# Should Ireland appeal the Apple ruling



## cremeegg

The facts as I understand them are.

The European commission has ruled that Apple must pay the Irish Government €13bn in tax.

The Irish government along with Apple had argued that that no taxes were due.

Ireland had a tax regime that allowed Apple pay very low amounts of tax. The commission has ruled that this amounts to unfair state aid, in the amount of €13bn.

The Irish government (and/or Apple) can appeal this ruling. Should it?

*Arguments for appealing. *

The generous tax regime was put in place to attract companies to Ireland. 

The government should defend its policies, and those companies which complied with the Irish law.

We are entitled to set our own tax rates. 

*Arguments for not appealing.*

€13bn

The tax policies amount to an effort to gain unfair competitive advantage over other countries.

Ireland should develop other more durable advantages to bolster its economy rather than rely on an unsustainable tax giveaway.

In my opinion Ireland must appeal, The Government introduced the tax policy it should defend its own actions. Investors will not expect to see Apple abandoned when the existing policy is challenged.

What we need is some really bad lawyers.


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## Boyd

19 billion now apparently, including interest.


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## Boyd

Whatever way you slice it, at 0.005%, Apple paid fifty euro tax on every million they made in 2014. Fifty euro!!! That's scandalous when we are charging citizens 41% up to 50% tax.


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## trasneoir

username123 said:


> Whatever way you slice it, at 0.005%, Apple paid fifty euro tax on every million they made in 2014. Fifty euro!!! That's scandalous when we are charging citizens 41% up to 50% tax.


To split a hair, you're comparing apple's effective tax rate to an individual's marginal tax rate.

More broadly, corporations are not people, so I have no problem with treating them differently. They don't get to vote or collect social welfare, so why should they pay the same taxes? One could argue that it's fairer to tax a company's employees and shareholders (where they actually live) rather than to tax a corporation wherever it notionally lives. It's certainly simpler - corporations can play infinitely complex shell games with their subsidiaries, where as we don't allow people to own other people.



cremeegg said:


> What we need is some really bad lawyers.


This is my feeling too. Ireland's money laundry ought to be stopped, but we can't afford for the laundry's customers to flee all at once, so we have to be seen to try to defend them.


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## mathepac

trasneoir said:


> ... They don't get to vote or collect social welfare, so why should they pay the same taxes? ...


Unless they are crooked financial institutions in which case they can cripple the country financially for generations to come and have their debts written off.

Apple and Ireland Inc. struck a legal taxation deal. The EU is trying to make it illegal retrospectively.


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## trasneoir

mathepac said:


> Unless they are crooked financial institutions in which case they can cripple the country financially for generations to come and have their debts written off.


I take your point, but governments granting undue influence to companies isn't a problem that taxation will fix.


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## Gerard123

Heart and head issue here, may be a struggle.  Amount of tax involved and also the level of employees, FDI, etc. All factors to consider. 

My overriding feeling is that Apple should have been subject to the normal tax arrangements in Ireland (or indeed wherever they operate).  Our corporation tax rate is 12.5% and that should have been what they paid.  I have no issue with, and indeed we should be offering, generous incentives, etc, to attract FDI.  However, I really struggle with a tax rate of 0.005% on their massive profits. 

How the tax got from 12.5% to 0.005% is indeed astonishing.  Reality is Ireland Inc facilitated them in not paying taxes on massive profits made from consumers in Europe and USA.  That is clearly wrong in my mind.  They paid (virtually) no taxes anywhere on these profits?  

To put it in context that's equivalent to someone on a salary of one million euro paying fifty euro tax.  How would people feel about that? 

I have no hesitation in saying that part of the reason that our personal taxes are so high is that we are not recouping anything like a fair share from corporations.  The dilemma is of course how to take a bigger share without threatening FDI, jobs, investment, etc.  Tricky one, but it seems to me that we may have crossed the line of what is acceptable regarding how we dealt with Apple and the tax breaks, and facilitating the non taxing of massive profits.   

Should Ireland be getting all of the 13bn?  Of course not.  Its not our money, it was simply a clever accounting/tax approach to dealing with profits, no head office, no/few employees, etc.  Though where it does go is another dilemma.


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## Firefly

As a line in the sand, our current national debt is:

€ 184,903,776,192

Let's see what our national debt figure rises to before this Apple tax issue is concluded.


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## cremeegg

mathepac said:


> Apple and Ireland Inc. struck a legal taxation deal. The EU is trying to make it illegal retrospectively.



I think the commission has said it was illegal from the beginning. That the Irish tax regime was in contravention of EU law.


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## cremeegg

Gerard123 said:


> Should Ireland be getting all of the 13bn?  Of course not.  Its not our money, it was simply a clever accounting/tax approach to dealing with profits, no head office, no/few employees, etc.  Though where it does go is another dilemma.



Interesting point. Apple reported the profits in Ireland and as such they should be taxed in Ireland, at least that is my understanding of it.


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## Gerard123

cremeegg said:


> Interesting point. Apple reported the profits in Ireland and as such they should be taxed in Ireland, at least that is my understanding of it.



Can understand that logic, however my understanding is that tax is usually follows the substance of transactions (not easy to define though at times, particularly where IT and IP is involved).  General tax anti avoidance provisions are typically based on the substance of transactions.  Using that approach would suggest that the profits did not accrue in Ireland commercially.


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## Gerard123

cremeegg said:


> *Arguments for appealing. *
> 
> The generous tax regime was put in place to attract companies to Ireland.
> 
> The government should defend its policies, and those companies which complied with the Irish law.
> 
> We are entitled to set our own tax rates.



Agree with all of the above with the following caveat re the third comment.  We are entitled to set out own tax rate, however we should not be allowed to facilitate the setting up of a structure or mechanism which allows the elimination or reduction of taxes TO SUCH AN EXTENT that they are far from substance and the  reality of the situation, etc.


