate of the FED and that was exactly my point if the FED would act like the ECB, Congress would've have burned it to the ground, and if would not stop there.
>In fact, EU states have a nuclear option that US states don't: they can leave. Greece could (and IMHO should) have left, but they came to the duel underprepared and eventually blinked first. Ireland is not in that position because it relies too much on its status as "tax haven cum operational base" for companies entering the EU market. So you can't leave and you can't keep being a tax haven, but if you play fair you can keep all you got and keep building from there.
Article 50 is not a realistic option, it also has nothing to do with how the EU and ECB policies are applied in reality, the fact that you suggest that as an option speaks about the general attitude problem of many people who see the current version of the EU as a stepping stone to anything but a complete catastrophe.
If the EU does not do a complete 180 on it's current policies it would just continue to do more and more damage not only to it's member states but to whatever is left of the idea that it can be more than a shared market and now a concrete anchor around your ankles unless you are in the G20, and considering the current state of affairs in the G8.
I don't object in principle to the idea of a federated Europe (If I were a European national I would strongly object however), but I just don't see it happening and the current state of the EU drive it further and further away, it's policies are destructive and they breed contempt.
If the EU is to become a federation it cannot go on as the Franco-German conglomerate while being indecisive and contradictive.
You can't force countries like Ireland and Greece to swallow it and say I know it's hard now but in 10-15 years when everyone's forgotten about it we might start thinking about federalization again and in 2078 we'll "pay you back".
This doesn't work like that, there is absolutly no political capital for federalism in the EU currently the likelihood of it falling apart completely which is slim as it is, is still considerably higher than it becoming a federated union.
>Most EU states say they don't, but in practice they do. It makes life easier for everyone, keeps the peace, and protects the block from US/Russian/Chinese power. There will always be critics, but hey, that's life.
Most voters within the EU member states do not want federalization and they want their national sovereignty and identity kept as it is, in the past few years it's even going completely the other way.
Federalists within the EU exists, but they exists within the ranks of the elites, a lot of them are unelected Eurocrats that while hold a lot of power within the EU do not have much power in individual states.
There isn't a single member state where this is a popular idea, in most of them even in Germany it is political suicide to even speak about federalization.
>Actually Luxembourg was in a pickle not long ago, because of their tax affairs. The difference is that Luxembourg will never be a competitor to large countries "where it matters", so it's given a bit of leeway; plus, its representatives are first-class and know how to play the game.
Luxembourg is protected by Juncker even tho the EUP is in brussels all the important EU institutions and the money is in Luxembourg the EUP is more or less of a "joke" since The Council of Europe and the Commission do most of the "grownup" work.
If the EU Parliament had power it would look differently rather than being overly representative of fringe elements and political laughing stock that wouldn't get elected nationally.
>Norway has the same population
Israel has 8M
Turkey has 75M
What's the point? Norway isn't in the EU, norway isn't a hub for multinationals, norway is a very rich country due to nationalized natural resources and a very smart investment portfolio.
>Actually, Norway has 5M and Ireland 6+M
No the Republic of Ireland, hence Ireland in this context has under 5M people (4.5-4.6 to be exact), Ireland as a geographical construct has about 6M people but this includes the 1.8M residents of Northern Ireland which are British nationals at least for the time being.
The situation is more complicated than that (IANAL or etc.) The majority of people in Ireland, and the Irish government, had no desire for any kind of sovereign default, and the majority of the Irish bank debt had already been (foolishly) covered by the Irish state on its own initiative. There was still a significant residuum of subordinated bank debt which the Irish taxpayer was forced to bail out as part of the Troika package, though. (Allegedly this was mainly Timmy Geithner's doing, by the way.) The irony is that come 2016 the EU is now trying to prevent the Italian government from bailing out sub debtors in the Italian banks.
