6 ms·

I think you make it seem like EU doesn't care at all about what member states do in regards to taxation but there's many limitations to what can be done by any

by vasco 2y ago

I think you make it seem like EU doesn't care at all about what member states do in regards to taxation but there's many limitations to what can be done by any member state in order to harmonize and prevent corruption etc. This in practice makes the EU have a lot of say in regards to taxation. Moreover the EU has special rules to limit moving funds to jurisdictions that have taxes that are deemed too low (read tax havens) - this directly implies no member state has agency to lower their own taxes as much. Here's some example limitations: https://eur-lex.europa.eu/EN/legal-content/summary/tackling-corporate-tax-avoidance.html?fromSummary=21 https://eur-lex.europa.eu/EN/legal-content/summary/tackling-... I focused on direct taxation, but in indirect taxation I think there's even more examples.

hinkley 2y ago
Maybe they should do it like Roth IRAs. You can move the money to a tax haven only after you’ve paid taxes on it. So if you’re building hotels or factories in the haven that’s fine. If you’re hiding money we demand our pound of flesh.
- The_Colonel 2y ago
  It's more difficult to determine where the value in software is being created. Still, big tech has a lot of R&D offices in Ireland.
  - hinkley 2y ago
    That is definitely a difficult paper trail. If you make valves in Ireland they at least have to be shipped. Code just moves on the network. As do commands. But wouldn’t Ireland see their taxes as “working” if Irish coders are being hired to do the work?
    - yunohn 2y ago
      There’s absolutely no employment requirement outside of any PR deals that IE may impose on Apple to satisfy their citizens. The tax evasion scheme they used does not necessitate any real humans in any jurisdictions - it’s almost literally just documentation.
      - musiciangames 2y ago
        I’m not sure that’s the case. I worked for Irish subsidiary of a financial software company. Management openly said the main reason we were there was for the tax benefit. We cut standard code for the product, then once a year had to fill out a form describing the ‘R&D’ component of what we had done. As I understood it, that was required for the tax treatment we received.
        yunohn 2y ago
        AFAIU it’s a soft requirement so that IE can claim that losing taxes is offset by employing (a few) people. The actual tax structuring discussed in this case and similar for other FAANG, is all about where the company is registered vs making revenue vs paying taxes, and how none of it is intuitively what you’d expect.
        piltdownman 2y ago
        You get a 33% tax rebate via a research credit. You probably filled out a form for PWC to attest to that. There's 10s of 1000s of Engineers directly employed in R&D in Ireland, spanning automotive, telecoms, fintech, SaaS etc.. with a large number of companies receiving the credit. We have a HUGE network effect now via the Silicon Docks and the other tech hubs around Ireland - Cork, Galway and Dublin are absolute inundated with groups of companies in certain industries. Seven of the ten of the world's top pharmaceutical companies including Janssen, AbbVie, Eli Lilly, Pfizer, Merck/MSD, Novartis, and Thermo Fisher Scientific are based within 50km of each other in Cork.
  - epolanski 2y ago
    That's not what really Apple did in Europe to pay little taxes. The scheme was essentially like this: - Apple Ireland bought iphones for 200$ or so (talking about pre X numbers, now they're likely slightly higher) - Apple Ireland sold iPhones to Apple Italy for 599€s - Apple Italy sold iPhones for 599€s + vat (thus avoiding to pay any corporate taxes in Italy while making billions) - Apple Ireland had a special agreement with Irish tax so they paid like sub 1% corporate taxes on the 400€s of profit This way not only Apple wasn't paying any tax in the countries they were doing business with, but also paying extremely low taxes in Ireland. On top of that, which isn't illegal per se, it happened allegedly on top of preferential treatments (but I'm not much informed on the details here).
    - hinkley 2y ago
      That sounds like something Hollywood does when they want to cut out profit sharing with the cast. One of their affiliate companies makes an absolute killing on services rendered and the studio itself takes a bath on the movie.
    - GeekyBear 2y ago
