What's the cause of all the flip flopping between Apple having to pay the bill or not? I think the main problem that this area of law is fundamentally uncertain and hard to apply. Legal mistakes get made, and judgements get appealed until people figure out what the law actually says.
A secondary issue is that judges in appeals courts are generalists, not tax or state aid experts. Despite this, they get landed with the hardest cases - situations that haven't been seen before which throw up new legal issues - and need to figure out what to do. Most of the time they get it right. Some of the time, they mis-interpret the law and get it wrong. That's why we have the appeals process.
So where are we up to in terms of this case, and how many more flip-flops we can expect? This article is citing an advisory opinion of one of the EU's Advocate Generals (themselves, very senior judges). These advisory opinions are issued prior to the CJEU (the highest court) making a final ruling. They are there to guide the CJEU so that the final ruling is as good as possible. Although this specific case should be finalised after the CJEU makes its ruling, I'm sure the case law will continue to evolve in the future as multinational companies push the boundaries of the EU's tax and state aid regimes.
> What's the cause of all the flip flopping between Apple having to pay the bill or not? I think the main problem that this area of law is fundamentally uncertain and hard to apply. Legal mistakes get made, and judgements get appealed until people figure out what the law actually says.
Or you know, Apple is trying really hard to not pay the tax they should and are stalling the process by throwing lawyers at it, because they want to continue their shell company scheme of reselling IP rights to avoid taxes in locales where they sell their hardware and make profit.
Is this the first time you're seeing a megacorp try their hardest not to pay their due?
What portion of Ireland's GDP is "American multinational companies" using them for tax avoidance?
As long as it is legal for Apple to route the money it makes in America back to shell companies in Ireland and pay 12.5% corporate tax instead of something higher elsewhere, why would it ever stop?
Around 23% in 2020, based on the difference between GNI* and GDP. It has been higher than that in the past, but increased medical manufacturing pushed it back. It's not just American companies, but they're certainly the largest.
The most notable effect here is that you learn to be wary of any stat mentioning "GDP" or "GDP per capita".
In 2015, when the US cut-off date for many of these transfers hit, the CSO refused to release accurate corporate tax numbers because it would have identified the companies involved.
For sure they are throwing lawyers at it. It's 13bn after all. But the underlying reason for the appeal is the same; the law is not yet clear as to what should happen.
Let's assume the law isn't clear, ans since I am no tax lawyer I actually cannot tell either way, pursueing that clarity at court is exactly what I would expect from Apple and the EU to do. So, the system is working as expected here.
Laws are never are clear enough, there is always room for interpretation. Laws are not some piece of software that give predctable answers, hence courts and the whole legal system. And it is the latter one atvwork here, as intended.
This is a rationalization for convoluted legislation. The impossibility of perfection is a poor excuse for mediocrity.
Notice that we almost never hear about corporations avoiding payroll taxes or VAT. They avoid this kind of tax in particular because the rules are unusually squishy and incoherent, and every time they find another way to do it, governments respond by making it more complicated or even less coherent instead of addressing the root cause and replacing it with something clearer and simpler.
To be fair, the EU responded to this case by enacting a new directive that says "the minimum corporate tax shall be 15%".
OK, it's unfortunately 175 pages long [0] instead of seven words, but that really is the gist of it. The current legislation is a more "squishy and incoherent" set of rules [1] that say you cannot give "state aid" preferentially to any company, the technicalities of which are being litigated in the ongoing Apple case.
But this is the problem, right? You can't really do that because governments are supposed to spend tax revenue on things that benefit those in their jurisdiction. The extent of tax dollars not used for this is a measure of government inefficiency and in a perfectly efficient government it would be zero, i.e. the average taxpayer would receive benefits equal to what they pay in taxes.
What they're kind of implying is that they want multinational corporations to pay more than they receive so some other people can receive more than they pay, but they haven't actually specified who or by how much. It would be pretty silly and inefficient to deny large companies the use of government-operated transit systems or police protection, but to make it at all practical you end up creating enough exceptions that anyone can find a loophole.
I feel like the elephant in the room is this. A lot of these huge companies are monopolies or nearly so, and a large proportion of their profit is a monopoly rent. But a monopoly rent isn't attributable to a particular factory or the location of your software developers. It can't be attributed to something happening in any particular jurisdiction because it's actually attributable to something that shouldn't be happening at all, and which doesn't have any corporeal existence or physical location. So those profits naturally get declared in whichever jurisdiction has the lowest taxes.
But the problem is not that the monopoly rent is being taxed in the wrong jurisdiction or at the wrong tax rate, the problem is that the monopoly rent exists. Stop trying to pin it to a particular place and find a way to eliminate it.
Countries in Europe have been gradually tightening up on corporations avoiding payroll taxes by declaring employees as contractors. In the UK it's known as IR35 working. The EU have recently proposed the platform working directive, aimed straight at this problem.
This is not a means to avoid payroll taxes. They're still being paid by the contractor. And in a way that costs the corporation money, if contractors have to pay the tax out of after-tax income, because then they'll demand higher compensation to account for it, by the amount of the tax plus the amount of the tax due on the increase in compensation.
There are other reasons corporations prefer workers to be contractors, but that isn't it.
In the UK both employer and employee pay payroll taxes (national insurance) at about 13% of salary, additionally employers must pay a minimum of 3% of salary to a pension.
Contractors paid themselves a minimum salary to avoid the payroll taxes. They then took the rest of their earnings as dividends from their personal services company instead, the combination of payroll taxes + income taxes being higher than taxes on dividends.
Since that ruse has been heavily restricted, employers have had to increase contractor pay to make-up for contractors having to pay more income tax + national insurance.
Without getting into the nitty gritty of it, it seems pretty obvious that there is a lack of clarity given that the European Commission came to one conclusion, the General Court concluded that the European Commission was incorrect and now an advocate general for the European Court of Justice has concluded that the General Court was incorrect. These are all smart people who have spent a lot of time and effort studying the law in this area. There are a lot of extremely reductionist takes on the case in the media but the actual legal principles in dispute, and their application to the facts, are quite complex.
You keep mixing up "muddying the waters to avoid paying tax" and "lack of clarity" The "lack" you speak of is generated by a megacorporation to avoid paying their part - and you keep attributing it to the wrong party.
Corporations will always attempt to lower their costs. It's like blaming the rain for being wet.
It isn't inherently necessary to have a tax system so convoluted that these games are even possible. If you tax wages and companies employ people in your jurisdiction then they have to remit the tax. If you tax sales and people buy things in your jurisdiction then companies have to remit the tax. If you tax property and companies own property in your jurisdiction etc. etc.
The problem is governments keep trying to tax companies not based on what happens in their jurisdiction but what happens outside of it, which they can only do sometimes, and that gives the companies an opportunity to find ways to make it one of the times they can't. Just stop doing that and tax the things that actually happen in your jurisdiction.
It is the EU institutions who are disagreeing with each other, Apple have nothing to do with it. The General Court of the EU isn't muddying the waters to help Apple avoid paying tax.
> Ireland also made a no corporate subsidy deal with the EU.
That seems odd. For example, if the government provides a national healthcare system, this is effectively a subsidy to employers who can then avoid providing a health plan their employees might otherwise demand or otherwise have to pay them more to compensate for their need to pay for their own healthcare. How is this being distinguished from any other form of subsidy? Isn't subsidizing things what governments do with tax money?
Bans on state subsidies are a core principle that enables the EU single market. Otherwise the market could easily be distorted by state aid. However it’s far from simple in practice and is something the member states have been arguing about forever.
The rest of the eu has never been happy with irelands tax policy but since taxation is a national competency they can’t do anything about it directly. They can however frame it as state aid and try to attack it that way.
> Bans on state subsidies are a core principle that enables the EU single market. Otherwise the market could easily be distorted by state aid.
It seems impossible to avoid this. If one state spends money on something that benefits businesses and another spends it on something else, those businesses will prefer the first one. But this isn't actually that much of a problem because each state has finite resources and its people get to decide how to use them. If one wants to have a UBI (which might increase entrepreneurship and the number of small businesses engaged in taxable activity) and another wants to lower unemployment by attracting large employers with subsidies and a third just wants to have lower taxes, what's the problem? That one might actually work better than another?
Ireland gave Apple a tax deal. The EU is arguing Ireland as part of the EU is not allowed to set it's own tax policy. The lack of clarity is Ireland's claiming it's still a sovereign nation and can set taxes but the EU says no you're not.
That's not true. EU nations set their own tax policy freely. That's why the EU is claiming it isn't simply a tax issue, but a hidden subsidy. The EU already lost once, but they are trying again
If I was Apple or any other megacorp I would happily pay the taxes and pay them publicly because of all the goodwill and favors and all the greased politicians and folks it can buy.
It’s less hassle than lawyering and cheaper and instead you can focus on building relationships or getting other benefits than hoarding cash which Apple clearly can print like a central bank.
That might be the case for super local taxes (eg. Paying land tax to the town), but for nationwide taxes even a big company makes basically no difference. Therefore, politicians don't really care - it isn't their money and doesn't directly impact them.
In regards to taxation and regulation of services sold into the EU common market Ireland is not fully sovereign. They have their act together, this is the legal process playing out.
Aren't they still sovereign? They just might be sanction/fined by peers or kicked out of the union if they don't comply?
