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I believe Ireland is failing to even charge Apple its statutory tax rate, which is why the the whole kerfluffle over Europe claiming back taxes are owed to Irel

I believe Ireland is failing to even charge Apple its statutory tax rate, which is why the the whole kerfluffle over Europe claiming back taxes are owed to Ireland, Apple claiming they don't, and Ireland claiming they don't want the taxes because they fear it will trigger a move by Apple from its shores. I assume offering deals like that runs afoul of international trade agreements.

jholman 10y ago
To the best of my knowledge, Apple, Ireland, and the EU all claim that Irish tax law is being obeyed. Do you have any reference to this claim of yours? Europe claims that Ireland's tax law is EU-illegal, and thus Ireland must retroactively enforce an EU-legal tax law, and thus the back taxes. I certainly agree with you about Ireland and Apple's motivations.
- akvadrako 10y ago
  The "special deal" the EU is claiming exists might be legal according to Irish tax law, but that doesn't matter because according to them, "it gives Apple a significant advantage over other businesses that are subject to the same national taxation rules" and "On this basis, the Commission concluded that the tax rulings issued by Ireland endorsed an artificial allocation of Apple Sales International and Apple Operations Europe's sales profits to their "head offices", where they were not taxed. As a result, the tax rulings enabled Apple to pay substantially less tax than other companies, which is illegal under EU state aid rules. This decision does not call into question Ireland's general tax system or its corporate tax rate." From http://europa.eu/rapid/press-release_IP-16-2923_en.htm http://europa.eu/rapid/press-release_IP-16-2923_en.htm
  - jholman 10y ago
    I agree with you about "EU is claiming exists might be legal according to Irish tax law, but that doesn't matter [to the EU]", and your source is helpful. I think if you read the actual claim they make, and then you go read the description of the Double Irish accounting trick on wikipedia, you'll notice that to the untrained eye (such as mine), there's nothing special about the deal that Apple is getting; we are publicly aware of dozens of transnationals that get that deal, and there are probably hundreds or thousands. The EU's claim, I think, is not that the deal is special in its entirety, but that Ireland's ruling on the exact fiddly details of how profits are allocated to different Apple subsidiaries is, uh, irregular. It's a pretty technical accounting point. e.g. the following assertion, from Vestager, some months ago: "This is not about transfer pricing, it is about allocation of profits so it is different to the decisions on Starbucks and Fiat". http://arstechnica.co.uk/tech-policy/2016/08/apple-must-pay-ireland-13-billion-euros-in-taxes-says-brussels/ http://arstechnica.co.uk/tech-policy/2016/08/apple-must-pay-...
    - astaunton 10y ago
      In standard terms, from discussing this with several tax accountants in Ireland, the issue lies in Ireland applied 13.5% tax on a certain percentage of the profits, those declared in Ireland at the time, but did not apply it to all the profits. Although the book-keeping was done in an Irish company the sales where not all in Ireland. At the time Ireland sought clarification from the EU on how the tax should be applied, and were told they could only tax the profits generated in Ireland. Now, after discovering there is a sum of money in off-shore accounts that had not had the tax deducted, they have told Ireland to retrospectively apply the 13% tax on all profits unless another EU country could claim the profits were generated there. So the original ruling was to use Ireland as a tax collector that the rest of Europe could then ask for the taxes they were due. It seems that the Irish gov are seeking to overturn the original ruling as, according to the original information sought at the time, they were not doing anything illegal. In hindsight the accounting irregularity, refereed to as the double Irish, meant that Apple could accumulate these profits. The main issue is that these monies have not been declared in any EU country, so now because of the EU's ruling Trump has decided it belongs to America because American companies should only declare profits in America :D
    - akvadrako 10y ago