      > avoiding to pay any corporate taxes in Italy This us a fairly common strategy not limited to tech. For instance, Starbucks in the UK: > Starbucks Coffee Company (UK) made a £149m “gross profit” in the year to October 2023, up from £129m the year before. But after “administrative expenses” of £127m, its pre-tax profits were reduced to £16.9m, on which it paid £7.2m tax... In 2012, it was revealed that Starbucks had paid just £8.6m in taxes on £3bn in UK sales since 1998, https://www.theguardian.com/business/2024/apr/05/starbucks-paid-7-point-2m-in-uk-corporation-tax-despite-gross-profit-of-149m https://www.theguardian.com/business/2024/apr/05/starbucks-p...
      - jrnx 2y ago
        you're ignoring the 20% VAT on those 3bn sales, which provided 600m tax revenue. Why is it so important that they paid 7m in corporate tax instead of any other amount? Their business apparently has high cost of sales (like stores, personnel etc.), where by the way also taxes occur, e.g. for wages... So I suggest to think twice if you want to paint the picture that Starbucks does not contribute it's fair share to taxes in the UK.
- gunapologist99 2y ago
  .. thus removing a significant portion of income from these so-called tax havens, which generally tend to be poorer countries. No one has accused Germany of being a tax haven, for instance.
  - aktenlage 2y ago
    This list disagrees with "poorer countries": https://worldpopulationreview.com/country-rankings/tax-haven-countries https://worldpopulationreview.com/country-rankings/tax-haven... 1 British Virgin Islands 2 Cayman Islands 3 Bermuda 4 Netherlands 5 Switzerland 6 Luxembourg 7 Hong Kong 8 Jersey 9 Singapore 10 United Arab Emirates
  - qwytw 2y ago
    > so-called tax havens, which generally tend to be poorer countries Smaller, not poorer. Unless you think that current or historical "tax havens" like Ireland, Luxembourg, Netherlands, Switzerland etc. were/are poorer than Germany. If you have less than a handful of million people even getting a few percent + several thousands of jobs from corporations like Apple is a huge deal. It would be a drop in the bucket for Germany so they have no incentives to make such deals.
    - deleted 2y ago
      [deleted]
nine_k 2y ago
Specifically in Ireland, corporate taxes were being lowered from late 1980s until 2003, in a series of agreements with the EU regulators. It's not like Ireland lowered the taxes in a sneaky scheme, or grandfathered-in an abnormally low rate.
- ajross 2y ago
  At the same time it's clear that Ireland has been "gaming the system" here, and the proof is the huge delta between the effective tax rates between member nations we're seeing in the judgement. I don't know that there's much of a moral or principled argument to be made here, every system gets gamed, and the European Commission is another such system. And Ireland absolutely agreed to be bound in that game as a price of joining the EU in the first place. Basically, from the other side of the ocean I don't see much to care about here beyond the microtactics of business development decisions. Let Europe sort out its business on its own.
  - ribosometronome 2y ago
    Punishing Ireland for gaming the system by paying Ireland 13 billion hardly makes it seem like the EU is super concerned about Ireland's transgressions.
    - pmontra 2y ago
      Apple having to pay those 13 B means that companies won't be as eager to have a headquarter in Ireland as they have been in the past. They could move somewhere else in the EU. That's a damage for Ireland and that's why Ireland sided with Apple for all this litigation.
      - martinald 2y ago
        Correct, Ireland fought very hard against getting that 13B.
      - qaq 2y ago
        Sure but the taxes are only part of the equation. Native english speakers familiar to US tech giants common law system. Large number of skilled workers. Flexible immigration system.
tomcam 2y ago
> I think you make it seem like EU doesn't care at all about what member states do in regards to taxation Did GP change the original text? The closest match I can find to your assertion is where they said "or non-EU readers, note that taxation is explicitly not a competency of the EU"
AmericanChopper 2y ago
The EU directly writes tax legislation for countries all over the world with the use of their black and grey lists, which restrict companies in those jurisdictions from trading with the EU, or trading with companies that trade with the EU, or from using any banking in the EU or banking that is especially connected to the EU.
ClumsyPilot 2y ago
> this directly implies no member state has agency to lower their own taxes as much. Two words: Dutch Sandwitch Because it’s one market, unless countries coordinate, you get massive tax loopholes with profits being shifted to tax heavens. Practical implications override hypothetical concerns https://en.wikipedia.org/wiki/Dutch_Sandwich https://en.wikipedia.org/wiki/Dutch_Sandwich
- touristtam 2y ago
  Hence why a lot of European companies have incorporated in the NL in the last couple of decades.

