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"Member states cannot give tax benefits to selected companies - this is illegal under EU state aid rules," the commissioner said. "The Commission's investi

by adamors 10y ago

"Member states cannot give tax benefits to selected companies - this is __illegal__ under EU state aid rules," the commissioner said. "The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years." http://www.rte.ie/news/2016/0830/812819-apple-tax-ireland/ http://www.rte.ie/news/2016/0830/812819-apple-tax-ireland/

FunctionalGuy 10y ago
I'm going to let the courts decide this, and not some popular vote from some nerds with pitchforks on Hacker News.
danielrhodes 10y ago
It seems hard to believe that Apple was receiving special treatment when practically every MNC has been using this very same loophole. But at this point it is he said/she said. This loophole is now closed, so the EC pursuing this feels more vindictive than anything (especially since the EU has had it out for US tech companies for awhile now).
- exDM69 10y ago
  It's likely that Google, Facebook, Ikea, et al. will receive similar consequences in the near future. Apple is just the first to receive a slap in the wrists. Hopefully this will reach beyond Ireland and similar investigations will be done in Netherlands and Luxemburg. A lot of Europeans (me included) are not at all happy to see massively profitable companies operating in Europe without paying practically any taxes. This makes it impossible for European companies to compete with them and I'm very glad the authorities are looking to level the playing field and bring in some tax revenue while doing so.
  - pjmlp 10y ago
    Agree, we should take them all down.
  - qaq 10y ago
    You do understand it's a two way street? There is a trade imbalance between EU and US aprox 30% in favor of EU. If your point of view prevails EU will loose tax revenue and US will gain tax revenue :).
    - themihai 10y ago
      How is that? Does US has sweetheart deals with EU companies? I highly doubt.
      - deleted 10y ago
        [deleted]
      - twoodfin 10y ago
        Of course it does. Volkswagen has gotten hundreds of millions of dollars worth of incentives from the state of Tennessee for its Chattanooga plant, for example. http://www.timesfreepress.com/news/business/aroundregion/story/2014/jul/15/state-local-governments-boost-incentives-to-lure/252206/ http://www.timesfreepress.com/news/business/aroundregion/sto...
        themihai 10y ago
        I think it's a bit different because it looks like an investment from the government(i.e. public-private partnerships) not a tax break.
        qaq 10y ago
        "Combined with other property tax breaks, TVA incentives, road projects and other potential tax credits, Volkswagen could qualify for more than $300 million of grants" what is different about this?
        themihai 10y ago
        Indeed that's the case though I can't say that I agree with them. The main reason is because these 'special' deals stifle competition and I think that's what the EC rule is all about. I guess it's legal in the US but that doesn't make it "right"(at least in the EU) so I don't mind if the US would tax EU companies more. It would be a win-win for the most of the citizens(EU and US).
  - LaSombra 10y ago
    It seems Amazon[1], Starbucks[2] and Fiat[3] are being investigated in Luxembourg and the Netherlands. So, Apple is not the only one, yet. [1] http://www.bbc.co.uk/news/business-30844962 http://www.bbc.co.uk/news/business-30844962 [2] http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38374 http://ec.europa.eu/competition/elojade/isef/case_details.cf... [3] http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38375 http://ec.europa.eu/competition/elojade/isef/case_details.cf... EDIT: Formatting
  - walki 10y ago
    I am a Luxembourger and I fully agree that the EU must close these kinds of tax loop holes. In the past my country made a little money out of these tax loop holes, this was immoral money that my country did not even need. Doing this, other European countries lost a lot of tax income. The only ones winning big time in scheme were the international companies abusing the EU and its people.
    - pzh 10y ago
      Just out of curiosity, why would tax competition be considered bad? It is generally accepted that monopolies and cartels are bad for the free market, but when it comes to governments and the services they provide, we're completely OK with tax cartels. These EU and OECD tax agreements basically amount to a tax cartel, where governments agree they'll fix their tax rate regardless of the infrastructure and level of services they provide...
      - intended 10y ago
        Because cartels means something specific to a group of market players and tax means something specific to a nation state. The two are vastly different, and the first is tolerated only by the latter because it's the best way we know to bring order and organization to trade.
      - xgbi 10y ago
        It is bad because it decorrelates the country you make a profit out of from the country you pay taxes on this profit. The people paying for your product are able to buy it because they live in a country that provides for them, through added value, jobs, health care, infrastructure and so on. If you want to profit from these people's buying power, then you have to conform to that country's rules of business, that's all. Apple is very happy to make huge sells of iPhones thoughout France, Germany, Italy and such countries, siphoning money from their people to Ireland, without ever contributing as much into the local economy. They employ a few hundred people in Apple stores and hotlines, but compared to their profit it is just ridiculous.
        10y ago
  - unprepare 10y ago
    From the EC's press release: > Since June 2013, the Commission has been investigating the tax ruling practices of Member States. It extended this information inquiry to all Member States in December 2014. In October 2015, the Commission concluded that Luxembourg and the Netherlands had granted selective tax advantages to Fiat and Starbucks, respectively. In January 2016, the Commission concluded that selective tax advantages granted by Belgium to least 35 multinationals, mainly from the EU, under its "excess profit" tax scheme are illegal under EU state aid rules. The Commission also has two ongoing in-depth investigations into concerns that tax rulings may give rise to state aid issues in Luxembourg, as regards Amazon and McDonald's.