It's not like someone's going to declare war on Ireland and conquer them to force compliance the way a citizen breaking the law might be conquered by a police force.
it just means a tax authority disagrees with someone rich enough to see what a court thinks
public servants don’t know their laws better than private lawyers do, one of the beauties of using lawyers is that the public servants don’t know which legal rationale you are using and have no way to find out except in the court.
this is often a deterrent for them to bother, because they know they can be wrong or completely blindsided by a mixture of laws they never considered.
in this case, it wasn't a deterrent and we will find out.
but just because a tax authority disagrees doesnt mean the defendant was not compliant according to the law. it means the calculators are different and everyone has to figure out why.
Yes, I read it, including the bit that said the Irish government told Apple their tax affairs were legal.
Apple paid taxes according to the laws that Ireland had at the time. The issue is not that Apple did not pay taxes according to the law, it’s that the laws themselves were incompatible with Ireland’s other obligations.
> Apple paid taxes according to the laws that Ireland had at the time.
The TFEU/Lisbon Treaty is law in Ireland and the allegation is that the deal between Apple and the Government was in breach of Article 107, which regulates State Aid.
The ultimate arbiter of whether the deal was lawful is the CJEU. Until decided there, it is uncertain whether Apple acted lawfully.
> The issue is not that Apple did not pay taxes according to the law, it’s that the laws themselves were incompatible with Ireland’s other obligations.
This just fundamentally misunderstands the relationship between member states and the EU. The EU Treaties and subsequent Regulations (although not Directives, which must be transposed into law nationally) are actually laws across the bloc. Not foreign treaties, not state obligations, but actual laws. Furthermore they take precedence over national laws and can be enforced by the bloc at a judicial level.
In addition, whether the Government of the day gave assurances of lawfulness or not, all large enterprises know that only the courts can actually decide whether a deal is lawful or not. This is the same in most democracies, including the US.
Europe is fine the way it is. Nations should be sovereign and common economic policy should be policed via fines such as this one. Hopefully this way corpos will learn that tax dodging in Europe is counter productive
Trying to fix this via fiscal union leads to more brexits
> What's the cause of all the flip flopping between Apple having to pay the bill or not?
Basically, since Apple is located in Ireland, they must pay their taxes to Ireland. But Ireland doesn't really want Apple to pay, so that makes it complicated. The real beef is between Europe and Ireland about whether it's legal to offer "personalized" discounts, not about Apple.
relevant quote:
> it reaches back a few years, beginning with a decision in 2018 that told Apple to hand over the aforementioned €13 billion to Irish tax officials after the European Commission decided Apple and Irish authorities had together broken state aid rules.
Regressive (opposite of progressive) taxation for corporations seems to be one of the root causes of the "teracorps'" ostensibly anti-competitive habitus (and unchecked growth). Just my observation.
I would point to economies of scale (from advanced in computing, database, and communications technology) as well as the higher barriers to entry for technologically advanced machinery to be the root causes for bigger companies to flourish.
Yes but: Winner-takes-all is something like a natural law. Society will always need active pro-competition anti-monopoly counter measures to nuture and protect open markets. (Acknowledging that some chartered monoplies are suitable for closed markets providing public goods, eg electricity, healthcare, water.)
Also, I'm fine with windfall taxes in the form of repeated radical cashectomies. I think it's fantastic that Apple, Tesla, Amazon, others, have amazing margins. Woot. Such achievements should be acknowledged and praised. Right before society claws back its share. Basically a return to the post-WWII boom times where teracorps can either spend it (eg wages, investment, research) or lose it.
Apple's market cap has increased almost 4000% since the release of the iphone. What have the contributed to society since then, nicer iphones? A watch that's mostly a clunky status symbol for affluent techies? Hyper-expensive VR goggles used by nobody? It doesn't seem like allowing that unchecked growth has really paid off in terms of benefit to society. I think taxes that greatly reduced that growth would have paid for countless hospitals, scholarships, aid to the poor, etc.
You're ignoring the amount of their products used by professionals. Apple is the dominant brand in media production and IT alone, and its role in powering these fields is unquantifiable.
I don't use Apple products, and the fact corporations abuse legal loop holes to evade taxes sickens me, but it's a huge leap to claim a company like Apple hasn't made substantial contributions to society.
When the iPhone was released, Apple had sold 0 iPhones. Since then, Apple has sold over 1.5 billion iPhones. Your position is that Apple produces no value for society?
If apple stopped existing shortly after android phones became available, everyone would just be using android phones now and the tears would be long in the past.
All of my non English speaking grandparents and great grandparents who are not familiar with computers were able to use FaceTime to video call with all the kids.
And we tried with Nexus devices and non Apple solutions first, but the iPad mini and iPad Air is what worked to give them troubleshoot free, consistent ability to video call people.
Am I reading the story correctly? Apple was given government permission to structure their business a certain way so they would not owe certain taxes, and now the government has changed its mind and wants to rule that they owe more than a decade in back taxes?
I'm all for mega corporations paying fines for breaking the law, but this seems like overreach. A government shouldn't punish someone for doing something that that they only did because the government said they could.
Close, but there's slightly more to it that. In this case the government that gave Apple permission was Ireland, but the issue is whether by doing so the Irish government is in violation of an EU treaty that EU countries can't offer subsidies to companies selectively (typically to avoid them subsidising companies from their own country at the expense of companies from other EU countries). The tricky bit is that control over taxation is not included in any EU treaty (i.e. it remains a national competence and countries are free to set their own taxation policy, which is perfectly reasonable). This case hinges on the question as to whether the tax break given to Apple was also available to other companies (which would be fine), or whether they were given some kind of special treatment. The reason Ireland is fighting the case is that in the long term they (and many other EU countries) do not want to cede any power to the EU regarding tax policy, either directly as part of a new EU taxation treaty or via the backdoor through court cases such as this.
That was my initial reaction. Then i thought about what would happen if it was an individual in a similar situation, say you are the subject of an error in your favour from a bank.
Good. I like Apple and their products. I understand that publicly traded companies act solely for the benefit of their shareholders and their own profits in general.
But man, are those big companies fu*** when it comes to tax avoidance. This comes at a cost for all societies which would benefit from a more just tax system. As a middle class earner I got the feeling that I‘m double-paying for those companies: for their products and for their tax deals.
- Pay the tax we think you owe, or go directly to jail
- if you can prove later that you overpaid, we will give you a rebate on taxes over the next N years
- if the government is consistently getting your tax estimate wrong (in your view), then perhaps your tax-avoidance games aren't such a good idea after all
> Pay the tax we think you owe, or go directly to jail
Did Apple not pay the taxes they owed? I ask because my reading of the article is that Apple did in fact pay all the taxes owed to Ireland, and the issue is actually about an EU internal disagreement over corporate subsidies and how they relate to tax policy.
In other words, none of that has anything to do with the topic at hand.
Last year the Biden administration and the 50-50 Senate managed to get through the Inflation Reduction Act ("IRA"). One aspect taht wasn't talked about a lot was the 15% minimumn corporate tax [1]. The US likes these alternatigve minimum taxes when it collectively throws its hands up int he air and says it's too complicated.
Now this faced some opposition but on the messaging front it was hard to argue gainst it because you simply say (as people did) "the corporate tax rate is 21%, why does it matter that there's a minimum of 15%?" Of course, we all know the answer: companies will be paying less than 15% tax or they wouldn't care.
Now this is all still too low but it's something.
Personally what I think we need is to go after profit shifting. Interestingly, "transfer pricing", which is basically the exact same thing, is illegal, but profit shifting isn't (because reasons). What is it? Acme Inc produces widgets in China for $100 including shipping and sells them in the US for $200. That's a taxable profit of $100. So instead Acme Inc sets up a subsidiary in Ireland. That subsidiary buys them for $100 and sells them to the US subsidiary for $195. That's now $5 taxable profit in the US and $95 low to no tax profit in Ireland.
So how do we go after it? Simple. Revenue apportionment. If you, as a multinational, make 35% (for example) of your revenue in the US then 35% of your conglomerate's profit gets taxed in the US.
Google and Meta do this too. Ad contracts in the UK are booked in Ireland. The UK subsidiary makes nothing. Ireland makes all the profits.
The other aspect to this which is idiotic is IP transfer [1]. Say you're Google and you invent a search engine. Well, you value that IP at $X and transfer it to an Irish subsidiary. You then pay royalties to yourself to use that IP. There are rules around what you can do here but it's an essential part of Big Tech companies shifting profits to tax havens.
When i worked in a manufacturing Tech company we were all told to purchase capital equipment through the netherlands subsidiary. I never understood it, because the equipment never "went" to the netherlands, but the netherlands entity would buy equipment for the US based entity from a US based company.
I think the real solution here would be to tax based on bills of landing. If you buy things for your american locations, then they should be taxed based on American tax law.
These sweetheart taxation deals should stop in Ireland and other tax havens. It benefits none; although on paper it looks that Ireland is doing too well, the reality is not that rosy for its residents.
Apple employees a ton of people in Ireland same as pretty much all top tier tech companies. Outside of crazy real estate prices Ireland is actually doing pretty well.
Employing lots of foreigners who pay insane rent prices and are taxed heavily doesn't really benefit anyone else other than home owners who already were fleecing people due to the lack of construction.
Ireland is doing well as a country in GDP terms (ignoring debt) but the people in the mid and lower tiers don't necessarily do well at all.