by vasco 2y ago

hinkley 2y ago

Maybe they should do it like Roth IRAs. You can move the money to a tax haven only after you’ve paid taxes on it. So if you’re building hotels or factories in the haven that’s fine. If you’re hiding money we demand our pound of flesh.

The_Colonel 2y ago
It's more difficult to determine where the value in software is being created. Still, big tech has a lot of R&D offices in Ireland.
- hinkley 2y ago
  That is definitely a difficult paper trail. If you make valves in Ireland they at least have to be shipped. Code just moves on the network. As do commands. But wouldn’t Ireland see their taxes as “working” if Irish coders are being hired to do the work?
  - yunohn 2y ago
    There’s absolutely no employment requirement outside of any PR deals that IE may impose on Apple to satisfy their citizens. The tax evasion scheme they used does not necessitate any real humans in any jurisdictions - it’s almost literally just documentation.
    - musiciangames 2y ago
      I’m not sure that’s the case. I worked for Irish subsidiary of a financial software company. Management openly said the main reason we were there was for the tax benefit. We cut standard code for the product, then once a year had to fill out a form describing the ‘R&D’ component of what we had done. As I understood it, that was required for the tax treatment we received.
      - yunohn 2y ago
        AFAIU it’s a soft requirement so that IE can claim that losing taxes is offset by employing (a few) people. The actual tax structuring discussed in this case and similar for other FAANG, is all about where the company is registered vs making revenue vs paying taxes, and how none of it is intuitively what you’d expect.
      - piltdownman 2y ago
        You get a 33% tax rebate via a research credit. You probably filled out a form for PWC to attest to that. There's 10s of 1000s of Engineers directly employed in R&D in Ireland, spanning automotive, telecoms, fintech, SaaS etc.. with a large number of companies receiving the credit. We have a HUGE network effect now via the Silicon Docks and the other tech hubs around Ireland - Cork, Galway and Dublin are absolute inundated with groups of companies in certain industries. Seven of the ten of the world's top pharmaceutical companies including Janssen, AbbVie, Eli Lilly, Pfizer, Merck/MSD, Novartis, and Thermo Fisher Scientific are based within 50km of each other in Cork.
- epolanski 2y ago
  That's not what really Apple did in Europe to pay little taxes. The scheme was essentially like this: - Apple Ireland bought iphones for 200$ or so (talking about pre X numbers, now they're likely slightly higher) - Apple Ireland sold iPhones to Apple Italy for 599€s - Apple Italy sold iPhones for 599€s + vat (thus avoiding to pay any corporate taxes in Italy while making billions) - Apple Ireland had a special agreement with Irish tax so they paid like sub 1% corporate taxes on the 400€s of profit This way not only Apple wasn't paying any tax in the countries they were doing business with, but also paying extremely low taxes in Ireland. On top of that, which isn't illegal per se, it happened allegedly on top of preferential treatments (but I'm not much informed on the details here).
  - hinkley 2y ago
    That sounds like something Hollywood does when they want to cut out profit sharing with the cast. One of their affiliate companies makes an absolute killing on services rendered and the studio itself takes a bath on the movie.
  - GeekyBear 2y ago
    > avoiding to pay any corporate taxes in Italy This us a fairly common strategy not limited to tech. For instance, Starbucks in the UK: > Starbucks Coffee Company (UK) made a £149m “gross profit” in the year to October 2023, up from £129m the year before. But after “administrative expenses” of £127m, its pre-tax profits were reduced to £16.9m, on which it paid £7.2m tax... In 2012, it was revealed that Starbucks had paid just £8.6m in taxes on £3bn in UK sales since 1998, https://www.theguardian.com/business/2024/apr/05/starbucks-paid-7-point-2m-in-uk-corporation-tax-despite-gross-profit-of-149m https://www.theguardian.com/business/2024/apr/05/starbucks-p...
    - jrnx 2y ago
      you're ignoring the 20% VAT on those 3bn sales, which provided 600m tax revenue. Why is it so important that they paid 7m in corporate tax instead of any other amount? Their business apparently has high cost of sales (like stores, personnel etc.), where by the way also taxes occur, e.g. for wages... So I suggest to think twice if you want to paint the picture that Starbucks does not contribute it's fair share to taxes in the UK.
gunapologist99 2y ago
.. thus removing a significant portion of income from these so-called tax havens, which generally tend to be poorer countries. No one has accused Germany of being a tax haven, for instance.
- aktenlage 2y ago
  This list disagrees with "poorer countries": https://worldpopulationreview.com/country-rankings/tax-haven-countries https://worldpopulationreview.com/country-rankings/tax-haven... 1 British Virgin Islands 2 Cayman Islands 3 Bermuda 4 Netherlands 5 Switzerland 6 Luxembourg 7 Hong Kong 8 Jersey 9 Singapore 10 United Arab Emirates
- qwytw 2y ago
  > so-called tax havens, which generally tend to be poorer countries Smaller, not poorer. Unless you think that current or historical "tax havens" like Ireland, Luxembourg, Netherlands, Switzerland etc. were/are poorer than Germany. If you have less than a handful of million people even getting a few percent + several thousands of jobs from corporations like Apple is a huge deal. It would be a drop in the bucket for Germany so they have no incentives to make such deals.
  - deleted 2y ago
    [deleted]