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## cremeegg

Gerard123 said:


> Can understand that logic, however my understanding is that tax is usually follows the substance of transactions (not easy to define though at times, particularly where IT and IP is involved).  General tax anti avoidance provisions are typically based on the substance of transactions.  Using that approach would suggest that the profits did not accrue in Ireland commercially.



The profits in question were reported for tax purposes as having arisen in Ireland. The intellectual property was owned by Irish registered companies. Whether this is appropriate or not does not seem to be at issue here. As I understand it the ruling does not say that Apple did not obey all relevant tax legislation in Ireland or any other jurisdiction. the ruling says that Irish tax law was in contravention of EU law.


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## Gerard123

cremeegg said:


> As I understand it the ruling does not say that Apple did not obey all relevant tax legislation in Ireland or any other jurisdiction. the ruling says that Irish tax law was in contravention of EU law.



Where did you get this?  The ruling is about illegal state aid not contravention of EU laws.  Here's the link to the EU site with the details. 

http://europa.eu/rapid/press-release_IP-16-2923_en.htm


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## PGF2016

Gerard123 said:


> How the tax got from 12.5% to 0.005% is indeed astonishing.



Where is the .005% coming from? I've read that the EU deem all profits outside of America taxable in Ireland (David Mcwilliams I think). Is it fair to say that the Irish arm of Apple is responsible for all profit outside the US? Should some of their profits not be taxed in the jurisdictions where they are generated? 

I think the question that pretty much everyone is struggling with is where the profit should be taxed.


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## Boyd

PGF2016 said:


> Where is the .005% coming from?



From here: http://www.independent.ie/business/...ve-to-pay-ireland-close-to-19bn-35010094.html

<snip>The European Competition Commissioner Margrethe Vestager's landmark ruling into the iPad and iPhone maker's tax affairs found it paid just 1pc tax on its European profits in 2003 and 0.005pc in 2014.</snip>


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## Boyd

trasneoir said:


> To split a hair, you're comparing apple's effective tax rate to an individual's marginal tax rate.
> 
> More broadly, corporations are not people, so I have no problem with treating them differently. They don't get to vote or collect social welfare, so why should they pay the same taxes?



OK fair enough, apples and oranges there. However, I'd give back my right to vote in the morning in exchange for a 0.005% tax rate. I'd even vote Trump to rule Ireland!!! 0.005% tax, say that out loud a few times......

Obviously I jest above, but our corporation tax is 12.5%, including for all of Apple's direct competitors. Why should Apple pay 0.005% vs 12.5%?


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## Delboy

trasneoir said:


> More broadly, corporations are not people, so I have no problem with treating them differently. They don't get to vote or collect social welfare, so why should they pay the same taxes?


No, they don't Vote. They have much more power than that!


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## thedaddyman

I've no doubt someone will appeal this, either the Govt or Apple. However since the €19b is tax based on global sales rather then simply sales in Ireland and if we assume that the "deal" was in effect illegal, does that mean we would owe some or most of that €19b to countries where the tax should have been paid in the first place.???


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## Protocol

Gerard123 said:


> My overriding feeling is that Apple should have been subject to the normal tax arrangements in Ireland (or indeed wherever they operate).  Our corporation tax rate is 12.5% and that should have been what they paid.  I have no issue with, and indeed we should be offering, generous incentives, etc, to attract FDI.  However, I really struggle with a tax rate of 0.005% on their massive profits.
> 
> How the tax got from 12.5% to 0.005% is indeed astonishing.  Reality is Ireland Inc facilitated them in not paying taxes on massive profits made from consumers in Europe and USA.  That is clearly wrong in my mind.  They paid (virtually) no taxes anywhere on these profits?




Please note that ASI did pay 12.5% Irish CT, but only on the profits of their Irish branch.

The rest of the profits of ASI are taxable by the USA.


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## Protocol

username123 said:


> OK fair enough, apples and oranges there. However, I'd give back my right to vote in the morning in exchange for a 0.005% tax rate. I'd even vote Trump to rule Ireland!!! 0.005% tax, say that out loud a few times......
> 
> Obviously I jest above, but our corporation tax is 12.5%, including for all of Apple's direct competitors. Why should Apple pay 0.005% vs 12.5%?



They paid 12.5% CT on the profits* of their Irish branch.*

How much of the total ASI profits should be attributed to Ireland is the issue.

The EU DG Comp feel that *all *the profits of ASI should be attributed to Ireland.


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## cremeegg

cremeegg said:


> As I understand it the ruling does not say that Apple did not obey all relevant tax legislation in Ireland or any other jurisdiction. the ruling says that Irish tax law was in contravention of EU law.





Gerard123 said:


> Where did you get this?  The ruling is about illegal state aid not contravention of EU laws.  Here's the link to the EU site with the details.
> 
> http://europa.eu/rapid/press-release_IP-16-2923_en.htm



Excellent link Gerard.

I have read it through twice now and this seems to me to be the heart of it. 

_"The Commission's investigation has shown that the tax rulings issued by Ireland endorsed an artificial internal allocation of profits within Apple Sales International and Apple Operations Europe, *which has no factual or economic justification*. Only the *Irish branch* of Apple Sales International had the capacity to generate any income from trading, i.e. from the distribution of Apple products. Therefore, the sales profits of Apple Sales International should have been recorded with the Irish branch and taxed there."_

It also says

_"Ireland must now recover the illegal aid."_

however 

_"The amount of unpaid taxes to be recovered by the Irish authorities would be reduced if other countries were to require Apple to pay more taxes on the profits recorded by Apple Sales International and Apple Operations Europe for this period. This could be the case if they consider, in view of the information revealed through the Commission’s investigation, that Apple's commercial risks, sales and other activities should have been recorded in their jurisdictions. This is because the taxable profits of Apple Sales International in Ireland would be reduced if profits were recorded and taxed in other countries instead of being recorded in Ireland."_


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## odyssey06

Didn't the Irish government represent and defend their position already... and lose... on what grounds would an appeal succeed? 
Does anyone think there is a realistic chance of an appeal succeeding?
Would an appeal compromise us further in pursuit of taxing the full amount in Ireland versus other jurisdictions? I would not appeal if that was a risk.