It's increasingly classist and it has bad and inefficient healthcare, lack of police, excessive bureocracy and lack of political change due to an entrenched political class.
Ireland, it's only doing well for some and only in the surface. Corrupt to an unbelievable degree if you actually see it up close, and not through layers of numbers and "process".
> Ireland is doing well as a country in GDP terms (ignoring debt) but the people in the mid and lower tiers don't necessarily do well at all.
Compared to what? Certainly not the Ireland of 25 years ago.
> It's increasingly classist and it has bad and inefficient healthcare, lack of police, excessive bureocracy and lack of political change due to an entrenched political class.
The only country in the EU where wealth inequality is decreasing, which has a struggling healthcare system but world-class outcomes, once of the least bureaucratic countries in the world, and which has a stable democracy which is about to undergo a completely peaceful transfer of power when Sinn Féin comes into power following the next election.
I can only say that if you believe what you've written about Ireland, you simply don't have the perspective to comment on this.
Compared to today. Compared to 5 years ago. Compared to 15 years ago.
Citation needed and the "peaceful transition" is laughable as a selling point. Is the bar so low? Lol.
It'll be grand land has yet another defender that wants people to not rock the boat and attacks anyone who showcases how backwards thing are. Talk to a real person and not one who has their life easily laid out...
Perspective, huh? Shame on your disingenuous response.
> Compared to today. Compared to 5 years ago. Compared to 15 years ago.
So your contention is that Ireland hasn't improved since 2018 or 2003? For almost everyone in almost every category, that is not true.
> Citation needed and the "peaceful transition" is laughable as a selling point. Is the bar so low? Lol.
No, the bar is very high as Ireland is one of the top tier countries in the world to live by almost any measure. That was a direct response to your claim of a "lack of political change due to an entrenched political class", which is patently untrue in Ireland.
> It'll be grand land has yet another defender that wants people to not rock the boat and attacks anyone who showcases how backwards thing are.
Ireland is certainly not perfect. I work in the medical field and am constantly frustrated at the medical and social services. However, I've also worked around the world and know that while Ireland is in fact an outlier, it's a positive outlier compared to even the developed world.
> Talk to a real person and not one who has their life easily laid out...
I do, daily, and not only online. The kind of disingenuous negativity you hold is not common.
> Perspective, huh? Shame on your disingenuous response.
The irony is palpable. Luckily those of us working to improve the country aren't discouraged by those on the sidelines offering only empty critiques.
> No, the bar is very high as Ireland is one of the top tier countries in the world to live by almost any measure
Like healthcare? Lol. What a disingenuous piece of manure.
> "lack of political change due to an entrenched political class", which is patently untrue in Ireland
You just claim it's untrue but offer no actual arguments. Your rabid offended defense of the country speaks volumes.
> work in the medical field and am constantly frustrated at the medical and social services.
DING DING DING. there it is. That's why you're offended. You're a crook who is part of the problem and has no perspective.
> However, I've also worked around the world and know that while Ireland is in fact an outlier, it's a positive outlier compared to even the developed world.
I like how you don't even say where.
> he irony is palpable. Luckily those of us working to improve the country aren't discouraged by those on the sidelines offering only empty critiques
My critiques weren't empty. They were poignant and your defenses were "no, lie". Kid level stuff and clearly very entrenched in maintain your current thing going.
You're part of the problem. I'm not surprised you'd defend it as such. It's very easy for people who benefit from the corruption and bureocracy to want to keep it going. Healthcare in Ireland is one of the biggest and worst scams in the country and the only way to paint in a good light is to compare it to the US, which is the go to tactic.
Shame on you for being willfully blind to the realities of people not well off because you're in on it.
I'm pretty sure. They're poking fun at people who see the billions in tax dodge BEPS schemes included in Ireland GDP and think it has any bearing in reality.
This is just... nonsense. You need to get around a bit more if you don't think the quality of life in Ireland is high in comparison to most places in the world.
The reality in Ireland is still that Ireland is a wealthy, stable, safe, educated liberal democracy, which is not at all what it was when I was young. Although suffering from the same housing-, cost-of-living-, refugee-, and public-service-crises as most other Western nations, its path has been extremely successful and beneficial to its citizens.
I think you might just be too young and too insulated to see how successful the policies have been.
Well, they are not sustainable, but Ireland no longer relies on them, so it's a moot point. The policies enabled the rapid development over a 25 year period and as the country became richer and the progress became self-sustaining, the arrangements were discontinued.
For example, the "Double Irish" arrangement, which is the subject of this case, was only in use up to 2014 (and was modelled on and often paired with the "Dutch Sandwich" BEPS arrangement, so you should note that Ireland wasn't the only EU country playing these games). It was this case that closed the Double Irish arrangement and while "Green Jersey"/CAIA partially took it's place, the legitimate tax take was already more than sustainable.
Now that Ireland has agreed to a global minimum corporate tax (CT) rate, it's likely that the CT take in Ireland will fall over time, but the inflated CT take of recent years has been treated as a windfall and not current income.
> If Ireland has closed all the loopholes then why do the phantom exports (US subsidiary buying IPs) account for 38% of total exports of this year?
I didn't say they have closed all the loopholes (nor have other EU countries). What I said was that Ireland is no longer reliant on them, in that the country does not fund current expenditure from the CT take. They are openly viewed as windfalls.
> Provided that they dont find another loophole.
It may happen, but one thing's for sure, Ireland won't be alone.
Thank you for sharing an article supporting my comments. From the article, which outlines the stance of the Department and Minister for Finance:
> Corporation tax growth has been a key support to the exchequer in recent years, though the Department of Finance has consistently said that much of the increase cannot be relied upon as it does not directly relate to economic activity undertaken in Ireland and was thus windfall in nature.
> It warned that the latest figures, which showed a decline greater than officials had anticipated to a monthly corporation tax payment of €1.7 billion, underlined that this source of revenue was potentially subject to " exceptional volatility”.
As stated many times now, the exceptional CT take is seen as a windfall and the State does not rely upon it for current expenditure.
Honestly, I think you've made up your mind that Ireland==bad and no amount of data or critical reasoning will change your mind. May I suggest travel? You will quickly learn that Ireland is not a poor, bad, or corrupt country.
Edit: Okay, having read the parent commenter's replies, they seem to be commenting in bad faith. To anyone reading along, I recommend you read the OP and shared articles.
> Thanks for sharing an article supporting my comments
No it does not. It’s saying that the corporate taxes are volatile and “should” not be relied upon, hence the cautionary tone of the article.
Edit: From the same article
> Peter Vale, a tax partner at Grant Thornton, warned that the figures were “surprisingly poor” and indicated that “the risk of weaker corporation tax receipts in the key month of November increases. Poor November figures could erode much of the planned budget surplus.”
Everything in the article including your quote here supports the assertion that the exceptional CT take is treated as a windfall (and this article is from before the actual budget where investment funds to manage the expected CT windfall were announced).
All I can say is that you are wilfully ignorant or commenting in bad faith, so I'm going to stop engaging with you.
>Well, they are not sustainable, but Ireland no longer relies on them, so it's a moot point.
Not true. Foreign companies are 80% of Irish corporation tax, 25% of Irish labour, 25 of top 50 Irish firms, and 57% of Irish value-add.
>For example, the "Double Irish" arrangement, which is the subject of this case, was only in use up to 2014 (and was modelled on and often paired with the "Dutch Sandwich" BEPS arrangement, so you should note that Ireland wasn't the only EU country playing these games).
The Double Irish was immediately replaced by the Single Malt and the Irish tax regime has started to add more traditional tools to tax evasion (e.g. QIAIF, L–QIAIF, and ICAV).
> Not true. Foreign companies are 80% of Irish corporation tax, 25% of Irish labour, 25 of top 50 Irish firms, and 57% of Irish value-add.
This isn't a rebuttal. Ireland is absolutely dependent on foreign firms, but no longer dependent on the inflated CT take from BEPS schemes. The majority of the above is now genuine work undertaken in Ireland, not IP tax avoidance schemes.
> The Double Irish was immediately replaced by the Single Malt and the Irish tax regime has started to add more traditional tools to tax evasion (e.g. QIAIF, L–QIAIF, and ICAV).
Yes, agreed (although Ireland is not alone in this, even in the EU). However, that doesn't change the fact that Ireland is no dependent on this tax income.
Given your apparent knowledge of the schemes involved, this should be clear to you?
> It could be argued it's just plain old corruption.
How so? That's certainly a novel take that hasn't been raised by any parties to the case including the plaintiffs, so I'd like to hear your reasoning here.
> Also, it's unclear to me the things you are listing followed due to aforementioned corruption.
As a side-note, Ireland is one of the least corrupt countries in the world and broadly comparable to, say, Sweden (https://www.transparency.org/en/countries/ireland), so it's not a case that the country is a beneficiary of corrupt practices. It does, however, operate in its own interest.
Honestly, I think you don't understand the issues at hand here well enough to make this accusation. Are you aware of the political environment at the time? Of the path into law of the Lisbon Treaty? Do you know what the Irish Guarantees are, and why at the time this deal was uncontroversial in Ireland?
If anything, this is the opposite of corruption. It's likely that if the general public in Ireland knew of this outcome in 2009, the second Lisbon Treaty referendum wouldn't have passed and TFEU would have stalled completely. Short memories abound here.