The other irony is that TFEU really doesn't prohibit member state IMF access or sovereign defaults at all. In fact it's basically set up to make sovereign default the only safety valve in the Euro area; it was generally understood as specifically prohibiting any form of EU or ECB "bailout" of EU sovereigns. It was only after the fact, when Greece and Ireland were headed for trouble, that the EU member state governments decided that they didn't like the idea of member state defaults after all, and began to interpose themselves between the IMF and those countries. It was only then that the Euro really became a fiscal/monetary/financial rat-trap with no adjustment mechanisms for struggling countries.
Yes. To the tune of €13bn.
At the scale Apple operates their legal team should be considering whether the deals they negotiate are legal in all the applicable jurisdictions, not just the local one. The Irish government should also have done a better job, so part of the blame lies with them, but that doesn't free Apple of all responsibility.
In any case, we should be taxing land value. That's harder to avoid: you can't hide land.
You can hide who owns it.
And then someone close the the Government leases back said land for 99-years with little to no actual "rent" money and you're back at step one of the problem.
How do you tax companies which rent their office/production space?
Isn't taxing land punishing companies planning for growth? It is not uncommon to buy/rent spaces which you don't need now but you know will be needed in the future?
How do you deal with real estate investors?
The idea is that taxing improvements means reducing the incentive to build and ultimately passing along the tax to renters.
A LVT doesn't allow pass through as the supply of land is fixed, and a tax cannot reduce the supply of land. It encourages more intense use of land in expensive areas and reduces land speculation.
You can think of it as a rent to the government for the land.
Growing companies who buy expensive core land are punished for making no use of the land, but if it's a soulless suburban office park or rural land kind of deal the costs are far lower.
Really what would happen is zoning would be looser as the incentives align and therefore a greater supply of housing and offices would follow, aiding growing companies.
This very much depends on your jurisdiction - the UK has local government taxation which is very roughly based on house size or commercial building use, and is capped so everything above a large family house ends up paying the same rate.
I'd be quite happy swapping the transaction tax and council tax for an ongoing property value tax, but I also know that wouldn't be very popular in the UK which is so dependent on house price inflation.
You don't, you tax the rentier. Whether the property is let or not.
The process of "land banking" by e.g. Tesco is controversial in itself, since it potentially results in land and buildings left idle or even rotting while everyone waits for the expansion. It obstructs the use of land by others who want to put it to immediate use.
Real estate investment is usually heavily geared and pro-cyclical, so I'm quite happy to stick them with a tax bill. Especially if it might prevent another 2008 boom/bust cycle.
It's a form of social engineering, like everything else in the tax code, and requires a bit of attention to detail. How to avoid ruining family farmers while discouraging people from reserving vast areas for sporting estates, for example? What of property-rich but cashflow-poor pensioners (the most common objection)?
>How do you tax companies which rent their office/production space?
You don't, you tax whoever owns the land they rent and the landowner will charge rent commensurate with the expenses he incurs (including tax) by owning the land.
>Isn't taxing land punishing companies planning for growth? It is not uncommon to buy/rent spaces which you don't need now but you know will be needed in the future?
This is already the status quo, though, except now you 'punish' corporations and people for succeeding (making a profit on investments, earning a high income etc.). I don't know how to rigorously decide whether it's worse to punish someone for owning land or to punish them for owning things that aren't land, or to punish them for being personally useful to other people (i.e. profiting from their skills and effort rather than from property that is in their name), but intuitively it seems to me that punishing, and thereby discouraging people from being useful is the worst, while punishing people for owning things is not as bad. I'm not sure how society looks when people are adverse to owning land.
>How do you deal with real estate investors?
In what sense would you have to deal with them? Their investments presumably lose most of their value if all present taxes are converted into one (high) land tax.
It just so happens that their job, as they understand it, is attracting multinational corporations by having much lower taxes than their neighbours.
Equal treatment of everyone is a critical aspect to prevent corruption and an unfair market. Selectively lowering taxation is illegal, and I don't find that wrong at all.