      Okay, I've looked into this a bit deeper since you've made me curious. I've read through the original ruling here: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52014XC1017(08) http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A5... It seems the main argument seems to be that the tax ruling from Ireland to Apple was not based on objective criteria but more of a negotiation like "we'll give you 1000 of jobs if you give us a discount". It seems reasonable to me to treat every ruling on that basis as "special treatment", even if they are commonly given. To quote: -------------------- The Commission notes, in the first place, that the taxable basis in the 1991 ruling was negotiated rather than substantiated by reference to comparable transactions. Moreover, according to the excerpt reproduced at recital (37), the authorities did not seem to have had the intention of establishing a profit allocation based on transfer pricing. Instead, according to that excerpt, Irish Revenue accepted the calculation of profit attributable to the branch of AOE on the basis of actual costs without this choice being reasoned in any way. The fact that the methods used to determine profit allocation to ASI and AOE result from a negotiation rather than a pricing methodology, reinforces the idea that the outcome of the agreed method is not arm’s length and that a prudent independent market operator would not have accepted the remuneration allocated to the branches of ASI and AOE in the same situation, which serve as a basis for calculating the tax liability. ------------------- They then go on to mention many irregularities with the ruling which seem to be reverse-engineered to get a desired tax basis, instead of based on the economic reality.
  - wav-part 10y ago
    This sounds like dispute between Ireland and EU. Please remind me why is Apple dragged into this ? Specifically laws. There is also the concern of how 13B Euros of Apple will-be/have-been seized/escrowed for the duration of the case which may takes years. In case EC loses, will EC/EU pay to Apple for temporary loss of their property ?
    - summarite 10y ago
      You can start by reading the sources in other comments here. This is a ruling about a deal between Apple and Ireland and how it is structured to minimise tax and avoid tax in other countries. The Commission, in simple terms, makes sure that a single market doesn't mean that one country helps companies avoid tax in other countries while still allowing completely free trade.
      - wav-part 10y ago
        And like other comments have suggested. You cant sue for following the laws. If EC/EU does not like laws then change the laws. If EU does not like Ireland laws then kick Ireland out. But holding 13B euros hostage cannot be tolerated.
        mpweiher 10y ago
        You are simply mistaken. Ireland agreed to obey EU rules when joining.
        Oletros 10y ago
        > You cant sue for following the laws. Ireland was not following the laws
    - Graphon1 10y ago
      > Please remind me why is Apple dragged into this ? Because if Ireland "loses", then Apple owes 14B Euro. So, Apple is an interested party.
    - Oletros 10y ago
Retric 10y ago
What deal? Ireland has tax laws on the books and Apple is following them. Ireland also has a law on the books saying it must comply with the EU. Nothing about this has anything directly to do with Apple. The real question is which of Ireland laws 'win'.
- akvadrako 10y ago
  This is not about Irish law, but EU law. Ireland has to follow EU laws because the EU says so, not Irish laws.
  - Retric 10y ago
    No, Ireland is still a country it has to follow EU laws because Ireland law says so. They could leave the EU at any time with a single change to their laws. Brexit is going to take time for various reasons, but legally they could have left the next day.
    - jdmichal 10y ago
      Specifically, it takes time to wind it down in a way that does not damage both parties. As you said, Brexit could have happened 100% in a day, but then trade and movement would likely be negatively effected until new deals were worked out. Much better for everyone involved to work out those new deals first, then execute the exit.
    - akvadrako 10y ago
      A country cannot make a law that it's part of the EU and expect the rest of the world to accept it. The EU has to agree and can stipulate the conditions, like following the EU laws. I did not say Ireland needs to follow EU laws if it leaves the EU, but that isn't relevant.
      - jholman 10y ago
        Yeah, that's all clear. But notice this sequence: Retric > Ireland also has a law on the books saying it must comply with the EU. akvadrako > Ireland has to follow EU laws because the EU says so Retric > No, Ireland ... has to follow EU laws because Ireland law says so My (modest) understanding of treaty law is that Retric is right, that the laws that require Ireland to obey EU rulings are Irish laws. In particular, presumably some members of various executive branches negotiated some treaties, and then asked their respective legislative branches to "ratify" those treaties, i.e. pass laws binding the signatories to obey the treaties, by their own respective legal systems. My non-lawyer understanding is that EU legal theory recognizes the sovereignty of nations, and the EU's authority is derived from the sovereign authority of nations. Do you actually disagree with any of this? If you do disagree, how do you understand international law to work? i.e. why would Ireland ever care what EU law says, other than via the legal chain I just outlined?
return0 10y ago
Which makes one wonder why doesn't Ireland just take the $14B. That is a lot of money , surely more than what apple is going to pay ireland in the next 20 years. They can say "sorry apple, they forced us". How likely is apple to leave Ireland for another country? There few countries that will offer such sweet deals.