Ok, then SAP will have to pay taxes on worldwide income to both the USA and Germany, or will international companies be allowed to headquarter in a country with the best worldwide tax policy? Will Chinese companies have an advantage over Americans ones because they are just taxed in the jurisdiction they are doing business in vs. being taxed on world income by China?
That’s exactly how it should be. Without nation to nation competition, taxes would be even more outrageous than they already are. The institution that monopolizes violence in order to tax should be at the very least threatened by the risk of losing its constituents to other nations/regions that offer a better deal.
Global corporations aren't generally looking for the lowest tax rates to house their companies, they are looking for the ways to avoid paying taxes in a higher tax country by offsetting them in tax havens. They do this by splitting themselves into multiple shell companies, then play dodgy games of selling things to themselves at stupid prices: charge one subsidiary a few dollars for a missile and another $50k for a roll of toilet paper. This practice should be illegal as it's basically tax evasion and fraud. But, our politicians are corrupt cowards, so we all have to pretend it's just good housekeeping and lump it.
All the megacorps would be fantastically successful without playing these stupid games (most of them did their greatest growth spurts before they started doing it), and our countries would be so much nicer places to live if we only agreed that paying back to the society that nurtured you was an important part of the social contract.
Tax is civilisation. By pushing back against it like this you are essentially pushing back against civilisation, and the effects of this are all around us in our crumbling infrastructure, failing health, and desperate tent cities.
> . They do this by splitting themselves into multiple shell companies, then play dodgy games of selling things to themselves at stupid prices: charge one subsidiary a few dollars for a missile and another $50k for a roll of toilet paper.
I was under the impression that the vast majority of it was via collecting "royalties" for the branding? Ie: a company's trademarked brands are owned by a holding company HQ'd in a tax shelter, and the parent company pays a licensing fee that just so happens to equal most if not all of their profits for the year.
It seems like it'd be pretty trivial to target via a tax on payments for intellectual property royalties to offshore corporations or a law that deems it tax evasion to pay IP royalties to a holding company outside the US for a corporation that is primarily operating in the US and Canada.
Suppose one government at time x makes corrupt/stupid decisions costing taxpayers at time x+30 years by having to pay debts that serve no benefit. I don’t see why I should be responsible to pay that, and it has been a factor in deciding which US jurisdiction to live in.
> and our countries would be so much nicer places to live if we only agreed that paying back to the society that nurtured you was an important part of the social contract.
This is constantly in flux, and declining fertility rates kind of throw this calculation for a loop.
When you manipulate the playing field to give you an advantage, it's not a competition. The idea that companies or whole nations "compete" by lowering wages/taxes, will destroy capitalism. We can already observe the bad effect: The company sector has become a net saver in most western countries, while tax-cut proponents claim, companies will invest more with lower taxes. It's a lie. The role of the company sector is to make debt and invest. If that's not the case anymore, someone else has to make the debt instead. Which is the government. How is that still capitalism?
You missed the memonof a global minimum corporate tax, thatbia being implemented rihht now, didn't you?
It seems the majoroty of people, and governments, have not too much interest to exist in a world of unlimited capitalism only benefiting the largest corporations and richest of people.
I upvoted you because you are right. I will never understand the excitement of the Hacker News community to pay a 50% penalty to the worst type of people on earth, those that do not produce.
It's the same excitement that I feel when I visit a relative in hospital and see they're taken care of without going bankrupt, when I take my kids to schools that my taxes paid for, on roads that my taxes paid for, in a country that isn't 10 meters under water because of the taxes that I paid in a place where poverty is reasonably rare (though not yet completely eradicated) and where because of that it is pretty safe to live and so on.
And what have those Romans ever done for us anyway?
What, you wouldn't like a world where you can only drive on the roads you pay for, as part of your AppleWay™ subscription? Not to be confused with the roads available on GoogleMotor™, of course! But there would be some interoperability: every pedestrian crossing would support the Microsoft Nickel&Dime™ system, so you can pay to enable the crossing. No more would we be slaves of those irresponsible elected bureaucrats, but rather conscious consumers making informed choices between different companies!
You don't have a safety net. You have interest payments on the Iraq War, Gulf War, Afghanistan War, GFC bailouts, HN bank bailout (SVC), and mountains and mountains of past spending. It will be 100% of the budget in not too long.
It's a problem like the prisoner dilemma. It's beneficial to the country that "deflects" and gives a discount, but makes everyone worse off than if all countries held line on a higher tax rate.
(disclaimer: I mean it from a direct perspective of maximizing tax income. In this comment I'm not getting into the deeper economics/politics/philosophy of whether higher or lower taxes are better overall).
> Then, as we said, in 2018, the commission had a change of heart, felt rules had been broken, and wanted that €13 billion in tax from Apple.
> Fast-forward to 2020, and the General Court of the European Union decided Apple didn't actually need to pay the tax due to the arrangement the iPhone maker had in Ireland seemingly being above board.
It was ok, then not ok, then ok again. The powers that be are going to keep trying until they want the ruling they want.
I certainly don't like to see companies get away with cheating their taxes, but the back-and-forth nature of this reflects poorly on the EU and not on apple. Having it go through the courts so many times with decision reversals feels more like a money grab than enforcement. Surely at some point, when the court says you are off the hook you can actually expect to never get dragged back through it over the exact same matter.
Apple should be happy that the legal Irish fiction continues. Rather than paying the standard Irish taxes, the whole scheme should be disbanded and they should pay their taxes like any other normal company.
More discussion a few days ago: https://news.ycombinator.com/item?id=38205155
What's the cause of all the flip flopping between Apple having to pay the bill or not? I think the main problem that this area of law is fundamentally uncertain and hard to apply. Legal mistakes get made, and judgements get appealed until people figure out what the law actually says.
A secondary issue is that judges in appeals courts are generalists, not tax or state aid experts. Despite this, they get landed with the hardest cases - situations that haven't been seen before which throw up new legal issues - and need to figure out what to do. Most of the time they get it right. Some of the time, they mis-interpret the law and get it wrong. That's why we have the appeals process.
So where are we up to in terms of this case, and how many more flip-flops we can expect? This article is citing an advisory opinion of one of the EU's Advocate Generals (themselves, very senior judges). These advisory opinions are issued prior to the CJEU (the highest court) making a final ruling. They are there to guide the CJEU so that the final ruling is as good as possible. Although this specific case should be finalised after the CJEU makes its ruling, I'm sure the case law will continue to evolve in the future as multinational companies push the boundaries of the EU's tax and state aid regimes.
> What's the cause of all the flip flopping between Apple having to pay the bill or not? I think the main problem that this area of law is fundamentally uncertain and hard to apply. Legal mistakes get made, and judgements get appealed until people figure out what the law actually says.
Or you know, Apple is trying really hard to not pay the tax they should and are stalling the process by throwing lawyers at it, because they want to continue their shell company scheme of reselling IP rights to avoid taxes in locales where they sell their hardware and make profit.
Is this the first time you're seeing a megacorp try their hardest not to pay their due?
Ireland didn't want Apple to pay either, as they wanted to be able to keep doing this sort of deal.
It's in Ireland's best interest: https://en.wikipedia.org/wiki/Put_on_the_green_jersey
> https://www.freshbooks.com/glossary/tax/double-irish-dutch-s...
> https://en.wikipedia.org/wiki/Double_Irish_arrangement
> https://en.wikipedia.org/wiki/Ireland_as_a_tax_haven
What portion of Ireland's GDP is "American multinational companies" using them for tax avoidance?
As long as it is legal for Apple to route the money it makes in America back to shell companies in Ireland and pay 12.5% corporate tax instead of something higher elsewhere, why would it ever stop?
Around 23% in 2020, based on the difference between GNI* and GDP. It has been higher than that in the past, but increased medical manufacturing pushed it back. It's not just American companies, but they're certainly the largest. The most notable effect here is that you learn to be wary of any stat mentioning "GDP" or "GDP per capita".
In 2015, when the US cut-off date for many of these transfers hit, the CSO refused to release accurate corporate tax numbers because it would have identified the companies involved.
That's the way countries should behave generally.
Countries set the bar for human rights, morale and ethics. What if they don’t matter if some provides the money?
For sure they are throwing lawyers at it. It's 13bn after all. But the underlying reason for the appeal is the same; the law is not yet clear as to what should happen.
Let's assume the law isn't clear, ans since I am no tax lawyer I actually cannot tell either way, pursueing that clarity at court is exactly what I would expect from Apple and the EU to do. So, the system is working as expected here.
If the system was well-functioning the tax law would be clear enough that it doesn't take a team of lawyers and courts to know what's permitted.
How is anyone supposed to arrange their affairs if the law they're going to be subjected to isn't established until after the fact?
Laws are never are clear enough, there is always room for interpretation. Laws are not some piece of software that give predctable answers, hence courts and the whole legal system. And it is the latter one atvwork here, as intended.
This is a rationalization for convoluted legislation. The impossibility of perfection is a poor excuse for mediocrity.
Notice that we almost never hear about corporations avoiding payroll taxes or VAT. They avoid this kind of tax in particular because the rules are unusually squishy and incoherent, and every time they find another way to do it, governments respond by making it more complicated or even less coherent instead of addressing the root cause and replacing it with something clearer and simpler.
To be fair, the EU responded to this case by enacting a new directive that says "the minimum corporate tax shall be 15%".