1. How do they target these companies?
2. Is this the issue then? If it was for all the companies, with no exceptions, would that be allowed?
I'm seriously asking in the hope to get a better understanding, because right now, the way I see it is: As long as they are not breaking any laws, it's their "right" to use any loophole there is, to minimize their taxes (or maximize their profit, depends how you look at it). Is it ethical? Of course not, I'm not arguing about that.
Problem with this one is that they didn't and it wasn't a loophole. It was a well understood and by Ireland supported ignorance of existing treaties which have an effect of a law that just finally caught up with them.
Both of these are entirely ethical.
The EU sees dollar signs for its budgets when it imagines how to charge Apple a few billion in fees. Simple as that.
In other words, it doesn't have to be applied across the board to every company at the same rate. If it were, it's unlikely that Apple would have chosen this arrangement with Ireland.
You might argue that the people of Ireland are somehow being hurt by this lower rate of taxation, but the money would have gone to the GOVERNMENT of Ireland, and probably not benefitted the people much at all, except some nominal amount to placate their desires and win popular appeal.
I'm super fringe when it comes to taxes and ethics, though, so... no need to agree with me.
The money would go to the Irish Government, which isn't some African corruption ridden state, so it would have gone on improving things in Ireland.
For example it costs approx €1bn a year to maintain their water supply. As an austerity measure they have had to recently introduce specific water rates rather than cover it from general taxation. This tax bill (if paid at the time it was properly incurred) could have prevented the need for that for a decade or more, and at a time when there was an economic crisis it would have meant consumers having more money available. Instead it can now only be used by the Irish government to pay off their deficit, which is a long term benefit to the Irish people.
There definitely is now though and you can be sure legal teams around the world will be advising senior leadership teams to rearrange their corporate structures accordingly.
Which of course is amusing because there aren't really any internationally accepted rules. Companies like Apple e.g. Ikea, Coke, Google etc all do this and many countries allow it in particular the US.
I think it's fantastic that this precedent has been set. But it is a precedent none the less.
The EU Commission is now engaged in a rather grotesque power grab in which despite having no mandate to interfere with member tax policies they are attempting to gain control anyway, without treaty change, by redefining low tax rates as a kind of subsidy.
There is no real precedent for this kind of legal abuse - to claim Apple should have anticipated it is absurd.
EU has held for almost two decades that "an effective level of taxation which is significantly lower than the general level of taxation in the country concerned" constitutes "harmful tax competition". The most logical way to undo such unfair benefit is to rule the company to return the unfair benefit it gained with interest. I don't see anything but a welcome measure to level the field for competition.
The rose by any other name is still as illegal. Semantic arguments don't help you when the definition is provided.
We should heavily penalise this, as AAPL literally stole money from both US and EU people. Because of this arrangement: Apple paid less taxes in US, hence US people have worse roads, healthcare etc. To the same in EU (but here by bad IE decision). Money taken is on AAPL accounts now.
Long story short:
Apple promised IE to incorporate there, to do a lot of business through IE, to open job positions. In exchange they asked for low special tax. They also said: if no low tax for us, we will do all this things in different country.
1. how far is this from extortion? Should we allow this?
2. did IE gov make a good decision (14mld is of lesser value than apple benefits given to IE) ?
3. why this was decided non publicly?
4. should we allow corpos to make such decisions (dodge taxes) ?
This is NOT extortion or bribery, just everyday business. It happens every single day even between US states, not to mention nation-states. Business is competitive and that's a good thing.
AAPL in this case has deferred taxes on profits with their structural arrangement, NOT avoided them. To call it theft is extremely ignorant of how taxes and governments work.
And it's honestly one of the bigger problems of the world today. There was a Planet Money episode where they presented the data from jobs "created" in Kansas and Missouri through tax breaks. It was something like: Kansas stole 5000 jobs from Missouri through relocation of offices in Kansas City, and Missouri stole 4000 jobs from Kansas the same way. So millions offered to companies to get a net benefit of basically zero.