  - SixSigma 10y ago
    Current EU president, Jean Claude Juncker, was the architect of much of the corporate tax avoidance scams for those very same companies, e.g. Amazon http://www.dailymail.co.uk/news/article-3688861/Jean-Claude-Juncker-held-secret-meetings-Amazon-officials-involved-tax-avoidance-strategy-president-Luxembourg-legal-papers-reveal.html http://www.dailymail.co.uk/news/article-3688861/Jean-Claude-...
    - bgarbiak 10y ago
      You are right, except that Juncker is not the current, but the former EU president.
      - SixSigma 10y ago
        He has been president since 1 November 2014 and the presidency is in 5 year terms. https://en.wikipedia.org/wiki/President_of_the_European_Commission https://en.wikipedia.org/wiki/President_of_the_European_Comm...
  - deleted 10y ago
    [deleted]
  - sangnoir 10y ago
    > A lot of Europeans (me included) are not at all happy to see massively profitable companies operating in Europe without paying practically any taxes. From the letter, it seems Apple thinks it should be paying taxes in California rather than were the profits are coming from (the EU). Excepts from the letter: "In Apple’s case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States." The second half of the sentence seems to be a non-sequitur, or intentional misdirection -nothing about it follows from the first half.
    - JBlue42 10y ago
      I think they should be paying taxes in California too. Seems they would rather not. http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html http://www.nytimes.com/2012/04/29/business/apples-tax-strate...
- creshal 10y ago
  Bullshit. Yes, all MNCs are dodging taxes where they can, but it's not like their finances are so easy that all you need is One Weird Trick and poof!, gone are the taxes. One of the multitude of measures Apple (and apparently nobody else) used was found illegal. The rest aren't, and Ireland is still a tax haven compared to the rest of Europe.
- the_mitsuhiko 10y ago
  > It seems hard to believe that Apple was receiving special treatment when practically every MNC has been using this very same loophole. Right. MNC have, but local companies had no way to do that. That's the crux of the issue. In fact, some people started an inquiry how to replicate that scheme.
- notahacker 10y ago
  The EU has been pursuing companies, including domestically based ones, under "illegal state aid" rules for years. Why should US tech companies get special dispensation to avoid repaying state aid ruled illegal that the likes of Real Madrid and Estonian Air (which went bankrupt when faced with the repayments) didn't?
- glenndebacker 10y ago
  "especially since the EU has had it out for US tech companies for awhile now" Sorry but this is typical American FUD, European companies are scrutinised on the same terms and when breaking the law or dodging stuff are getting (high) fines as well. It is not Europe's fault that this kind of news doesn't find its way in the US... .
vilhelm_s 10y ago
Fine, but then shouldn't Ireland pay the European Commission a fine or something? It seems unreasonable to make Apple retroactively pay.
- _Codemonkeyism 10y ago
  You can't benefit from someone else doing something illegal and keep your benefits. One of the principles of Western law.
  - maratd 10y ago
    Here are a few more principles of Western Law for you. Statute of Limitations. Ex Post Facto. If this tax activity was illegal, why wasn't it stopped 25 years ago, when it started?
    - _Codemonkeyism 10y ago
      "Ex Post Facto" It was illegal all the way, only Apple wants to make it legal. "why wasn't it stopped 25 years ago, when it started?" If murdering is illegal, why wasn't it stopped 5000 years ago? Don't know. People do illegal things all the time, most people doing illegal things do not get prosecuted for various reasons, fashion, society, not enough prosecutors. The argument "I was not prosecuted some years, so it was not illegal" doesn't work with any court. "Statutes of limitations" I don't know the time frames and for what time frame Apple needs to pay fines. Could you share the time frames where you think Apple got illegally fined? I'm no expert in tax law but would assume, here in Germany, there is no "Statutes of limitations" for taxes. Countries lose all their humor when it's about taxes.
      - maratd 10y ago
        > The argument "I was not prosecuted some years, so it was not illegal" doesn't work with any court. That's exactly how it works. Look up statute of limitations. Most civil violations have stringent limits. > I'm no expert in tax law but would assume, here in Germany, there is no "Statutes of limitations" for taxes. Countries lose all their humor when it's about taxes. I didn't know German law applied in Ireland. Perhaps that's the entire point of the EU, I don't know. Anyway, Ireland explicitly says that nothing is owed. Maybe you should read a bit more about this issue before commenting?
jdimov9 10y ago
So it seems to me that the Irish government should be punished, not Apple. Apple did nothing illegal.
- themihai 10y ago
  Apple was part of a illegal deal. Does it ring any bells?
jomamaxx 10y ago
"Member states cannot give tax benefits to selected companies - this is __illegal__ under EU state aid rules," Yeah - but this arrangement has been going on for more than 20 years, no? A little late in the game to be declaring it 'illegal'? I'm not against the ruling, but it's clear that the EU is messed up. Make no mistake - the only reason Apple was under investigation is because they were making so much money. This thing should have been brought up the moment it was implemented. Also - the EU is structured to incent governments to screw other governments by creating crazy tax schemes. You know who spearheaded this? Jean-Claude Junker - the same guy who spent 10 years developing tax avoidance schemes for Luxembourg!