OK, it's unfortunately 175 pages long [0] instead of seven words, but that really is the gist of it. The current legislation is a more "squishy and incoherent" set of rules [1] that say you cannot give "state aid" preferentially to any company, the technicalities of which are being litigated in the ongoing Apple case.
[0] https://data.consilium.europa.eu/doc/document/ST-8778-2022-I... [1] https://competition-policy.ec.europa.eu/state-aid/overview_e...
But this is the problem, right? You can't really do that because governments are supposed to spend tax revenue on things that benefit those in their jurisdiction. The extent of tax dollars not used for this is a measure of government inefficiency and in a perfectly efficient government it would be zero, i.e. the average taxpayer would receive benefits equal to what they pay in taxes.
What they're kind of implying is that they want multinational corporations to pay more than they receive so some other people can receive more than they pay, but they haven't actually specified who or by how much. It would be pretty silly and inefficient to deny large companies the use of government-operated transit systems or police protection, but to make it at all practical you end up creating enough exceptions that anyone can find a loophole.
I feel like the elephant in the room is this. A lot of these huge companies are monopolies or nearly so, and a large proportion of their profit is a monopoly rent. But a monopoly rent isn't attributable to a particular factory or the location of your software developers. It can't be attributed to something happening in any particular jurisdiction because it's actually attributable to something that shouldn't be happening at all, and which doesn't have any corporeal existence or physical location. So those profits naturally get declared in whichever jurisdiction has the lowest taxes.
But the problem is not that the monopoly rent is being taxed in the wrong jurisdiction or at the wrong tax rate, the problem is that the monopoly rent exists. Stop trying to pin it to a particular place and find a way to eliminate it.
Countries in Europe have been gradually tightening up on corporations avoiding payroll taxes by declaring employees as contractors. In the UK it's known as IR35 working. The EU have recently proposed the platform working directive, aimed straight at this problem.
This is not a means to avoid payroll taxes. They're still being paid by the contractor. And in a way that costs the corporation money, if contractors have to pay the tax out of after-tax income, because then they'll demand higher compensation to account for it, by the amount of the tax plus the amount of the tax due on the increase in compensation.
There are other reasons corporations prefer workers to be contractors, but that isn't it.
In the UK both employer and employee pay payroll taxes (national insurance) at about 13% of salary, additionally employers must pay a minimum of 3% of salary to a pension.
Contractors paid themselves a minimum salary to avoid the payroll taxes. They then took the rest of their earnings as dividends from their personal services company instead, the combination of payroll taxes + income taxes being higher than taxes on dividends.
Since that ruse has been heavily restricted, employers have had to increase contractor pay to make-up for contractors having to pay more income tax + national insurance.
Where do you see the lack of clarity? A wish to avoid paying is not lack of clarity.
Without getting into the nitty gritty of it, it seems pretty obvious that there is a lack of clarity given that the European Commission came to one conclusion, the General Court concluded that the European Commission was incorrect and now an advocate general for the European Court of Justice has concluded that the General Court was incorrect. These are all smart people who have spent a lot of time and effort studying the law in this area. There are a lot of extremely reductionist takes on the case in the media but the actual legal principles in dispute, and their application to the facts, are quite complex.
You keep mixing up "muddying the waters to avoid paying tax" and "lack of clarity" The "lack" you speak of is generated by a megacorporation to avoid paying their part - and you keep attributing it to the wrong party.
It's not apple V. EU. It's Ireland Vs. EU. The real crux of the argument is; Does Ireland have the authority to grant Apple it's deal.
Corporations will always attempt to lower their costs. It's like blaming the rain for being wet.
It isn't inherently necessary to have a tax system so convoluted that these games are even possible. If you tax wages and companies employ people in your jurisdiction then they have to remit the tax. If you tax sales and people buy things in your jurisdiction then companies have to remit the tax. If you tax property and companies own property in your jurisdiction etc. etc.
The problem is governments keep trying to tax companies not based on what happens in their jurisdiction but what happens outside of it, which they can only do sometimes, and that gives the companies an opportunity to find ways to make it one of the times they can't. Just stop doing that and tax the things that actually happen in your jurisdiction.
It is the EU institutions who are disagreeing with each other, Apple have nothing to do with it. The General Court of the EU isn't muddying the waters to help Apple avoid paying tax.
This is the General Court's judgment by the way: https://eur-lex.europa.eu/legal-content/en/TXT/?uri=CELEX:62...
The case is between the Irish government and the EU. Ireland made a a tax deal with Apple. Ireland also made a no corporate subsidy deal with the EU.
EU wants apple taxed. Ireland says a tax break is not a subsidy, and a subsidy would be if they gave Apple grants, funds, or special loans
> Ireland also made a no corporate subsidy deal with the EU.
That seems odd. For example, if the government provides a national healthcare system, this is effectively a subsidy to employers who can then avoid providing a health plan their employees might otherwise demand or otherwise have to pay them more to compensate for their need to pay for their own healthcare. How is this being distinguished from any other form of subsidy? Isn't subsidizing things what governments do with tax money?
Bans on state subsidies are a core principle that enables the EU single market. Otherwise the market could easily be distorted by state aid. However it’s far from simple in practice and is something the member states have been arguing about forever.
The rest of the eu has never been happy with irelands tax policy but since taxation is a national competency they can’t do anything about it directly. They can however frame it as state aid and try to attack it that way.
Edit to add, information on how state aid works in eu context: https://enterprise.gov.ie/en/what-we-do/eu-internal-market/e...
> Bans on state subsidies are a core principle that enables the EU single market. Otherwise the market could easily be distorted by state aid.
It seems impossible to avoid this. If one state spends money on something that benefits businesses and another spends it on something else, those businesses will prefer the first one. But this isn't actually that much of a problem because each state has finite resources and its people get to decide how to use them. If one wants to have a UBI (which might increase entrepreneurship and the number of small businesses engaged in taxable activity) and another wants to lower unemployment by attracting large employers with subsidies and a third just wants to have lower taxes, what's the problem? That one might actually work better than another?
Ireland gave Apple a tax deal. The EU is arguing Ireland as part of the EU is not allowed to set it's own tax policy. The lack of clarity is Ireland's claiming it's still a sovereign nation and can set taxes but the EU says no you're not.
That's not true. EU nations set their own tax policy freely. That's why the EU is claiming it isn't simply a tax issue, but a hidden subsidy. The EU already lost once, but they are trying again
If lower tax rates are a "hidden subsidy" then clearly they can't set their own tax policy freely....
Well clearly there is a lot more to this situation if you want to actually look at it.
What do you tell your CPA to do, when tax time rolls around?
If I was Apple or any other megacorp I would happily pay the taxes and pay them publicly because of all the goodwill and favors and all the greased politicians and folks it can buy.
It’s less hassle than lawyering and cheaper and instead you can focus on building relationships or getting other benefits than hoarding cash which Apple clearly can print like a central bank.
That might be the case for super local taxes (eg. Paying land tax to the town), but for nationwide taxes even a big company makes basically no difference. Therefore, politicians don't really care - it isn't their money and doesn't directly impact them.
Seems like there would be cheaper ways to buy good will greased politicians.
Elon paid one of the largest (the largest?) personal tax bills ever.
How’s that working out for him?
Well he does enough self owning to erode any good will he’s ever earned. You can’t fix stupid. The man is a genius but socially very stupid.
But someone would not have been promoted (or would not have gotten a huge bonus) without taking advantage of that perceived tax loophole! /s
They paid taxes according to the laws of a sovereign nation. Seems like a done deal to me. Europe should get their affairs in order.
If Ireland shouldn't have done that, that's not Apple. It really seems like a case of "the law should have been", which seems to work in Europe.
In regards to taxation and regulation of services sold into the EU common market Ireland is not fully sovereign. They have their act together, this is the legal process playing out.
Aren't they still sovereign? They just might be sanction/fined by peers or kicked out of the union if they don't comply?
It's not like someone's going to declare war on Ireland and conquer them to force compliance the way a citizen breaking the law might be conquered by a police force.
The winning move for a single round of the Prisoner's Dilemma is to defect.
The winning move for the Iterated Prisoner's Dilemma is tit-for-tat.
Enforcement mechanisms lead actors to behave more cooperatively, and everyone knows everyone is better off if everyone is cooperating.
That doesn't make anyone in the game not sovereign
The enforcement mechanism is a voluntary de jure loss of sovereignty, even though the de facto sovereignty to leave the enforcement mechanism remains.
Ok, that makes more sense
The fact that they're being in this mess absolutely means that they did not pay taxes according to the laws. Did you miss what the article says?
it just means a tax authority disagrees with someone rich enough to see what a court thinks
public servants don’t know their laws better than private lawyers do, one of the beauties of using lawyers is that the public servants don’t know which legal rationale you are using and have no way to find out except in the court.
this is often a deterrent for them to bother, because they know they can be wrong or completely blindsided by a mixture of laws they never considered.
in this case, it wasn't a deterrent and we will find out.
but just because a tax authority disagrees doesnt mean the defendant was not compliant according to the law. it means the calculators are different and everyone has to figure out why.
> Did you miss what the article says?
Yes, I read it, including the bit that said the Irish government told Apple their tax affairs were legal.
Apple paid taxes according to the laws that Ireland had at the time. The issue is not that Apple did not pay taxes according to the law, it’s that the laws themselves were incompatible with Ireland’s other obligations.