It's the equivalent of paying everyone the same wage. Countries are going to aggressively compete for talent just like companies do. And whether it's offering them different tax rates, amending employment laws, building infrastructure for them etc countries are going to bend over backwards.
It is solvable through international agreements between countries. Unfortunately those tend to defend companies more than individuals.
But hey, maybe the recent TTIP backlash and apparent failure is part of a positive trend.
From my perspective (as a EU citizen), it is the right thing to do (no allowing special deals). How is that a fair landscape for competition? It's not. If you want to do business in the EU, you have to obey EU laws, just like everybody else.
Furthermore, government officials agreeing to tax cuts should be tried for abuse of public assets, in my opinion. That's however a separate issue in this case, Apple does no obey EU law no matter how guilty politicians are.
Giving a tax break to some specific kind of company (e.g plumbers or taxi companies) sounds dubious but doable.
To my ears this just sounds like the Irish government tried to "make a good deal" with Apple, but the law doesn't allow it. Which sounds obvious.
It feels like a clash of company and government culture: the US one where companies try to get "deals" from states in return for doing business there, and the European one where they can't.
As you put it, it doesn't sound like extortion at all.
It sounds like a business negotiation.
Like negotiating for a place you want to rent or whatever. If they don't accept your terms, you take your business elsewhere.
Extortion necessitates an actual threat of harm.
"I'll take my business elsewhere" is not that, since Apple's business wasn't Ireland's in the first place.
Those are EU laws. Apple could have taken their business anywhere else, including outside EU where such laws don't apply, and a country could undercut Irish taxes.
That said, I'm not against an international agreement to prevent that (though I don't think most countries will be willing to sign it, as they lose their negotiating advantages compared to other countries, and no companies would prefer them all other things being equal).
Yes, Apple could do that. But then they'd have to pay EU customs and other costs that aren't applicable when you do business inside the EU. They choose to be inside the EU for a reason, and they should pay accordingly.
That's orthogonal to the argument though. Just another tradeoff to consider in their negotiation.
And you are completely wrong to say that this decision resulted in Apple paying less taxes in the US. They paid less taxes in Ireland not the US.
Well you have US Govt now arguing on behalf of Apple, which suggests that US people were not going to be the losers.
The losers are people of other countries where Apple and other MNC's don't pay their fair share of taxes.
The plan is to hoard this money in low tax jurisdictions and I guess for 2 purposes
1. wait for a lower tax rate amnesty to be offered in US
2. use cash hoard to undertake overseas acquisitions to grow the US Company and by extension US influence.
Apple finds it better to take loans out in US for its cash needs there and write them off against US incomes inspite of sitting on more than 100b in cash reserves.
Not really. The US Govt sides with an US corporation in a conflict with a foreign government. That's not surprising and does not imply anything.
Apple's mechanism of theft: Create products that people want so badly they give Apple their money in exchange for products and services from Apple.
Don't conflate the US Government and the US People. The US people don't benefit from money given to the government.
Please see: Wars, bank bailouts, and "regulatory capture".
Having to pay back the taxes that were due is not a punishment, it's simply restitution.
Meanwhile the EU is not a tax collection body, it does not set tax policy and it does not issue tax rulings. It has no power to do this and I'm unaware of any countries that want it to have this power.
In my opinion it is highly unethical to construct such financial mechanisms with the only aim to reduce tax payments.
It's not about lower taxes in general, it is about lower taxes for a single specific company. And that constitutes state aid which is (mostly) forbidden under EU rules, as it is massively uncompetetive.
Apple isn't headquartered in Ireland, Apple Sales International and Apple Operations Europe are. The EU says these subsidiaries have been making untaxed profits, but it's not obvious that they've made any profits, ever (that's the whole point of the tax scheme in the first place.)
The grey area seems to be that there has been a cash hoard in Ireland which legally is on the Apple Inc. balance sheet, but hasn't been taxed. Again, however, Apple Inc. is not domiciled in Ireland so it's not the Irish governments job to collect that tax.
What am I missing?