"Member states cannot give tax benefits to selected companies - this is __illegal__ under EU state aid rules," the commissioner said. "The Commission's investi

by adamors 10y ago

FunctionalGuy 10y ago

I'm going to let the courts decide this, and not some popular vote from some nerds with pitchforks on Hacker News.

danielrhodes 10y ago

It seems hard to believe that Apple was receiving special treatment when practically every MNC has been using this very same loophole. But at this point it is he said/she said. This loophole is now closed, so the EC pursuing this feels more vindictive than anything (especially since the EU has had it out for US tech companies for awhile now).

exDM69 10y ago
It's likely that Google, Facebook, Ikea, et al. will receive similar consequences in the near future. Apple is just the first to receive a slap in the wrists. Hopefully this will reach beyond Ireland and similar investigations will be done in Netherlands and Luxemburg. A lot of Europeans (me included) are not at all happy to see massively profitable companies operating in Europe without paying practically any taxes. This makes it impossible for European companies to compete with them and I'm very glad the authorities are looking to level the playing field and bring in some tax revenue while doing so.
- pjmlp 10y ago
  Agree, we should take them all down.
- qaq 10y ago
  You do understand it's a two way street? There is a trade imbalance between EU and US aprox 30% in favor of EU. If your point of view prevails EU will loose tax revenue and US will gain tax revenue :).
  - themihai 10y ago
    How is that? Does US has sweetheart deals with EU companies? I highly doubt.
    - deleted 10y ago
      [deleted]
    - twoodfin 10y ago
      Of course it does. Volkswagen has gotten hundreds of millions of dollars worth of incentives from the state of Tennessee for its Chattanooga plant, for example. http://www.timesfreepress.com/news/business/aroundregion/story/2014/jul/15/state-local-governments-boost-incentives-to-lure/252206/ http://www.timesfreepress.com/news/business/aroundregion/sto...
      - themihai 10y ago
        I think it's a bit different because it looks like an investment from the government(i.e. public-private partnerships) not a tax break.
        qaq 10y ago
        "Combined with other property tax breaks, TVA incentives, road projects and other potential tax credits, Volkswagen could qualify for more than $300 million of grants" what is different about this?
        themihai 10y ago
        Indeed that's the case though I can't say that I agree with them. The main reason is because these 'special' deals stifle competition and I think that's what the EC rule is all about. I guess it's legal in the US but that doesn't make it "right"(at least in the EU) so I don't mind if the US would tax EU companies more. It would be a win-win for the most of the citizens(EU and US).
- LaSombra 10y ago
  It seems Amazon[1], Starbucks[2] and Fiat[3] are being investigated in Luxembourg and the Netherlands. So, Apple is not the only one, yet. [1] http://www.bbc.co.uk/news/business-30844962 http://www.bbc.co.uk/news/business-30844962 [2] http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38374 http://ec.europa.eu/competition/elojade/isef/case_details.cf... [3] http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_SA_38375 http://ec.europa.eu/competition/elojade/isef/case_details.cf... EDIT: Formatting
- walki 10y ago
  I am a Luxembourger and I fully agree that the EU must close these kinds of tax loop holes. In the past my country made a little money out of these tax loop holes, this was immoral money that my country did not even need. Doing this, other European countries lost a lot of tax income. The only ones winning big time in scheme were the international companies abusing the EU and its people.
  - pzh 10y ago
    Just out of curiosity, why would tax competition be considered bad? It is generally accepted that monopolies and cartels are bad for the free market, but when it comes to governments and the services they provide, we're completely OK with tax cartels. These EU and OECD tax agreements basically amount to a tax cartel, where governments agree they'll fix their tax rate regardless of the infrastructure and level of services they provide...
    - intended 10y ago
      Because cartels means something specific to a group of market players and tax means something specific to a nation state. The two are vastly different, and the first is tolerated only by the latter because it's the best way we know to bring order and organization to trade.