> Apple paid taxes according to the laws that Ireland had at the time.
The TFEU/Lisbon Treaty is law in Ireland and the allegation is that the deal between Apple and the Government was in breach of Article 107, which regulates State Aid.
The ultimate arbiter of whether the deal was lawful is the CJEU. Until decided there, it is uncertain whether Apple acted lawfully.
> The issue is not that Apple did not pay taxes according to the law, it’s that the laws themselves were incompatible with Ireland’s other obligations.
This just fundamentally misunderstands the relationship between member states and the EU. The EU Treaties and subsequent Regulations (although not Directives, which must be transposed into law nationally) are actually laws across the bloc. Not foreign treaties, not state obligations, but actual laws. Furthermore they take precedence over national laws and can be enforced by the bloc at a judicial level.
In addition, whether the Government of the day gave assurances of lawfulness or not, all large enterprises know that only the courts can actually decide whether a deal is lawful or not. This is the same in most democracies, including the US.
Ireland being in the EU, and Apple doing business across the EU, means that Irelands opinion might not be the last or valid one.
They paid taxes according to their twisted interpretation of the laws.
A number of governments seem to disagree with that interpretation.
Europe is fine the way it is. Nations should be sovereign and common economic policy should be policed via fines such as this one. Hopefully this way corpos will learn that tax dodging in Europe is counter productive
Trying to fix this via fiscal union leads to more brexits
> What's the cause of all the flip flopping between Apple having to pay the bill or not?
Basically, since Apple is located in Ireland, they must pay their taxes to Ireland. But Ireland doesn't really want Apple to pay, so that makes it complicated. The real beef is between Europe and Ireland about whether it's legal to offer "personalized" discounts, not about Apple.
relevant quote:
> it reaches back a few years, beginning with a decision in 2018 that told Apple to hand over the aforementioned €13 billion to Irish tax officials after the European Commission decided Apple and Irish authorities had together broken state aid rules.
> What's the cause of all the flip flopping between Apple having to pay the bill or not?
The justice system. Basically going trough the various EU courts due to appeals.
> What's the cause of all the flip flopping between Apple having to pay the bill or not?
Ireland doesn’t want Apple to pay.
Regressive (opposite of progressive) taxation for corporations seems to be one of the root causes of the "teracorps'" ostensibly anti-competitive habitus (and unchecked growth). Just my observation.
I would point to economies of scale (from advanced in computing, database, and communications technology) as well as the higher barriers to entry for technologically advanced machinery to be the root causes for bigger companies to flourish.
Yes but: Winner-takes-all is something like a natural law. Society will always need active pro-competition anti-monopoly counter measures to nuture and protect open markets. (Acknowledging that some chartered monoplies are suitable for closed markets providing public goods, eg electricity, healthcare, water.)
Also, I'm fine with windfall taxes in the form of repeated radical cashectomies. I think it's fantastic that Apple, Tesla, Amazon, others, have amazing margins. Woot. Such achievements should be acknowledged and praised. Right before society claws back its share. Basically a return to the post-WWII boom times where teracorps can either spend it (eg wages, investment, research) or lose it.
Corporate taxes in general are just a regressive tax on the population.
there is not much wrong with unchecked growth. Apple has added a ton of value to society
Apple's market cap has increased almost 4000% since the release of the iphone. What have the contributed to society since then, nicer iphones? A watch that's mostly a clunky status symbol for affluent techies? Hyper-expensive VR goggles used by nobody? It doesn't seem like allowing that unchecked growth has really paid off in terms of benefit to society. I think taxes that greatly reduced that growth would have paid for countless hospitals, scholarships, aid to the poor, etc.
You're ignoring the amount of their products used by professionals. Apple is the dominant brand in media production and IT alone, and its role in powering these fields is unquantifiable.
I don't use Apple products, and the fact corporations abuse legal loop holes to evade taxes sickens me, but it's a huge leap to claim a company like Apple hasn't made substantial contributions to society.
When the iPhone was released, Apple had sold 0 iPhones. Since then, Apple has sold over 1.5 billion iPhones. Your position is that Apple produces no value for society?
If apple stopped existing shortly after android phones became available, everyone would just be using android phones now and the tears would be long in the past.
They financed Scorsese’s new picture
What’s the definition of value here? You’d have a hard time arguing that touch screen phones have been a net positive on societies well being.
And society added a ton of value to Apple.
What?
What values apple brought to society that other phone makers wouldnt?
Especially in Europe where e.g iPhones arent that popular
All of my non English speaking grandparents and great grandparents who are not familiar with computers were able to use FaceTime to video call with all the kids.
And we tried with Nexus devices and non Apple solutions first, but the iPad mini and iPad Air is what worked to give them troubleshoot free, consistent ability to video call people.
Well, a little of stock buy-backs. We common mortals can't escape our taxes, I don't understand why corporate behemoths should be allowed to do that.
Am I reading the story correctly? Apple was given government permission to structure their business a certain way so they would not owe certain taxes, and now the government has changed its mind and wants to rule that they owe more than a decade in back taxes?
I'm all for mega corporations paying fines for breaking the law, but this seems like overreach. A government shouldn't punish someone for doing something that that they only did because the government said they could.
Close, but there's slightly more to it that. In this case the government that gave Apple permission was Ireland, but the issue is whether by doing so the Irish government is in violation of an EU treaty that EU countries can't offer subsidies to companies selectively (typically to avoid them subsidising companies from their own country at the expense of companies from other EU countries). The tricky bit is that control over taxation is not included in any EU treaty (i.e. it remains a national competence and countries are free to set their own taxation policy, which is perfectly reasonable). This case hinges on the question as to whether the tax break given to Apple was also available to other companies (which would be fine), or whether they were given some kind of special treatment. The reason Ireland is fighting the case is that in the long term they (and many other EU countries) do not want to cede any power to the EU regarding tax policy, either directly as part of a new EU taxation treaty or via the backdoor through court cases such as this.
That was my initial reaction. Then i thought about what would happen if it was an individual in a similar situation, say you are the subject of an error in your favour from a bank.
I don’t know but it is not obvious.
Good. I like Apple and their products. I understand that publicly traded companies act solely for the benefit of their shareholders and their own profits in general.
But man, are those big companies fu*** when it comes to tax avoidance. This comes at a cost for all societies which would benefit from a more just tax system. As a middle class earner I got the feeling that I‘m double-paying for those companies: for their products and for their tax deals.
I would think for companies default should be:
- Pay the tax we think you owe, or go directly to jail
- if you can prove later that you overpaid, we will give you a rebate on taxes over the next N years
- if the government is consistently getting your tax estimate wrong (in your view), then perhaps your tax-avoidance games aren't such a good idea after all
> Pay the tax we think you owe, or go directly to jail
Did Apple not pay the taxes they owed? I ask because my reading of the article is that Apple did in fact pay all the taxes owed to Ireland, and the issue is actually about an EU internal disagreement over corporate subsidies and how they relate to tax policy.
In other words, none of that has anything to do with the topic at hand.
I'd conform with the 1st one.
CEOs should be personally liable for a company's crimes. After all they are getting billions of dollars in bonuses.
I love this sort of news
It takes a special level of clownish incompetence to make Apple seem like the sympathetic character in the context of taxes.
This is taxes.
Sympathy is irrelevant.
Last year the Biden administration and the 50-50 Senate managed to get through the Inflation Reduction Act ("IRA"). One aspect taht wasn't talked about a lot was the 15% minimumn corporate tax [1]. The US likes these alternatigve minimum taxes when it collectively throws its hands up int he air and says it's too complicated.
Now this faced some opposition but on the messaging front it was hard to argue gainst it because you simply say (as people did) "the corporate tax rate is 21%, why does it matter that there's a minimum of 15%?" Of course, we all know the answer: companies will be paying less than 15% tax or they wouldn't care.
Now this is all still too low but it's something.
Personally what I think we need is to go after profit shifting. Interestingly, "transfer pricing", which is basically the exact same thing, is illegal, but profit shifting isn't (because reasons). What is it? Acme Inc produces widgets in China for $100 including shipping and sells them in the US for $200. That's a taxable profit of $100. So instead Acme Inc sets up a subsidiary in Ireland. That subsidiary buys them for $100 and sells them to the US subsidiary for $195. That's now $5 taxable profit in the US and $95 low to no tax profit in Ireland.
So how do we go after it? Simple. Revenue apportionment. If you, as a multinational, make 35% (for example) of your revenue in the US then 35% of your conglomerate's profit gets taxed in the US.
Google and Meta do this too. Ad contracts in the UK are booked in Ireland. The UK subsidiary makes nothing. Ireland makes all the profits.
The other aspect to this which is idiotic is IP transfer [1]. Say you're Google and you invent a search engine. Well, you value that IP at $X and transfer it to an Irish subsidiary. You then pay royalties to yourself to use that IP. There are rules around what you can do here but it's an essential part of Big Tech companies shifting profits to tax havens.
[1]: mhttps://www.williamfry.com/knowledge/ireland-as-the-jurisdic...
[1]: https://www.irs.gov/newsroom/irs-clarifies-rules-for-new-cor...
When i worked in a manufacturing Tech company we were all told to purchase capital equipment through the netherlands subsidiary. I never understood it, because the equipment never "went" to the netherlands, but the netherlands entity would buy equipment for the US based entity from a US based company.