Are they completely legal or is this just a case of they are legal, until a court finds that they actually aren't legal.
Even if they are legal, I would argue that convoluted schemes to avoid paying taxes is unethical in the same way that moving manufacturing to a place with lax environmental or labor laws in unethical. Apple might be able to make phones with what is effectively slave labor legally, but they shouldn't.
To the extent that things are generally legal until they aren't.
The complaints from the US treasury are that the decision goes against pre-existing case law, and so shouldn't be applied retroactively. 
A 'power grab' is an adequate description of what's going on; the EU commission is basically forcing member states to redefine their own arm's length principle and their application of it. They would call it 'tax harmonization.'
Damn me, the linguistic backflips in this thread are amazing. Tax is the taking of something. Low taxes mean you take less, not that you are generously paying people!
That is a terrible straw-man - no one ever claimed that in this thread. Additionally - your argument relies on word play: in practise, Walmart giving you a $10 bill after you buy a $100 item has the same effect as giving you a $10 discount on the item.
When one corp (Apple) pays less taxes than others in the same jurisdiction (Ireland in this case), it is unfair - logically and according to European law. If Irish taxes were uniformly low to all companies (including the German, French & Greek ones), the EU would have no case.
in practise, Walmart giving you a $10 bill after you buy a $100 item has the same effect as giving you a $10 discount on the item
I guess you meant a $90 discount? But regardless, the wordplay is on your side: if Walmart charge you $10 for an item then by definition that item costs $10. If they charge other people more, perhaps because they don't have a loyalty card, that doesn't mean they're giving you "aid" under any normal definition of the term as they're still charging you money. Aid would be if they gave away their products for free, or explicitly made a donation to some cause. Merely having differential pricing isn't "aid" for the same reason that an airline charging me less to fly economy isn't "aid", nor is it a discount.
In this case in particular, describing the financial benefit as "lower taxes" instead of "giving money", when "giving money" is illegal, probably isn't a loophole that should be allowed, when the result is the same.
Are you intentionally ignoring this line?
Some countries may pat you on the back for finding loopholes in the law while other may simply order one to pay hopefully without calling that criminal offence. We have no idea how this will turn out
The low rate of corporation tax in Ireland is not really a loophole, it is a specific strategy to attract employers to a country that might otherwise not have much to offer, and it has worked fantastically well for them. This policy has been in place for decades and it is (or was) popular - the Irish prefer the jobs to the corporation taxes.
What is the EU is doing here is trying to ban tax competition between countries on the grounds that if you don't charge much tax, you're offering illegal "aid". Beyond a strange interpretation of the word "aid" this is really a very serious problem - if the EU successfully forces countries to pick a single corporation tax rate across the bloc under the doctrine of illegal "aid", despite having no mandate to set tax policies, then what comes next? What if the French start arguing that countries with laxer worker rights than France are providing illegal state aid to their corporations?
Zero-rating corporation tax is a perfectly reasonable policy for a country to have, there are plenty of economic arguments for it, and even if other countries might feel the outcome is unfair, well, so what? Competition is about different people making different tradeoffs and seeing what happens: if the Irish prefer to prioritise employment over collecting corporation tax (one of the hardest taxes to collect anyway), why should they be prevented from doing so?
> if the EU successfully forces countries to pick a single corporation tax rate across the bloc
The EU is forcing no such thing. It is forcing countries within the bloc to not give any one company special treatment. The distinction is critical.
The argument is that the deal that Apple brokered would not have been available to any other company.
A country regulating an industry's tax across the whole industry, affecting every player equally, is very different to a sweetheart deal with one company that puts other players in that same market, both at home and abroad, at a grave disadvantage.
The modern EU is based on freedom of access to market and equality of opportunity. This is what is enshrined in the treaty currently enforced. The EU is not forcing "its members to give up tax policy", it is forcing its members to treat companies fairly across the bloc according to those policies which they have each set. Whilst this could be seen as an assault on their sovereignty, for a collective union to work there has to be common rules, and everyone has to play by them; thereby fairness is ensured. Everybody concedes an equal amount of their sovereignty for the common good (c.f. the ECJ). When one country doesn't play by the rules for its own gain, the others are disadvantaged, and so it is only fair that the central body of that union enforces the previously-agreed rules.