    - xgbi 10y ago
      It is bad because it decorrelates the country you make a profit out of from the country you pay taxes on this profit. The people paying for your product are able to buy it because they live in a country that provides for them, through added value, jobs, health care, infrastructure and so on. If you want to profit from these people's buying power, then you have to conform to that country's rules of business, that's all. Apple is very happy to make huge sells of iPhones thoughout France, Germany, Italy and such countries, siphoning money from their people to Ireland, without ever contributing as much into the local economy. They employ a few hundred people in Apple stores and hotlines, but compared to their profit it is just ridiculous.
      - 10y ago
- unprepare 10y ago
  From the EC's press release: > Since June 2013, the Commission has been investigating the tax ruling practices of Member States. It extended this information inquiry to all Member States in December 2014. In October 2015, the Commission concluded that Luxembourg and the Netherlands had granted selective tax advantages to Fiat and Starbucks, respectively. In January 2016, the Commission concluded that selective tax advantages granted by Belgium to least 35 multinationals, mainly from the EU, under its "excess profit" tax scheme are illegal under EU state aid rules. The Commission also has two ongoing in-depth investigations into concerns that tax rulings may give rise to state aid issues in Luxembourg, as regards Amazon and McDonald's.
- SixSigma 10y ago
  Current EU president, Jean Claude Juncker, was the architect of much of the corporate tax avoidance scams for those very same companies, e.g. Amazon http://www.dailymail.co.uk/news/article-3688861/Jean-Claude-Juncker-held-secret-meetings-Amazon-officials-involved-tax-avoidance-strategy-president-Luxembourg-legal-papers-reveal.html http://www.dailymail.co.uk/news/article-3688861/Jean-Claude-...
  - bgarbiak 10y ago
    You are right, except that Juncker is not the current, but the former EU president.
    - SixSigma 10y ago
      He has been president since 1 November 2014 and the presidency is in 5 year terms. https://en.wikipedia.org/wiki/President_of_the_European_Commission https://en.wikipedia.org/wiki/President_of_the_European_Comm...
- deleted 10y ago
  [deleted]
- sangnoir 10y ago
  > A lot of Europeans (me included) are not at all happy to see massively profitable companies operating in Europe without paying practically any taxes. From the letter, it seems Apple thinks it should be paying taxes in California rather than were the profits are coming from (the EU). Excepts from the letter: "In Apple’s case, nearly all of our research and development takes place in California, so the vast majority of our profits are taxed in the United States." The second half of the sentence seems to be a non-sequitur, or intentional misdirection -nothing about it follows from the first half.
  - JBlue42 10y ago
    I think they should be paying taxes in California too. Seems they would rather not. http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html http://www.nytimes.com/2012/04/29/business/apples-tax-strate...
creshal 10y ago
Bullshit. Yes, all MNCs are dodging taxes where they can, but it's not like their finances are so easy that all you need is One Weird Trick and poof!, gone are the taxes. One of the multitude of measures Apple (and apparently nobody else) used was found illegal. The rest aren't, and Ireland is still a tax haven compared to the rest of Europe.
the_mitsuhiko 10y ago
> It seems hard to believe that Apple was receiving special treatment when practically every MNC has been using this very same loophole. Right. MNC have, but local companies had no way to do that. That's the crux of the issue. In fact, some people started an inquiry how to replicate that scheme.
notahacker 10y ago
The EU has been pursuing companies, including domestically based ones, under "illegal state aid" rules for years. Why should US tech companies get special dispensation to avoid repaying state aid ruled illegal that the likes of Real Madrid and Estonian Air (which went bankrupt when faced with the repayments) didn't?
glenndebacker 10y ago
"especially since the EU has had it out for US tech companies for awhile now" Sorry but this is typical American FUD, European companies are scrutinised on the same terms and when breaking the law or dodging stuff are getting (high) fines as well. It is not Europe's fault that this kind of news doesn't find its way in the US... .

