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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 h

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).
        qaq 10y ago
        It would be Net loss for EU.
        themihai 10y ago
        I think it would be a win for ordinary citizens(both EU and US) and perhaps each individual state too(unless you consider tax a bad thing) because the taxes help the governments to develop the infrastructure(i.e. schools, logistics etc) thus they can create more value. I have doubts that these MNCs help the society that much to be eligible for these tax breaks. They are not charities... The loss for the EU as a economic partner is negligible.
  - dogma1138 10y ago
    The bigger problem is that it's a two way street within the EU. The "smaller" economies have to give incentive to large corporations so they could set up shop. Ireland did it with various incentives, Poland, Estonia and the likes are also doing it with others. Ireland is in the Eurozone so they can't set up their own monetary policy so they can't offer much in terms of favorable interest and conversion rates to large corporations. If they can't offer tax incentives companies would be less inclined to set up shop in Ireland if their operating costs would be similar to those in Germany or France. English gives Ireland some advantage but it's not nearly as big as people think, the culture in Germany or France is close enough and you can train people to speak English and with the shared market even import a few 1000's Irish to man the phones. Apple and the other big guys set up their shop in Ireland because the Irish government gave out huge incentive both direct and indirect it provided funding for training and education for its residents to meet the specific requirements that companies like Apple, Google, and Facebook had. It provided financing, loans and tax breaks to those companies to come in and employ Irish workers and it did it because it's the only way it could compete with the likes of Germany. Tax loopholes are bad, laws that prevent smaller countries from being competitive are even worse, an equal playing field works when the players are equal, when they aren't "equality" is only advantageous to the strong and established players.
- 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... .

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).
        qaq 10y ago
        It would be Net loss for EU.
        themihai 10y ago
        I think it would be a win for ordinary citizens(both EU and US) and perhaps each individual state too(unless you consider tax a bad thing) because the taxes help the governments to develop the infrastructure(i.e. schools, logistics etc) thus they can create more value. I have doubts that these MNCs help the society that much to be eligible for these tax breaks. They are not charities... The loss for the EU as a economic partner is negligible.
- dogma1138 10y ago
  The bigger problem is that it's a two way street within the EU. The "smaller" economies have to give incentive to large corporations so they could set up shop. Ireland did it with various incentives, Poland, Estonia and the likes are also doing it with others. Ireland is in the Eurozone so they can't set up their own monetary policy so they can't offer much in terms of favorable interest and conversion rates to large corporations. If they can't offer tax incentives companies would be less inclined to set up shop in Ireland if their operating costs would be similar to those in Germany or France. English gives Ireland some advantage but it's not nearly as big as people think, the culture in Germany or France is close enough and you can train people to speak English and with the shared market even import a few 1000's Irish to man the phones. Apple and the other big guys set up their shop in Ireland because the Irish government gave out huge incentive both direct and indirect it provided funding for training and education for its residents to meet the specific requirements that companies like Apple, Google, and Facebook had. It provided financing, loans and tax breaks to those companies to come in and employ Irish workers and it did it because it's the only way it could compete with the likes of Germany. Tax loopholes are bad, laws that prevent smaller countries from being competitive are even worse, an equal playing field works when the players are equal, when they aren't "equality" is only advantageous to the strong and established players.
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... .