Group fairness doesn't trump individual liberties, as long as that individual doesn't harm someone else.
What Ireland did with Apple is the same as a company hiring away developers from its competition by paying them more.
Does it hurt them? Sure, they lost a talented developer. Is the proper response wage controls? Dear god no.
Do you think that bureaucrats and politicians "play by the rules"?
I contest this unsupported assertion; you provide no argument to back it up.
Ensuring a fair marketplace cannot cause "bad outcomes on the individual" for everybody, as this implies nobody benefits from fairness (a.k.a a law-regulated environment) (an everybody-lose situation simply doesn't make sense, otherwise anarchy would have taken hold centuries ago).
> Group fairness doesn't trump individual liberties
... In your humble opinion. This is an ideological statement with no support.
> What Ireland did with Apple is the same as a company hiring away developers from its competition
... Except that it's not the same, as the two are in no way equivalent:
* the labour market is very different to the market for corporate domiciling
* private companies have no necessity to exist; failure (consequent from labour market failure) is acceptable whereas a state's failure (or a diminished form, a state's failure to collect adequate tax revenues) is unacceptable
* The market for corporate domiciling in the EU was regulated and there were regulations in place to prevent this action. There is usually no such regulation in employment law.
So really, the two are not "the same" at all.
> Does it hurt them? Sure
This is in contradiction with your statement "doesn't trump individual liberties, as long as that ... doesn't harm someone else". In this case the poaching company is harming the target company, and so by your argument group fairness ought to trump individual liberties. On the one hand you argue for constrained liberty, and on the other you accept unconstrained liberty. The two aren't compatible on this simple a level.
If a country can't charge different tax rates to different companies based on their own arbitrary policies, then they have lost a significant component of their own sovereignty. If the EU wants its members to give up tax policy to Brussels then they should propose a treaty change and make corporation tax a competency of Brussels, then it can be the EU that decides which companies pay more or less tax according to their own political priorities. But they haven't done that and I bet they won't, because they know that they'd lose any such argument. Hence, the back door approach.
Member states are not free to set different tax rates for different companies. This is part of the deal of joining the EU and has been part of the treaties since the beginning. The only surprising thing here is that it took so long for the EC to stop this.
The EU did not suddenly discover what Irish tax laws were. They were legislated in an open process and were public records and were trumpeted loudly by the Irish government to attract investment. This state of affairs existed for decades. The EU simply wants to get its grubby little hands on Apple's money so they can use it for more dole-outs to friends of the bureaucrats and also use this as a precedent so they can expand their powers into areas where their power has been explicitly curtailed by treaty.
Apple made a business decision to invest in the EU based in part on the tax rates at the time which went into it's calculations of expected rate of return. Of course they probably did much better than what they expected, but many who made similar decisions lost money too. If tax laws are subject to change retroactively, investors have to start taking uncertainty about the tax rate and the expected rate of return into account and will demand a (potentially much) higher rate of return to invest. This is why it's so hard to attract investment in countries without stable governments and a strong rule of law even though the purported rate of return is much higher. If this continues it will lead to further slowdown in the EU economy. The current slowdown is not apparent to EU citizens only because the market is not charging the EU a credit risk premium on EU bonds and so EU governments are still able to fund public benefits by borrowing. This is something that will change quickly and lead to a Greece like situation if the EU starts acting in this manner.
As an outside observer, I did not think Brexit was a great idea but this event frankly is a very good argument for why more countries should consider EUExit and/or the national governments need to figure out how to defang the EU. The EU was supposed to be about free movement, no "TARIFFS" as in impediments to TRADE within the block and a single currency. What it seems to have turned into is unelected bureaucrats in Europe dictating to elected national governments what their tax policy must be.