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## Duke of Marmalade

The fact that many believe that profits should be taxed where they are economically earned is a pink mackerel so far as this ruling is concerned.  The issue here is that Apple had a sweetheart deal with the Irish revenue (government) that most of its profits could be internally allocated to its "head office" which apparently resides nowhere.  Imagine if every company could have a piece of that.

There is no question but the illegal state aid should be returned to Ireland, the argument that it was economically earned elsewhere is yet to be thrashed out and will surely not be retrospective, and it is of course a much more important matter so far as FDI is concerned.

Should we appeal?  IMHO we have no chance of winning and in any event the practice has stopped going forward so a win brings no material gains whatsoever.  The "bad lawyers" comment is brilliant but even good lawyers won't reverse this.  So the main purpose of an appeal is optics.

How are we going to get that Tower of Babel which is our "government" to agree on that?


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## ppmeath

Duke of Marmalade said:


> There is no question but the illegal state aid should be returned to Ireland, the argument that it was economically earned elsewhere is yet to be thrashed out and will surely not be retrospective,



But isn't that the nub of the issue? 



cremeegg said:


> "The amount of unpaid taxes to be recovered by the Irish authorities *would be reduced if other countries were to require Apple to pay more taxes on the profits recorded by Apple Sales International and Apple Operations Europe for this period.* This could be the case if they consider, in view of the information revealed through the Commission’s investigation, that Apple's commercial risks, sales and other activities should have been recorded in their jurisdictions. This is because the taxable profits of Apple Sales International in Ireland would be reduced if profits were recorded and taxed in other countries instead of being recorded in Ireland."



As far as I can make out, the ruling was regarding profits that were not taxed because of our tax laws, which enabled Apple to route their EU profits through Ireland, tax free. (Is that it? Open to correction).

It seems to me that on one hand the ruling is against Ireland for not taxing those profits, while simultaneously inviting other countries to get what should have been their slice of the pie, thereby reducing the amount of unpaid taxes to us.

So if the taxes should have been paid in other countries, then how can we issue a tax bill for repayments of tax, that we may not have actually been entitled to?


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## Duke of Marmalade

_ppmeath_ No! No! No!  Profits being taxed where they are economically earned is the real biggie and has been top of the EU agenda for some time.

This ruling is not about that, it is about a sweetheart deal given to Apple which, for example, was not given to Ryanair.  The practice has already stopped so no appeal is going to reinstate it.  Making an appeal possibly would be good relationship management with our FDI visitors, though they would possibly see it as lip service, given its very unlikely success.

A successful appeal would be a disaster.  It would not reinstate the practice and it would cost 19bn


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## Purple

Let me get this straight; the same EU that put a gun to our head and forced us to nationalise private debt, owed by Irish registered company to German and other EU banks, and then repay it directly and indirectly to those German and other EU banks, is now saying that tax breaks are state aid to private companies. What hypocrisy.


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## ppmeath

Duke of Marmalade said:


> _ppmeath_ No! No! No! Profits being taxed where they are economically earned is the real biggie and has been top of the EU agenda for some time.



Lol, oops.


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## Duke of Marmalade

_Purple_ are you trolling again?

The EU were against the blanket guarantee - state aid and all that -  they would have allowed Anglo to go.  They were against a bail out of Irish depositors at the expense of foreign bondholders even though they both had equal legal rights. No hypocrisy there.


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## Purple

Duke of Marmalade said:


> _Purple_ are you trolling again?
> 
> The EU were against the blanket guarantee - state aid and all that -  they would have allowed Anglo to go.  They were against a bail out of Irish depositors at the expense of foreign bondholders even though they both had equal legal rights. No hypocrisy there.


Some don't agree with you and I hate to use McWilliams as a source [broken link removed]... he is writing about a report from the European Court of Auditors.


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## losttheplot

Could other companies have availed of the same scheme. Is the governments argument that any company could have done it so it wasn't a unique deal with Apple.


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## cronley

EU Commission ruled against Netherlands (Re Starbucks) & Luxemburg (Re Fiat), for similar tax schemes - did Netherlands & Luxemburg appeal these rulings - if yes - who won
Have any other companies done the same tax scheme e.g. Pfizer, CRH - if yes - why has the Commission not gone after them. If other companies have done this scheme - there is potentially more money payable to Ireland.
Did any other companies ask Irish Revenue for the same scheme as Apple, & were refused.
Were the Apple Ireland "Head Office" profits taxed anywhere e.g. in USA

Transparency in these questions would be interesting.


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## cremeegg

Protocol said:


> Please note that ASI did pay 12.5% Irish CT, but only on the profits of their Irish branch.
> 
> The rest of the profits of ASI are taxable by the USA.





cronley said:


> Were the Apple Ireland "Head Office" profits taxed anywhere e.g. in USA



The so called head office profits were not taxed anywhere. Again from the commission website,

_"the Commission concluded that the tax rulings issued by Ireland endorsed an artificial allocation of Apple Sales International and Apple Operations Europe's sales profits to their "head offices", where they were not taxed."_


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## johnny1234

All I do know is if Apple are plaumossed very soon there will be some very worried people in Ireland.