nine_k 2y ago

Specifically in Ireland, corporate taxes were being lowered from late 1980s until 2003, in a series of agreements with the EU regulators. It's not like Ireland lowered the taxes in a sneaky scheme, or grandfathered-in an abnormally low rate.

ajross 2y ago
At the same time it's clear that Ireland has been "gaming the system" here, and the proof is the huge delta between the effective tax rates between member nations we're seeing in the judgement. I don't know that there's much of a moral or principled argument to be made here, every system gets gamed, and the European Commission is another such system. And Ireland absolutely agreed to be bound in that game as a price of joining the EU in the first place. Basically, from the other side of the ocean I don't see much to care about here beyond the microtactics of business development decisions. Let Europe sort out its business on its own.
- ribosometronome 2y ago
  Punishing Ireland for gaming the system by paying Ireland 13 billion hardly makes it seem like the EU is super concerned about Ireland's transgressions.
  - pmontra 2y ago
    Apple having to pay those 13 B means that companies won't be as eager to have a headquarter in Ireland as they have been in the past. They could move somewhere else in the EU. That's a damage for Ireland and that's why Ireland sided with Apple for all this litigation.
    - martinald 2y ago
      Correct, Ireland fought very hard against getting that 13B.
    - qaq 2y ago
      Sure but the taxes are only part of the equation. Native english speakers familiar to US tech giants common law system. Large number of skilled workers. Flexible immigration system.

tomcam 2y ago

> I think you make it seem like EU doesn't care at all about what member states do in regards to taxation Did GP change the original text? The closest match I can find to your assertion is where they said "or non-EU readers, note that taxation is explicitly not a competency of the EU"

AmericanChopper 2y ago

The EU directly writes tax legislation for countries all over the world with the use of their black and grey lists, which restrict companies in those jurisdictions from trading with the EU, or trading with companies that trade with the EU, or from using any banking in the EU or banking that is especially connected to the EU.

ClumsyPilot 2y ago

> this directly implies no member state has agency to lower their own taxes as much. Two words: Dutch Sandwitch Because it’s one market, unless countries coordinate, you get massive tax loopholes with profits being shifted to tax heavens. Practical implications override hypothetical concerns https://en.wikipedia.org/wiki/Dutch_Sandwich https://en.wikipedia.org/wiki/Dutch_Sandwich

touristtam 2y ago
Hence why a lot of European companies have incorporated in the NL in the last couple of decades.