jholman 10y ago

To the best of my knowledge, Apple, Ireland, and the EU all claim that Irish tax law is being obeyed. Do you have any reference to this claim of yours? Europe claims that Ireland's tax law is EU-illegal, and thus Ireland must retroactively enforce an EU-legal tax law, and thus the back taxes. I certainly agree with you about Ireland and Apple's motivations.

akvadrako 10y ago
The "special deal" the EU is claiming exists might be legal according to Irish tax law, but that doesn't matter because according to them, "it gives Apple a significant advantage over other businesses that are subject to the same national taxation rules" and "On this basis, the Commission concluded that the tax rulings issued by Ireland endorsed an artificial allocation of Apple Sales International and Apple Operations Europe's sales profits to their "head offices", where they were not taxed. As a result, the tax rulings enabled Apple to pay substantially less tax than other companies, which is illegal under EU state aid rules. This decision does not call into question Ireland's general tax system or its corporate tax rate." From http://europa.eu/rapid/press-release_IP-16-2923_en.htm http://europa.eu/rapid/press-release_IP-16-2923_en.htm
- jholman 10y ago
  I agree with you about "EU is claiming exists might be legal according to Irish tax law, but that doesn't matter [to the EU]", and your source is helpful. I think if you read the actual claim they make, and then you go read the description of the Double Irish accounting trick on wikipedia, you'll notice that to the untrained eye (such as mine), there's nothing special about the deal that Apple is getting; we are publicly aware of dozens of transnationals that get that deal, and there are probably hundreds or thousands. The EU's claim, I think, is not that the deal is special in its entirety, but that Ireland's ruling on the exact fiddly details of how profits are allocated to different Apple subsidiaries is, uh, irregular. It's a pretty technical accounting point. e.g. the following assertion, from Vestager, some months ago: "This is not about transfer pricing, it is about allocation of profits so it is different to the decisions on Starbucks and Fiat". http://arstechnica.co.uk/tech-policy/2016/08/apple-must-pay-ireland-13-billion-euros-in-taxes-says-brussels/ http://arstechnica.co.uk/tech-policy/2016/08/apple-must-pay-...
  - astaunton 10y ago
    In standard terms, from discussing this with several tax accountants in Ireland, the issue lies in Ireland applied 13.5% tax on a certain percentage of the profits, those declared in Ireland at the time, but did not apply it to all the profits. Although the book-keeping was done in an Irish company the sales where not all in Ireland. At the time Ireland sought clarification from the EU on how the tax should be applied, and were told they could only tax the profits generated in Ireland. Now, after discovering there is a sum of money in off-shore accounts that had not had the tax deducted, they have told Ireland to retrospectively apply the 13% tax on all profits unless another EU country could claim the profits were generated there. So the original ruling was to use Ireland as a tax collector that the rest of Europe could then ask for the taxes they were due. It seems that the Irish gov are seeking to overturn the original ruling as, according to the original information sought at the time, they were not doing anything illegal. In hindsight the accounting irregularity, refereed to as the double Irish, meant that Apple could accumulate these profits. The main issue is that these monies have not been declared in any EU country, so now because of the EU's ruling Trump has decided it belongs to America because American companies should only declare profits in America :D
  - akvadrako 10y ago
    Okay, I've looked into this a bit deeper since you've made me curious. I've read through the original ruling here: http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52014XC1017(08) http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A5... It seems the main argument seems to be that the tax ruling from Ireland to Apple was not based on objective criteria but more of a negotiation like "we'll give you 1000 of jobs if you give us a discount". It seems reasonable to me to treat every ruling on that basis as "special treatment", even if they are commonly given. To quote: -------------------- The Commission notes, in the first place, that the taxable basis in the 1991 ruling was negotiated rather than substantiated by reference to comparable transactions. Moreover, according to the excerpt reproduced at recital (37), the authorities did not seem to have had the intention of establishing a profit allocation based on transfer pricing. Instead, according to that excerpt, Irish Revenue accepted the calculation of profit attributable to the branch of AOE on the basis of actual costs without this choice being reasoned in any way. The fact that the methods used to determine profit allocation to ASI and AOE result from a negotiation rather than a pricing methodology, reinforces the idea that the outcome of the agreed method is not arm’s length and that a prudent independent market operator would not have accepted the remuneration allocated to the branches of ASI and AOE in the same situation, which serve as a basis for calculating the tax liability. ------------------- They then go on to mention many irregularities with the ruling which seem to be reverse-engineered to get a desired tax basis, instead of based on the economic reality.
- wav-part 10y ago
  This sounds like dispute between Ireland and EU. Please remind me why is Apple dragged into this ? Specifically laws. There is also the concern of how 13B Euros of Apple will-be/have-been seized/escrowed for the duration of the case which may takes years. In case EC loses, will EC/EU pay to Apple for temporary loss of their property ?
  - summarite 10y ago
    You can start by reading the sources in other comments here. This is a ruling about a deal between Apple and Ireland and how it is structured to minimise tax and avoid tax in other countries. The Commission, in simple terms, makes sure that a single market doesn't mean that one country helps companies avoid tax in other countries while still allowing completely free trade.
    - wav-part 10y ago
      And like other comments have suggested. You cant sue for following the laws. If EC/EU does not like laws then change the laws. If EU does not like Ireland laws then kick Ireland out. But holding 13B euros hostage cannot be tolerated.
      - mpweiher 10y ago
        You are simply mistaken. Ireland agreed to obey EU rules when joining.
      - Oletros 10y ago
        > You cant sue for following the laws. Ireland was not following the laws
  - Graphon1 10y ago
    > Please remind me why is Apple dragged into this ? Because if Ireland "loses", then Apple owes 14B Euro. So, Apple is an interested party.
  - Oletros 10y ago