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## Protocol

cronley said:


> Were the Apple Ireland "Head Office" profits taxed anywhere e.g. in USA
> 
> Transparency in these questions would be interesting.



Yes, ASI and AOE profits are liable to US CT when sent home.

The US allows CT to be deferred until profits are repatriated.

Given the 35% CT rate in the USA, it's no surprise that the accumulated profits are held offshore, as yet untaxed.


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## Protocol

cronley said:


> Have any other companies done the same tax scheme e.g. Pfizer, CRH - if yes - why has the Commission not gone after them. If other companies have done this scheme - there is potentially more money payable to Ireland.
> Did any other companies ask Irish Revenue for the same scheme as Apple, & were refused.



No special scheme.

Apple simply exploited a loophole.

The USA didn't tax ASI and AOE, as they are Irish registered companies.

We don't tax them as we use a management test, where are they managed, not where are they registered.

They are managed from USA.

So they are not tax resident here.

But not tax resident in USA either.


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## SlugBreath

thedaddyman said:


> I've no doubt someone will appeal this, either the Govt or Apple. However since the €19b is tax based on global sales rather then simply sales in Ireland and if we assume that the "deal" was in effect illegal, does that mean we would owe some or most of that €19b to countries where the tax should have been paid in the first place.???



I agree. If we don't take the money, will other countries, then come after us who are owed tax?


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## Firefly

Protocol said:


> No special scheme.
> 
> Apple simply exploited a loophole.
> 
> The USA didn't tax ASI and AOE, as they are Irish registered companies.
> 
> We don't tax them as we use a management test, where are they managed, not where are they registered.
> 
> They are managed from USA.
> 
> So they are not tax resident here.
> 
> But not tax resident in USA either.



Great post & easily understood!


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## Boyd

Firefly said:


> Great post & easily understood!


So easy, why weren't we all doing it..... less tax for all!
What's annoying is that you know this loophole would've been closed in a heartbeat if Joe Soap could do similar.


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## Duke of Marmalade

_Protocol _that seems an oversimplification of the situation.  According to the ruling profits were internally allocated within the Irish branch to a "head office" which wasn't *based* anywhere, not Ireland not the US.  Loophole suggests something in the legislative framework which anybody could use.  This does not seem to be the case,  Apple came up with a fairytale of their own and got the Irish Revenue to approve it, as I understand it for them specifically but not made universally available.


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## Duke of Marmalade

_Purple _I am sure we don't want this turned into a rerun of the great bail out debates. But I am surprised, nay disappointed, that you appear to be firmly in the "Ireland the victim, Frankfurt the demon" camp.

You should have followed your instincts and refrained from quoting Mr Bank Guarantee a Master Stroke.  The Irish Times coverage of the same auditors' report cites the finding about burden sharing as an afterthought and then only that as a point of audit it should have been examined before being rejected.  Of course Mr Confiscate 10% of MNC Irish Assets put the much more colourful (purple if you like) spin on this aspect.  After all anything less and he would soon lose his fan base.


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## Purple

I'm in no way saying that we were the victims in the overall context of our debt and general mess but I reject the notion that the EU and it's various arms were in any way honest brokers, that they keep their own rules or that they don't have an larger agenda here.


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## Firefly

username123 said:


> So easy, why weren't we all doing it..... less tax for all!
> What's annoying is that you know this loophole would've been closed in a heartbeat if Joe Soap could do similar.



It would be difficult for Joe Soap to arrange for the management of his business to be conducted from abroad though - he would need a foreign office and directors to be based there.

Don't get me wrong, I'd love to avail of it myself!!


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## Purple

Firefly said:


> It would be difficult for Joe Soap to arrange for the management of his business to be conducted from abroad though - he would need a foreign office and directors to be based there.
> 
> Don't get me wrong, I'd love to avail of it myself!!


Given that small to medium sized businesses make such small profits the corporation tax rate and ways of manipulating it are of no real consequence.


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## Firefly

Purple said:


> Given that small to medium sized businesses make such small profits the corporation tax rate and ways of manipulating it are of no real consequence.



I agree completely - leaving profits in a company means you will more than likely pay corp tax & then income tax.


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## cremeegg

A slight diversion here, to minor but I think very interesting point.



Duke of Marmalade said:


> According to the ruling profits were internally allocated within the Irish branch to a "head office" which wasn't *based* anywhere, not Ireland not the US.



The EU commission seems to have been happy with this arrangement in regard to profits arising from interest earned.

again from the commissions press statement.

_"The only activities that can be associated with the "head offices" are limited decisions taken by its directors (many of which were at the same time working full-time as executives for Apple Inc.) on the distribution of dividends, administrative arrangements and cash management. These activities generated *profits in terms of interest that*, based on the Commission's assessment, *are the only profits which can be attributed to the "head offices*"."_

This seems to me to suggest that the commission is ok with certain activities not being taxed anywhere.


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## Protocol

Seamus Coffey, UCC, has provided an updated blogpost on the calculation of the 13-19 billion:

http://economic-incentives.blogspot.ie/2016/09/does-arithmetic-behind-13-billion-stack.html


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## Protocol

Duke of Marmalade said:


> _Protocol _that seems an oversimplification of the situation.  According to the ruling profits were internally allocated within the Irish branch to a "head office" which wasn't *based* anywhere, not Ireland not the US.  Loophole suggests something in the legislative framework which anybody could use.  This does not seem to be the case,  Apple came up with a fairytale of their own and got the Irish Revenue to approve it, as I understand it for them specifically but not made universally available.



Correct, ASI wasn't tax-resident anywhere.

The Revenue didn't seem to care that it wasn't tax-resident anywhere else, as long as they were sure that it wasn't tax-resident here??

It had a branch here, yes, and the Revenue agreed on a formula on how to allocate profits to that branch.