vilhelm_s 10y ago

Fine, but then shouldn't Ireland pay the European Commission a fine or something? It seems unreasonable to make Apple retroactively pay.

_Codemonkeyism 10y ago
You can't benefit from someone else doing something illegal and keep your benefits. One of the principles of Western law.
- maratd 10y ago
  Here are a few more principles of Western Law for you. Statute of Limitations. Ex Post Facto. If this tax activity was illegal, why wasn't it stopped 25 years ago, when it started?
  - _Codemonkeyism 10y ago
    "Ex Post Facto" It was illegal all the way, only Apple wants to make it legal. "why wasn't it stopped 25 years ago, when it started?" If murdering is illegal, why wasn't it stopped 5000 years ago? Don't know. People do illegal things all the time, most people doing illegal things do not get prosecuted for various reasons, fashion, society, not enough prosecutors. The argument "I was not prosecuted some years, so it was not illegal" doesn't work with any court. "Statutes of limitations" I don't know the time frames and for what time frame Apple needs to pay fines. Could you share the time frames where you think Apple got illegally fined? I'm no expert in tax law but would assume, here in Germany, there is no "Statutes of limitations" for taxes. Countries lose all their humor when it's about taxes.
    - maratd 10y ago
      > The argument "I was not prosecuted some years, so it was not illegal" doesn't work with any court. That's exactly how it works. Look up statute of limitations. Most civil violations have stringent limits. > I'm no expert in tax law but would assume, here in Germany, there is no "Statutes of limitations" for taxes. Countries lose all their humor when it's about taxes. I didn't know German law applied in Ireland. Perhaps that's the entire point of the EU, I don't know. Anyway, Ireland explicitly says that nothing is owed. Maybe you should read a bit more about this issue before commenting?

jdimov9 10y ago

So it seems to me that the Irish government should be punished, not Apple. Apple did nothing illegal.

themihai 10y ago
Apple was part of a illegal deal. Does it ring any bells?

jomamaxx 10y ago

"Member states cannot give tax benefits to selected companies - this is __illegal__ under EU state aid rules," Yeah - but this arrangement has been going on for more than 20 years, no? A little late in the game to be declaring it 'illegal'? I'm not against the ruling, but it's clear that the EU is messed up. Make no mistake - the only reason Apple was under investigation is because they were making so much money. This thing should have been brought up the moment it was implemented. Also - the EU is structured to incent governments to screw other governments by creating crazy tax schemes. You know who spearheaded this? Jean-Claude Junker - the same guy who spent 10 years developing tax avoidance schemes for Luxembourg!