What exactly is the argument against whistling back governments colluding with foreign corporations at the expense of domestic businesses?
> The EU was supposed to be about free movement, no "TARIFFS" as in impediments to TRADE within the block and a single currency.
The EU is about working together instead of each country racing each other to the bottom at the behest of non-EU interests and power blocks.
> unelected bureaucrats in Europe dictating to elected national governments
or you could read up on how it actually functions.
This is exactly the sort of job I would expect a EU competition commissioner to do. It's now up to the courts to verify if the findings are correct.
Regardless of the outcome, I'm very happy to see this part of the system works.
>The EU simply wants to get its grubby little hands on Apple's money so they can use it for more dole-outs to friends of the bureaucrats...
I'm not sure why so many people think this was a move about fairness.
It's just a grab of money and power from politicians, as expected. I wish this money/power grab were not so widely defended by so many people.
It allowed Apple to pay an effective rate of tax much lower than that typically required of companies in the sector. De jure, no, they did not set a different tax rate. De facto, yes, Apple paid a significantly lower tax rate.
Unfortunately inflation stats cannot be relied upon because they ignore large and important sectors of the economy. For example, they often don't include house prices, or stock prices, or bond prices. The real inflationary pain is being felt by pension funds but consumer price indices don't reflect that.
If Ireland want a 0% tax rate for all corporations, as far as I know they are allowed to do it. They just cannot afford it.
Long term gains are very hard to pick over short term gains, especially if that would incur some short term loss. The free market [long term] goal of EU can be roughly expressed as a fight for competition over monopolies. It may look extremely lucrative to lower taxes for a corporation to pay significant lump of money (create jobs, capital movement, etc) even at low rate, than to let the corporation set its foot at another country. As it was stated in other comments, a multinational naturally attempts to increase profits by any means and incorporating at different location with significant tax discount is one of the ways. Although, globally (or EU wise) this is simply tax discount for a corporation that is already pretty much resembling a monopoly.
Think about the EC decision in this light.
> The Commission can order recovery of illegal state aid for a ten-year period preceding the Commission's first request for information in 2013.
from the press release
Of course, Apple and the Irish tax authorities dispute that and the case is going to court.
These companies buy up 1 person offices to use as PO Boxes. Land isn't representative of profits flowing through a place.
I'm not sure about US states (I would have thought they are considered sovereign member states of the Federation, but I haven't researched the issue), but the much less incorporated European Union certainly consists of "sovereign" states.
Or was it just a linguistic shortcut for "Ireland has submitted itself under treaties and laws of the European Union"?
EU rules are like U.S. federal laws, not WTO treaties. Member states can be bound by them even if their representatives vote against them.
If you follow your line of thought a bit further to its extremes, your home state is not sovereign, because its administration ordered some paper clips from a supplier and is now bound to pay for them, without the senators being asked if they really want to pay. ;-)
A formerly sovereign state can choose to give up its sovereignty to join a larger union, as the U.S. states did and as EU member countries have done.
> your home state is not sovereign, because its administration ordered some paper clips from a supplier and is now bound to pay for them, without the senators being asked if they really want to pay
They're not obligated to pay for the paperclips. E.g. if the U.S. government fails to pay for paperclips you sell it, you can file a claim in the Court of Federal Claims, but only because the government has chosen to waive its sovereign immunity as to such claims.
"the Commission says both companies should have been taxed by Ireland on the basis of their worldwide income."
"These profits allocated to the 'head offices' were not subject to tax in any country under specific provisions of the Irish tax law, which are no longer in force."
It seems it is not an Irish problem, but more a European one, and it appears that there are some technicalities that allow the EU to request Apple to pay taxes.
Let's not forget that regardless of Apple complying with local tax authorities, these laws may be against EU treaties... "[the Treaty] generally prohibits State aid unless it is justified by reasons of general economic development"1
Let's see how this pans out.