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## Duke of Marmalade

Letter from the French Riviera

I'm in France and found Le Monde's take on this a very interesting read.  (Le Monde is sort of France's Irish Times).
They describe the 13bn as "Irlande a touché le jackpot"  and express sarcastic incredulity that Dublin is refusing to accept this gift.  It notes that SF are the exception in wanting to keep the money and what interested me most is that they (correctly) describe SF as the "branche legale de l'IRA" something that wouldn't be PC these days in Ireland.
They give a short background to why Dublin is appealing the ruling.  They describe how using our English speaking workforce and what they call "dumping fiscal" Ireland has attracted all the big names from Silicon Valley and that one quarter of the private sector workforce are now employed by US multinationals.

There is no doubt that there is a perception in these parts that Ireland has been milking it ever since our entry into the EC.  Maybe _Purple_ is right and there is an agenda to put us in our place.

I think Brexit helps big time here.  If this "dumping fiscal" plug is pulled you could well see a popular groundswell to get Ireland to follow Britain through the exit.


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## Ceist Beag

Just out of curiosity then Duke, where could we find out what % tax Renault pay in France?


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## T McGibney

Ceist Beag said:


> Just out of curiosity then Duke, where could we find out what % tax Renault pay in France?



Renault Finanical Statements are all online.

https://group.renault.com/wp-content/uploads/2015/03/renault-consolidated-accounts-2014.pdf

Income before taxes and share in net income of associates and joint ventures  €772m

Statutory income tax rate in France, including the additional contribution  38%
Theoretical tax charge €293m
Current and deferred tax charge  (Actual tax charge) €136m

Your answer seems to be 17.6%.


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## trasneoir

Duke of Marmalade said:


> They describe the 13bn as "Irlande a touché le jackpot"  and express sarcastic incredulity that Dublin is refusing to accept this gift.


F: "Here, we killed your golden goose for you."
!: "You what!?" 
F: "Ingrate"

The rest of the flock may take some consolation from the fact that we weren't the ones holding the knife, but I expect they'll be testing their wings just in case.


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## Purple

T McGibney said:


> Renault Finanical Statements are all online.
> 
> https://group.renault.com/wp-content/uploads/2015/03/renault-consolidated-accounts-2014.pdf
> 
> Income before taxes and share in net income of associates and joint ventures  €772m
> 
> Statutory income tax rate in France, including the additional contribution  38%
> Theoretical tax charge €293m
> Current and deferred tax charge  (Actual tax charge) €136m
> 
> Your answer seems to be 17.6%.


That seems strange given that the effective tax rate of the top CAC companies is 8.2%


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## T McGibney

Here are the footnotes to the Tax Note on page 29.



> (1) In France, the Group is liable for an exceptional 10.7% contribution applicable until the end of the 2015 financial year. The theoretical tax rate including this exceptional contribution stands at 38.0%. (2) The main countries contributing to the tax rate differential in 2014 are Korea, Morocco, Romania, Russia, Switzerland and Turkey. (3) Other impacts are primarily permanent differences, income subject to reduced tax rates, the cost of tax reassessments, and prior year adjustments. They also include the effect of the differential between the income tax rate including the exceptional contribution applicable in France (38.0%) used for the tax breakdown between theoretical and actual taxes, and the 34.43% tax rate used to calculate deferred taxes for the French tax consolidation group (unfavourable effect of €25 million for 2014 and €76 million for 2013).



Clear as mud.


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## Duke of Marmalade

_transneoir _interesting you should mention the golden goose.


			
				Le Monde said:
			
		

> Pas question pour Dublin, dans ces conditions, de mettre en danger la poule aux oeufs d'or



"There is no question of Dublin, in this situation, putting in danger the hen with the golden eggs."


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## odyssey06

Ok that settles it. If Le Monde doesn't want us to appeal, we have only one course of action. We must appeal as clearly it's in our self interest. 
Le Monde would never urge us do to something that was in Irish interests.


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## Firefly

Dear Green-Eyed EU member states,

If you want to reduce your own corporation tax to what we charge, off you go and stop whinging.

Firefly.


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## Purple

Duke of Marmalade said:


> _transneoir _interesting you should mention the golden goose.
> 
> 
> "There is no question of Dublin, in this situation, putting in danger the hen with the golden eggs."


There's no such thing as a male hen.


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## ppmeath

So, after reading up on the matter a little more, I do not think Ireland should appeal the ruling.

From my understanding now, Apple created a system for the sole purpose of tax avoidance and the Irish Government allowed this. 

The EU are not attacking our tax laws, in my view, they appear to be saying pay the rate that applied to every company at that time, 12.5%.


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## Duke of Marmalade

_ppmeath_ you seem to be basing your conclusion on the merits of the ruling.  Ireland faces a thornier decision than that.  The question is how best to keep "la poule aux oeufs d'or" on board.  Apple is protesting a huge injustice with a lot of, I presume faux, indignation.  If Ireland does not support Apple to the hilt on this it could backfire big time.


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## ppmeath

I am basing it on what looks to me like a tax avoidance scheme, which the Government allowed.

Why should we have to wonder how to keep them on board, we have the lowest rate of corporate tax in the EU, do we not? 

They are paying it now I would presume - and if the applicable "law" that was in place at that time, is no longer in place - then to me that the Government are defending this.

Ireland shouldn't be supporting Apple though should it?

It wasn't Ireland who took them to task over their minuscule tax payments, it was the EU.

They will appeal no doubt, but what if they lose, then what?


----------



## newtothis

I'm a bit surprised that whether an appeal is made or not is such a hot potato politically: surely it’s in the interests of even those who think we should say thanks very much and get the €19bn to get a definitive answer? Also, since Apple are planning to appeal in any case, it’s something of a moot point. It would be interesting if the government fell (which looks to be quite possible) in trying to have appeal that is going to happen in any case…..