Retric 10y ago

What deal? Ireland has tax laws on the books and Apple is following them. Ireland also has a law on the books saying it must comply with the EU. Nothing about this has anything directly to do with Apple. The real question is which of Ireland laws 'win'.

akvadrako 10y ago
This is not about Irish law, but EU law. Ireland has to follow EU laws because the EU says so, not Irish laws.
- Retric 10y ago
  No, Ireland is still a country it has to follow EU laws because Ireland law says so. They could leave the EU at any time with a single change to their laws. Brexit is going to take time for various reasons, but legally they could have left the next day.
  - jdmichal 10y ago
    Specifically, it takes time to wind it down in a way that does not damage both parties. As you said, Brexit could have happened 100% in a day, but then trade and movement would likely be negatively effected until new deals were worked out. Much better for everyone involved to work out those new deals first, then execute the exit.
  - akvadrako 10y ago
    A country cannot make a law that it's part of the EU and expect the rest of the world to accept it. The EU has to agree and can stipulate the conditions, like following the EU laws. I did not say Ireland needs to follow EU laws if it leaves the EU, but that isn't relevant.
    - jholman 10y ago
      Yeah, that's all clear. But notice this sequence: Retric > Ireland also has a law on the books saying it must comply with the EU. akvadrako > Ireland has to follow EU laws because the EU says so Retric > No, Ireland ... has to follow EU laws because Ireland law says so My (modest) understanding of treaty law is that Retric is right, that the laws that require Ireland to obey EU rulings are Irish laws. In particular, presumably some members of various executive branches negotiated some treaties, and then asked their respective legislative branches to "ratify" those treaties, i.e. pass laws binding the signatories to obey the treaties, by their own respective legal systems. My non-lawyer understanding is that EU legal theory recognizes the sovereignty of nations, and the EU's authority is derived from the sovereign authority of nations. Do you actually disagree with any of this? If you do disagree, how do you understand international law to work? i.e. why would Ireland ever care what EU law says, other than via the legal chain I just outlined?

return0 10y ago

Which makes one wonder why doesn't Ireland just take the $14B. That is a lot of money , surely more than what apple is going to pay ireland in the next 20 years. They can say "sorry apple, they forced us". How likely is apple to leave Ireland for another country? There few countries that will offer such sweet deals.