But Apple used those cuts, sold products all over EU and then tried to pay (or actually not pay) their due taxes to all those EU countries where it did business back in Ireland.
Apple was not trying to use the Irish law, Apple was trying to use a loophole in EU that didn't actually existed and got caught.
This is already done, and depending on where you live it is quite expensive. It is also in addition to all of the other taxes someone is paying.
Would you also tax virtual property? I guess that would be things like domain names.
It is legal and not unprecedented to require additional payments for the past after a change of tax-law.
This isn't about fairness but instead so that other countries don't have to correct their spending issues and can inflict the same pain on their contemporaries.
Even in the US there are politicians who want to have all states implement similar taxation rules or penalize those who move one state to live in another. The absurdity of taxation rules never ceases to amaze me, let alone the punitive actions of politicians who go after people and groups who don't adhere to their rules.
Worse, the EU tends to think of beneficial tax polices to people and corporations as subsidies where in the US the government calls it a tax expenditure.
People need to wake up. Taxation view points are closely paralleled to privacy issues. Politicians and many left leaning groups think that all money belongs to government as do most rights. The same goes for privacy rules, in that many think you should have protection only from other individuals and private groups by government does not have to grant the same and in fact can decide how much you should keep.
That is most definitely not fraud. Fraud involves deliberate deception for unlawful gain, none of which are involved in tax shopping.
I don't think 'fraud' means what you think it does.
is the link to the EU press release that answers your question. Irish govt. tax deal is in violation of EU tax law and the EU recommend that the Irish govt. seek recompense to the tune of €13bn plus interest.
> The two tax rulings issued by Ireland concerned the internal allocation of these profits within Apple Sales International (rather than the wider set-up of Apple's sales operations in Europe). Specifically, they endorsed a split of the profits for tax purposes in Ireland: Under the agreed method, most profits were internally allocated away from Ireland to a "head office" within Apple Sales International. This "head office" was not based in any country and did not have any employees or own premises. Its activities consisted solely of occasional board meetings. Only a fraction of the profits of Apple Sales International were allocated to its Irish branch and subject to tax in Ireland. The remaining vast majority of profits were allocated to the "head office", where they remained untaxed.
Inforgraphic from same link, notice the text to the left in the red box.
TC's answer was about repatriating money, not about tax reporting in Ireland. I'm not sure why he chose to answer that question, but the reporter let him get away with answering a totally different question.
Apple followed the law. End of story. The issue is that the EU found that the law was illegal under state aid rules.
So it is AAPL's lawyers' fault, in the end. Hence, AAPL's.
This is another issue why I am strongly against the EU. You can find out that a country is behaving illegally when WRITING ITS OWN LAWS...
So you cannot even be sure to be abiding by the law if you obey a country's laws.
2) That treaty (which is part of Irish law) allows for certain kind of EU laws (called "regulations") to be directly binding without the Irish lawmakers needing to do something actively. Your link covers another kind of EU laws (called "directives") which in fact have to be transposed before becoming directly enforcecable. However that treaty (which, remember, is part of Irish law) forces the Irish lawmakers to actually transpose them. If they fail they open the country up for litigiation which makes directives indirectly binding.
That can happen in every country which has a constitution.
That's true whenever you have international treaties. The WTO has plenty of clauses that go very close to disallowing this type of stuff in slightly different contexts. Same applies to the states within the US. They are bound by federal law in many ways.
When you can't write your own laws, and you don't get to elect who does, you're not really sovereign.
I just fully disagree with using the term fraud to describe what happened.
The EU, did it go hard after VW?
But when it comes to the small fry, rules is rules.
Edit: Just wanted to make clear, that of course the cheating should have totally been caught in Europe earlier. The thought that the US is not biased with its domestic brands just made me chuckle.
Who suggested that, or for that matter who suggested that "VW is polluting more than US brands"?
I know I didn't.
So we can all agree, that governments favouring their big domestic companies is not just an EU thing. You criticized the EU for going after Apple and not VW, I made clear that the US is going after VW and not GM.