----------



## ppmeath

I think the Government have to play both sides of this, I do think that they were way to quick coming out stating they would appeal - when they didn't have all their little duckies in a row, they should have discussed first and then made an announcement.


----------



## Duke of Marmalade

Apple boss (Tim Cook) said that Apple and Ireland "need to stand together" on this; as the BBC points out a not too subtle hint to the government.

Cook is feigning moral indignation that anyone could accuse Apple of underhand dealings.  The stakes are getting high here. If we do not do Cook's bidding I think there could be an (irrational) negative impact on Apple's and possibly other American MNC's attitude to Ireland.  If we do his bidding it will be seen as cynical self serving by our EU partners and strengthen their moral hand in dismantling Ireland's "dumping fiscal" once and for good.

This is no decision to be left to the crazy hitch pitch of a cabinet which we now have.

What if Apple loses the appeal?  As I understand it Apple will be able to deduct this tax from its US tax obligations.  Hence why Washington has got in on the act in condemning the ruling.


----------



## ppmeath

That looks about the size of it duke.



Duke of Marmalade said:


> As I understand it Apple will be able to deduct this tax from its US tax obligations. Hence why Washington has got in on the act in condemning the ruling.




Can you expand on that? My understanding is that the money is somewhere, just not taxed and if it has to be taxed somewhere, well why not here - if you see my point?


----------



## Duke of Marmalade

Again my source is Le Monde.  Ultimately Ireland's tax advantage is one of deferral of US 35% tax to if and when profits are repatriated to the US.  At that stage the US will allow an offset of any tax already paid abroad.  So if Apple have to pay this the name of the game would be to repatriate sufficient of their  250bn accumulated offshore profits to just generate US tax equal to the 13bn.

Yes from a pure numbers game far better that Ireland keep the dosh.  But this is a hearts and mind game with Tim Cook et al

My take is still that an appeal is very unlikely to succeed except maybe to reduce the amount so we should swallow hard and do as Tim bids us.


----------



## ppmeath

Duke of Marmalade said:


> Yes from a pure numbers game far better that Ireland keep the dosh.



I don't think it's about the dosh though. 



Duke of Marmalade said:


> My take is still that an appeal is very unlikely to succeed except maybe to reduce the amount so we should swallow hard and do as Tim bids us.



I think that would be a mistake, because we can't be seen to condone the practice of tax avoidance, I agree that both sides of the fence have to be played, but I don't think we should "siding" with anyone.


----------



## TheBigShort

Wait a second! We can appeal decisions made by the EU Commission?
I thought what they said was gospel, that we had to suck it up regardless, not being allowed to reverse water charges and all that?

In my opinion it simply exposes the lengths to which will be stooped to facilitate big corporations. This isnt goverance.
I have no problem with a 12.5% tax rate, as long as its applied. Otherwise why bother with a tax rate at all.
Better to do away with CT altogether and raise tax rates on CGT. Tax those who benefit most from this, a corporation is nothing more than a legal entity on a piece of paper.


----------



## Andy836

Yes they should appeal it.


----------



## Setanta12

Crikey - 4 pages of mostly ill-informed comments

As a tax-expert - and one who hasn't tracked this as well as he should have - can I view anywhere the Revenue's rulings in the two relevant years?  

I note the IRNR aspect of the two Apple companies but this doesn't appear to be about the Double Irish - at least that phrase hasn't been bandied about - but elements of what is being discussed certainly bear a lot of relation to the Double Irish; anyone agree? But that's not under attack here, agree?

After all, the Double Irish was only a problem for American companies and only created by American legislation.


----------



## odyssey06

Worth reading contrary opinion from the previous commissioner:

Https://www.theguardian.com/busines...damentally-unfair-former-ec-competition-chief

Also, as far as the irish and us governments and apple are concerned, the money is taxable in the us - but there is no us legislation to compel apple to repatriate the profits from the irish holding company with any kind of deadline.

https://www.theguardian.com/comment...e-to-pay-taxes-strengthen-us-tax-laws-ireland


----------



## Delboy

odyssey06 said:


> Worth reading contrary opinion from the previous commissioner:
> 
> Https://www.theguardian.com/busines...damentally-unfair-former-ec-competition-chief


From the same articleon Neeli Kroes
_The Dutch former politician, who headed the commission’s competition directorate from 2004 to 2010, now sits on the public policy board of the taxi-hailing business Uber, a technology group headquartered in California.Uber uses subsidiaries in the Netherlands to shield its overseas income from United States taxes._

'Nuff said


----------



## Dan Murray

Setanta12 said:


> Crikey - 4 pages of mostly ill-informed comments



Totally agree. Not just on here - but more broadly also and in particular from some "editors" in RTE.


----------



## cremeegg

Setanta12 said:


> Crikey - 4 pages of mostly ill-informed comments





Dan Murray said:


> Totally agree. Not just on here - but more broadly also and in particular from some "editors" in RTE.



Neither of your contributions have even attempted to make us any better informed.

It really isn't in the spirit of AAM to condemn other posters as ill-informed, and then offer nothing of your own.


----------



## Dan Murray

Hi Cremeegg,

Point taken re spirit of AAM (_mise dána)_ but I don't have time to get into the detail tonight and I just wanted to acknowledge Setanta12's point which I totally agree with. Hopefully, tomorrow or the weekend, I'll have time to elaborate more.


----------



## Duke of Marmalade

Setanta, as a tax expert will you please set us humble plebs right


----------



## Setanta12

One can be a tax-expert, in as much as one can be a law-expert - but you wouldn't expect a law-expert to know the A-Z of law from consumer protection legislation to medical-negligence claims.  