I think the real solution here would be to tax based on bills of landing. If you buy things for your american locations, then they should be taxed based on American tax law.
These sweetheart taxation deals should stop in Ireland and other tax havens. It benefits none; although on paper it looks that Ireland is doing too well, the reality is not that rosy for its residents.
Apple employees a ton of people in Ireland same as pretty much all top tier tech companies. Outside of crazy real estate prices Ireland is actually doing pretty well.
Employing lots of foreigners who pay insane rent prices and are taxed heavily doesn't really benefit anyone else other than home owners who already were fleecing people due to the lack of construction.
Ireland is doing well as a country in GDP terms (ignoring debt) but the people in the mid and lower tiers don't necessarily do well at all.
It's increasingly classist and it has bad and inefficient healthcare, lack of police, excessive bureocracy and lack of political change due to an entrenched political class.
Ireland, it's only doing well for some and only in the surface. Corrupt to an unbelievable degree if you actually see it up close, and not through layers of numbers and "process".
> Ireland is doing well as a country in GDP terms (ignoring debt) but the people in the mid and lower tiers don't necessarily do well at all.
Compared to what? Certainly not the Ireland of 25 years ago.
> It's increasingly classist and it has bad and inefficient healthcare, lack of police, excessive bureocracy and lack of political change due to an entrenched political class.
The only country in the EU where wealth inequality is decreasing, which has a struggling healthcare system but world-class outcomes, once of the least bureaucratic countries in the world, and which has a stable democracy which is about to undergo a completely peaceful transfer of power when Sinn Féin comes into power following the next election.
I can only say that if you believe what you've written about Ireland, you simply don't have the perspective to comment on this.
Compared to today. Compared to 5 years ago. Compared to 15 years ago.
Citation needed and the "peaceful transition" is laughable as a selling point. Is the bar so low? Lol.
It'll be grand land has yet another defender that wants people to not rock the boat and attacks anyone who showcases how backwards thing are. Talk to a real person and not one who has their life easily laid out...
Perspective, huh? Shame on your disingenuous response.
> Compared to today. Compared to 5 years ago. Compared to 15 years ago.
So your contention is that Ireland hasn't improved since 2018 or 2003? For almost everyone in almost every category, that is not true.
> Citation needed and the "peaceful transition" is laughable as a selling point. Is the bar so low? Lol.
No, the bar is very high as Ireland is one of the top tier countries in the world to live by almost any measure. That was a direct response to your claim of a "lack of political change due to an entrenched political class", which is patently untrue in Ireland.
> It'll be grand land has yet another defender that wants people to not rock the boat and attacks anyone who showcases how backwards thing are.
Ireland is certainly not perfect. I work in the medical field and am constantly frustrated at the medical and social services. However, I've also worked around the world and know that while Ireland is in fact an outlier, it's a positive outlier compared to even the developed world.
> Talk to a real person and not one who has their life easily laid out...
I do, daily, and not only online. The kind of disingenuous negativity you hold is not common.
> Perspective, huh? Shame on your disingenuous response.
The irony is palpable. Luckily those of us working to improve the country aren't discouraged by those on the sidelines offering only empty critiques.
> No, the bar is very high as Ireland is one of the top tier countries in the world to live by almost any measure
Like healthcare? Lol. What a disingenuous piece of manure.
> "lack of political change due to an entrenched political class", which is patently untrue in Ireland
You just claim it's untrue but offer no actual arguments. Your rabid offended defense of the country speaks volumes.
> work in the medical field and am constantly frustrated at the medical and social services.
DING DING DING. there it is. That's why you're offended. You're a crook who is part of the problem and has no perspective.
> However, I've also worked around the world and know that while Ireland is in fact an outlier, it's a positive outlier compared to even the developed world.
I like how you don't even say where.
> he irony is palpable. Luckily those of us working to improve the country aren't discouraged by those on the sidelines offering only empty critiques
My critiques weren't empty. They were poignant and your defenses were "no, lie". Kid level stuff and clearly very entrenched in maintain your current thing going.
You're part of the problem. I'm not surprised you'd defend it as such. It's very easy for people who benefit from the corruption and bureocracy to want to keep it going. Healthcare in Ireland is one of the biggest and worst scams in the country and the only way to paint in a good light is to compare it to the US, which is the go to tactic.
Shame on you for being willfully blind to the realities of people not well off because you're in on it.
Ireland is doing well directly because of extremely clever biz Dev Irish people who made Ireland top tech and biotech centre in the entire world.
the point is that this is only benefiting those that already have money
A bunch of foreigners showing up to pay more than you can for rent is not a good thing.
Ireland has pretty good education system while there are certainly immigrants a large % of positions is actually occupied by people born in Ireland.
/s in the end? (genuine question)
I'm pretty sure. They're poking fun at people who see the billions in tax dodge BEPS schemes included in Ireland GDP and think it has any bearing in reality.
I lived in Ireland for 4 years can't say I share your sentiment
Great arguments. I'm convinced.
I have a personal experiences which granted might not be much, but it certainly beats just making things up.
This is just... nonsense. You need to get around a bit more if you don't think the quality of life in Ireland is high in comparison to most places in the world.
The reality in Ireland is still that Ireland is a wealthy, stable, safe, educated liberal democracy, which is not at all what it was when I was young. Although suffering from the same housing-, cost-of-living-, refugee-, and public-service-crises as most other Western nations, its path has been extremely successful and beneficial to its citizens.
I think you might just be too young and too insulated to see how successful the policies have been.
> how successful the policies have been.
I don't know how these “successful” policies are sustainable if they are not playing level field with the rest of EU.
Well, they are not sustainable, but Ireland no longer relies on them, so it's a moot point. The policies enabled the rapid development over a 25 year period and as the country became richer and the progress became self-sustaining, the arrangements were discontinued.
For example, the "Double Irish" arrangement, which is the subject of this case, was only in use up to 2014 (and was modelled on and often paired with the "Dutch Sandwich" BEPS arrangement, so you should note that Ireland wasn't the only EU country playing these games). It was this case that closed the Double Irish arrangement and while "Green Jersey"/CAIA partially took it's place, the legitimate tax take was already more than sustainable.
Now that Ireland has agreed to a global minimum corporate tax (CT) rate, it's likely that the CT take in Ireland will fall over time, but the inflated CT take of recent years has been treated as a windfall and not current income.
> Ireland no longer relies on them
If Ireland has closed all the loopholes then why do the phantom exports (US subsidiary buying IPs) account for 38% of total exports of this year?
> Now that Ireland has agreed to a global minimum corporate tax (CT) rate.
Provided that they dont find another loophole.
Edit: Someone asked for baseline, the phantom exports were 6 billion in 2012, they are 134 billion this year.
https://www.businesspost.ie/news/irish-phantom-exports-surge...
> If Ireland has closed all the loopholes then why do the phantom exports (US subsidiary buying IPs) account for 38% of total exports of this year?
I didn't say they have closed all the loopholes (nor have other EU countries). What I said was that Ireland is no longer reliant on them, in that the country does not fund current expenditure from the CT take. They are openly viewed as windfalls.
> Provided that they dont find another loophole.
It may happen, but one thing's for sure, Ireland won't be alone.
> Ireland is no longer reliant on them, in that the country does not fund current expenditure from the CT take
https://www.irishtimes.com/business/economy/2023/09/05/corpo...
Thank you for sharing an article supporting my comments. From the article, which outlines the stance of the Department and Minister for Finance:
> Corporation tax growth has been a key support to the exchequer in recent years, though the Department of Finance has consistently said that much of the increase cannot be relied upon as it does not directly relate to economic activity undertaken in Ireland and was thus windfall in nature.
> It warned that the latest figures, which showed a decline greater than officials had anticipated to a monthly corporation tax payment of €1.7 billion, underlined that this source of revenue was potentially subject to " exceptional volatility”.
As stated many times now, the exceptional CT take is seen as a windfall and the State does not rely upon it for current expenditure.
Honestly, I think you've made up your mind that Ireland==bad and no amount of data or critical reasoning will change your mind. May I suggest travel? You will quickly learn that Ireland is not a poor, bad, or corrupt country.
Edit: Okay, having read the parent commenter's replies, they seem to be commenting in bad faith. To anyone reading along, I recommend you read the OP and shared articles.
> Thanks for sharing an article supporting my comments
No it does not. It’s saying that the corporate taxes are volatile and “should” not be relied upon, hence the cautionary tone of the article.
Edit: From the same article
> Peter Vale, a tax partner at Grant Thornton, warned that the figures were “surprisingly poor” and indicated that “the risk of weaker corporation tax receipts in the key month of November increases. Poor November figures could erode much of the planned budget surplus.”
Everything in the article including your quote here supports the assertion that the exceptional CT take is treated as a windfall (and this article is from before the actual budget where investment funds to manage the expected CT windfall were announced).
All I can say is that you are wilfully ignorant or commenting in bad faith, so I'm going to stop engaging with you.
Without providing a baseline, 38% means nothing. In the past it could have been 80%?
>Well, they are not sustainable, but Ireland no longer relies on them, so it's a moot point.
Not true. Foreign companies are 80% of Irish corporation tax, 25% of Irish labour, 25 of top 50 Irish firms, and 57% of Irish value-add.
>For example, the "Double Irish" arrangement, which is the subject of this case, was only in use up to 2014 (and was modelled on and often paired with the "Dutch Sandwich" BEPS arrangement, so you should note that Ireland wasn't the only EU country playing these games).