Which is why I asked some questions .. .. I know enough to know I don't have full details*, and there is a lot of guff being reported as fact here.

I would prefer to have full info and then comment, and was reaching out for better-informed people to assist. 

*I do work in the world of international taxation and transfer-pricing as it happens   I will be reading the entire judgement for work-purposes but was hoping to get the abridged-version here!


----------



## Duke of Marmalade

_Setanta_ according to John Fitzgerald (you know the guy with the beard) this is the Double Irish.  Are you sure your CPD is up to date?

I most certainly am not a tax expert but I would really like an appreciation of what happened here, hopefully you can help - seriously.

I read in full the Commission press release, linked to earlier in this thread, but I can't find anywhere what you call the "entire judgement".

Here's my layman's read of what constitutes a tax ruling.  It is where you come up with some fancy scheme, possibly valid on paper but failing the "smell test".  So you go to the Revenue and ask for advance clearance.  If Revenue say no you say "ah well nice try", if they say yes you say "happy days".  If this interpretation is correct then IMHO the judgement is spot on, but I still think we should do as Tim asks.


----------



## Setanta12

I like the Double Irish, I do have a few simple paras of layman English somewhere explaining it*.  It is a problem created as a result of American tax legislation differing from other countries' tax legislation and concerns what determines the tax residence of companies - basically put, if all countries agreed on what constituted tax-residency there wouldn't be a problem.  I think the problem also centers around what is known as 'substance' too (this is the whole 'empty office in the other country' debate here - rather strangely, this is an argument used against Ireland most of the time)  




Duke of Marmalade said:


> If Revenue say no you say "ah well nice try", if they say yes you say "happy days". If this interpretation is correct then IMHO the judgement is spot on



I disagree totally with this.  The Revenue gave their opinion on the basis of their knowledge of Irish tax law at that point in time - if the facts ever differ from those presented, rulings cannot be relied upon.  If it fails a 'smell test' but is legal - then it is legal; after all, who decides what smells and what doesn't smell - a supra-national authority 20-30 years later ?


*I read up on it a few years ago when the other tax-experts in my American MNC couldn't explain the group structure at the time.  I will pass it along if I an find it.


----------



## Dan Murray

Just to clarify.....when I was critical last night of "editors" within RTE, Tony Connelly was not the target of my comments.

His analysis, just now, is most definitely informed and to be applauded. Recommended.

http://www.rte.ie/news/2016/0902/813591-santander-apple/


----------



## Duke of Marmalade

_setanta_ thanks for that clarification. I think in the domestic context where we have anti avoidance laws the smell test is very important, and the slightest whiff makes you look for Revenue's blessing.  Though I accept that at the international level the legal position is paramount.
Reading the Telegraph, they see this as vindictive politics by Brussels and see it as endorsing their Brexit stance.  It does rather seem like a back door approach to getting Ireland into line.

I sense that you agree with an appeal and further that you think we will succeed.


----------



## Duke of Marmalade

Tony Connelly of RTE's analysis is compulsory reading;  how on earth did he come so well informed.  I note that the entire judgement is not yet available because of confidentiality issues, so _setanta_ those rulings not in public domain yet. 

But I have a very basic question, why is the VAT concession not regarded as State aid to the hospitality sector.


----------



## Setanta12

I do agree with an appeal. Wholeheartedly agree.

I do not know the legal mechanisms here for a successful appeal.  What is the level of proof required to win, 'balance of probabilities' versus 'reasonable doubt' etc etc.   I think it will come down to a squaring of articles in the Treaty of Rome (or Lisbon, or ..) against other articles and the more important, fundamental article winning on balance.


----------



## ppmeath

Very enlightening, thank you @Setanta12 @Dan Murray .


----------



## Firefly

What a SUPER article! There's a book there when this whole thing is finished!


----------



## Dan Murray

Duke of Marmalade said:


> Tony Connelly of RTE's analysis is compulsory reading;  how on earth did he come so well informed.



Maybe it's just that he's a smart guy and a talented journalist. What would you do if you had his job? You would prepare and inform yourself on future anticipated developments (within your patch) and develop and nurture contacts with relevant subject matter experts (as in old-fashioned networking). And this decision, we know, was anticipated. All this in addition to an already developed understanding of the general workings of the double Irish and associated concepts, EU precedents, etc. (......presumably a matter of regular discussion in the _milieu_ he operates in). Even still, magnum opus....

This state of readiness is in dramatic contrast to the abysmal state of preparedness of the Irish government. Fionnan Sheehan was justifiably scathing in this regard on the Sean O'Rourke program - on Wednesday, I think.


----------



## TheBigShort

Duke of Marmalade said:


> But I have a very basic question, why is the VAT concession not regarded as State aid to the hospitality sector.



My tuppence worth on this. The VAT concession applies to all businesses in the hospitality sector. Therefore no one hotel or restaurant is at an advantage over anothers competitor.
 Whereas Apple, it is claimed received a tax advantage over its competitors, say Microsoft.

Here is an apparent tax expert attacking the Apple view. (Not sure if copying and posting this link is allowed?)

https://www.fastcompany.com/3063340/a-tax-expert-rips-tim-cooks-eu-letter-apart-point-by-point


----------



## Setanta12

Ok, I read the weekend papers (Sunday Times and Sunday Business Post) - not a lot in either, truth be told.  The grandstanding triumphalism 'we told you so!' attitude by the Post really took me by surprise though.

So, it would seem that the Apple execs paraded a primitive value-chain in front of the Irish revenue and showed the Revenue how they (Apple) attributed their profits to their profit-centres (note: not companies).  Revenue agreed with that - and agreed the tax payable amount  - an amount which had no bearing in reality, but which must have seemed like Christmas to the Revenue.  So I'm not surprised they agreed.  (And it appears the profit-centres, where the value-add was added, were in IRNR companies outside the Irish tax authority's reach anyway under law)

They couldn't have known - and indeed no-one forecast the explosive growth of Apple over the coming years.