The Double Irish was immediately replaced by the Single Malt and the Irish tax regime has started to add more traditional tools to tax evasion (e.g. QIAIF, L–QIAIF, and ICAV).
> Not true. Foreign companies are 80% of Irish corporation tax, 25% of Irish labour, 25 of top 50 Irish firms, and 57% of Irish value-add.
This isn't a rebuttal. Ireland is absolutely dependent on foreign firms, but no longer dependent on the inflated CT take from BEPS schemes. The majority of the above is now genuine work undertaken in Ireland, not IP tax avoidance schemes.
> The Double Irish was immediately replaced by the Single Malt and the Irish tax regime has started to add more traditional tools to tax evasion (e.g. QIAIF, L–QIAIF, and ICAV).
Yes, agreed (although Ireland is not alone in this, even in the EU). However, that doesn't change the fact that Ireland is no dependent on this tax income.
Given your apparent knowledge of the schemes involved, this should be clear to you?
It could be argued it's just plain old corruption. Also, it's unclear to me the things you are listing followed due to aforementioned corruption.
> It could be argued it's just plain old corruption.
How so? That's certainly a novel take that hasn't been raised by any parties to the case including the plaintiffs, so I'd like to hear your reasoning here.
> Also, it's unclear to me the things you are listing followed due to aforementioned corruption.
As a side-note, Ireland is one of the least corrupt countries in the world and broadly comparable to, say, Sweden (https://www.transparency.org/en/countries/ireland), so it's not a case that the country is a beneficiary of corrupt practices. It does, however, operate in its own interest.
Honestly, I think you don't understand the issues at hand here well enough to make this accusation. Are you aware of the political environment at the time? Of the path into law of the Lisbon Treaty? Do you know what the Irish Guarantees are, and why at the time this deal was uncontroversial in Ireland?
If anything, this is the opposite of corruption. It's likely that if the general public in Ireland knew of this outcome in 2009, the second Lisbon Treaty referendum wouldn't have passed and TFEU would have stalled completely. Short memories abound here.
At last, someone actually talking sense on this thread.
I agree - it's a race to the bottom if different countries compete to provide global corporations the lowest tax bill.
which is why Janet Yellen was lobbying to tax global companies worldwide so they could not find tax shelters
It only takes one hold-out.
Only American ones right? I can’t imagine Germany would be happy with America trying to tax SAP on its world wide income.
Said law is currently being passed in Germany so.
Ok, then SAP will have to pay taxes on worldwide income to both the USA and Germany, or will international companies be allowed to headquarter in a country with the best worldwide tax policy? Will Chinese companies have an advantage over Americans ones because they are just taxed in the jurisdiction they are doing business in vs. being taxed on world income by China?
You uave no idea how international taxation works. No, SAP, nor Apple, will pay taxes twice.
That’s right. But those companies that are subject to extra world taxes are determined by why their home country is, not via international treaty.
That’s exactly how it should be. Without nation to nation competition, taxes would be even more outrageous than they already are. The institution that monopolizes violence in order to tax should be at the very least threatened by the risk of losing its constituents to other nations/regions that offer a better deal.
Global corporations aren't generally looking for the lowest tax rates to house their companies, they are looking for the ways to avoid paying taxes in a higher tax country by offsetting them in tax havens. They do this by splitting themselves into multiple shell companies, then play dodgy games of selling things to themselves at stupid prices: charge one subsidiary a few dollars for a missile and another $50k for a roll of toilet paper. This practice should be illegal as it's basically tax evasion and fraud. But, our politicians are corrupt cowards, so we all have to pretend it's just good housekeeping and lump it.
All the megacorps would be fantastically successful without playing these stupid games (most of them did their greatest growth spurts before they started doing it), and our countries would be so much nicer places to live if we only agreed that paying back to the society that nurtured you was an important part of the social contract.
Tax is civilisation. By pushing back against it like this you are essentially pushing back against civilisation, and the effects of this are all around us in our crumbling infrastructure, failing health, and desperate tent cities.
> . They do this by splitting themselves into multiple shell companies, then play dodgy games of selling things to themselves at stupid prices: charge one subsidiary a few dollars for a missile and another $50k for a roll of toilet paper.
I was under the impression that the vast majority of it was via collecting "royalties" for the branding? Ie: a company's trademarked brands are owned by a holding company HQ'd in a tax shelter, and the parent company pays a licensing fee that just so happens to equal most if not all of their profits for the year.
It seems like it'd be pretty trivial to target via a tax on payments for intellectual property royalties to offshore corporations or a law that deems it tax evasion to pay IP royalties to a holding company outside the US for a corporation that is primarily operating in the US and Canada.
Suppose one government at time x makes corrupt/stupid decisions costing taxpayers at time x+30 years by having to pay debts that serve no benefit. I don’t see why I should be responsible to pay that, and it has been a factor in deciding which US jurisdiction to live in.
> and our countries would be so much nicer places to live if we only agreed that paying back to the society that nurtured you was an important part of the social contract.
This is constantly in flux, and declining fertility rates kind of throw this calculation for a loop.
Unfortunately, the "bottom" part of "to the bottom" isn't a very fun place to be.
What are you ranting about? Mega corps like Apple pay barely any taxes. Did you mix up middle class workers and global corporations?
When you manipulate the playing field to give you an advantage, it's not a competition. The idea that companies or whole nations "compete" by lowering wages/taxes, will destroy capitalism. We can already observe the bad effect: The company sector has become a net saver in most western countries, while tax-cut proponents claim, companies will invest more with lower taxes. It's a lie. The role of the company sector is to make debt and invest. If that's not the case anymore, someone else has to make the debt instead. Which is the government. How is that still capitalism?
You missed the memonof a global minimum corporate tax, thatbia being implemented rihht now, didn't you?
It seems the majoroty of people, and governments, have not too much interest to exist in a world of unlimited capitalism only benefiting the largest corporations and richest of people.
Republicans in the US are not on bored. They are threatening retaliation if EU countries move forward with it.
https://www.wsj.com/articles/house-lawmakers-europe-global-c...
And what exactly can tje GOP do? Unless they win the White House, in which case I guess even NATO membership of the US woupd be on the table, right?
Just remind me, how well did tue last GOP trade war with China go?
Simply one election away, from any sovereign country on earth, from disappearing.
I upvoted you because you are right. I will never understand the excitement of the Hacker News community to pay a 50% penalty to the worst type of people on earth, those that do not produce.
It's the same excitement that I feel when I visit a relative in hospital and see they're taken care of without going bankrupt, when I take my kids to schools that my taxes paid for, on roads that my taxes paid for, in a country that isn't 10 meters under water because of the taxes that I paid in a place where poverty is reasonably rare (though not yet completely eradicated) and where because of that it is pretty safe to live and so on.
And what have those Romans ever done for us anyway?
Because I like roads and public infrastructure and a social safety net?
What, you wouldn't like a world where you can only drive on the roads you pay for, as part of your AppleWay™ subscription? Not to be confused with the roads available on GoogleMotor™, of course! But there would be some interoperability: every pedestrian crossing would support the Microsoft Nickel&Dime™ system, so you can pay to enable the crossing. No more would we be slaves of those irresponsible elected bureaucrats, but rather conscious consumers making informed choices between different companies!
You don't have a safety net. You have interest payments on the Iraq War, Gulf War, Afghanistan War, GFC bailouts, HN bank bailout (SVC), and mountains and mountains of past spending. It will be 100% of the budget in not too long.
Someone is benefitting or it wouldn't happen.
It's a problem like the prisoner dilemma. It's beneficial to the country that "deflects" and gives a discount, but makes everyone worse off than if all countries held line on a higher tax rate.
(disclaimer: I mean it from a direct perspective of maximizing tax income. In this comment I'm not getting into the deeper economics/politics/philosophy of whether higher or lower taxes are better overall).
It obviously benefits Apple shareholders.
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Do you want to elaborate?
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> The EU continually being jealous that the US continuously runs circles around them and lapping over and over and over and over . . .
You're making up imaginary scenarios which have nothing to do with this antitrust litigation...
I don't think nations follow a sports team fan culture when it comes to the question of whether or not a certain company paid enough taxes.
To be fair 13B sounds like a tax avoidance scheme that didn't work out
> Then, as we said, in 2018, the commission had a change of heart, felt rules had been broken, and wanted that €13 billion in tax from Apple.
> Fast-forward to 2020, and the General Court of the European Union decided Apple didn't actually need to pay the tax due to the arrangement the iPhone maker had in Ireland seemingly being above board.
It was ok, then not ok, then ok again. The powers that be are going to keep trying until they want the ruling they want.
I certainly don't like to see companies get away with cheating their taxes, but the back-and-forth nature of this reflects poorly on the EU and not on apple. Having it go through the courts so many times with decision reversals feels more like a money grab than enforcement. Surely at some point, when the court says you are off the hook you can actually expect to never get dragged back through it over the exact same matter.
And of course Apple is totally uninvolved in all of that...
Apple is literally a defendant. What is the implication you're making?
That Apple has vested intetest in getting the decisison Apple wants. Same rights for everyone, Apple or the EU.
Apple should be happy that the legal Irish fiction continues. Rather than paying the standard Irish taxes, the whole scheme should be disbanded and they should pay their taxes like any other normal company.