I have seen a favourable tax-ruling for an Irish company from the Irish Revenue ; I advised a well-known not-for-profit company (not a charity) who had a corporation tax rate of 16% at a time when the rate was in the 30's falling to the 20s.  When the rate fell below 16% to 12.5%, we wrote to the Revenue asking could we revert to the normal usual rate then in force of 12.5%; the Revenue said no.  We were stick at the 16% rate.  Tax rulings normally work for you - but they can work against you.


----------



## Setanta12

Dan Murray said:


> Just to clarify.....when I was critical last night of "editors" within RTE, Tony Connelly was not the target of my comments.
> 
> His analysis, just now, is most definitely informed and to be applauded. Recommended.
> 
> http://www.rte.ie/news/2016/0902/813591-santander-apple/



Very good article.


----------



## Purple

TheBigShort said:


> My tuppence worth on this. The VAT concession applies to all businesses in the hospitality sector. Therefore no one hotel or restaurant is at an advantage over anothers competitor.
> Whereas Apple, it is claimed received a tax advantage over its competitors, say Microsoft.
> 
> Here is an apparent tax expert attacking the Apple view. (Not sure if copying and posting this link is allowed?)
> 
> https://www.fastcompany.com/3063340/a-tax-expert-rips-tim-cooks-eu-letter-apart-point-by-point


From your link;
_"To get the other side of the argument I went to Matt Gardner, the director of the Institute on Taxation and Economic Policy (the research umbrella for [broken link removed]). The CTJ is nonpartisan and nonprofit, and it's funded by some of the same foundations that fund NPR."_
Citizens for Tax Justice doesn't sound very non-partisan. They could be on one side or the other but they sound political and therefore partisan.


----------



## Dan Murray

Purple said:


> Citizens for Tax Justice doesn't sound very non-partisan. They could be on one side or the other but they sound political and therefore partisan.



Laughing out loud. Very, very loud – don’t exactly know why……it’s not that funny!! Anyway, thank you Purple!

I read a lot about this stuff over the weekend but couldn't finish this particular article. (It wasn't the only one I couldn't finish....as Sentanta12 rightly opined, the SBP was generally very hard work......although, I'll stick my neck out and say that McDowell's article was, at least, very intelligent, possibly brilliant.)

Anyway, you can understand why Tim Cook said what he said and……..you know that Cook knows that you're thinking "well, he would say that wouldn't he?" and that’s all ok.

_Simili modo_, when Ruth Coppinger came on the news and set out all the things that we could spend the moolah on - _coz it’s ours_ - you kinda thought well she would say that wouldn't she? Indeed, it would be hard to imagine her going.......
_my understanding is that the Irish authorities have broadly received the tax due in respect of profits attributable to Ireland so that the appropriate thing to now do is to agree an equitable basis to distribute the €13/€19 billion amongst the other countries which gave rise to these taxable amounts!! _

So, not knowing the honourable Matt Gardner and his eminent institution from Adam, the “anchoring” effect of the purported impartiality (as set out in the introduction) lasted a few paragraphs until reason was restored and my short-lived engagement with his thoughts terminated. I just hate being duped. As I write, I’m not even sure whether what he said was partly valid or not – just can’t remember and I have no intention of re-visiting it. What I am certain of is that this is, in absolute no way, an impartial article.


----------



## Duke of Marmalade

This is deep and, as Dan O'B says, without the actual ruling hard to make a call.
It is not your ordinary Double Irish which every Tom, D & H could have a piece off.  DI is about transfer pricing between two Irish companies, one taxed in Ireland and one (not) taxed in Bermuda, say.  The Commissioner is very anxious to stress this is not about transfer pricing, it is about internal profit allocation involving no internal transactions.  She stressed that the Irish *endorsed* the Apple allocation and method suggesting that it needed their endorsement. My sense is that they have the bases well covered and we won't win the appeal.  That is of course a reasonable result as we get our dosh and yet are seen to have fought the good fight.  Others argue that making this appeal is doing us serious damage with our EU partners and ultimately spells the end of our 12.5% tax rate. 
_bigshort_ your leftie hero makes some laudable points I'm sure but on the key issue of selectivity he is off the wall.  Your own example of Microsoft could surely afford the same expertise as Apple.


----------



## SlugBreath

I had to laugh at Phil Hogan and Katherine Zappone "nearly" leaving their jobs, but not actually leaving their jobs over the Apple issue.
I see that I may be expected to pay a large property tax increase in a few years time. I would prefer if the Government took the money and let the small guy, be it business or individual, off the tax hook for a while.


----------



## Gordon Gekko

My favourite politician's view...


----------



## Firefly

SlugBreath said:


> I had to laugh at Phil Hogan and Katherine Zappone "nearly" leaving their jobs, but not actually leaving their jobs over the Apple issue.



Me too. I can hear it now. "I was _this _close to leaving, honestly, no really, swear to God like. I was really so close*"


* then I thought about me pension


----------



## Dan Murray

Fair play, Gordon


Dan Murray said:


> ....as Sentanta12 rightly opined, the SBP was generally very hard work......although, I'll stick my neck out and say that McDowell's article was, at least, very intelligent, possibly brilliant.



I just couldn't find a non-pay-for-view link!

I'm not sure how I feel about McDowell more generally - sometimes irritating, sometimes brilliant, invariably very interesting.


----------



## Duke of Marmalade

A disappointing McWilliamsesque anti EU rant from McD.  His "clever" barrister riposte to Ms V would be dismissed at ease by the most junior counsel.  Let's imagine we had an open and shut case of State aid - let's say a letter telling Apple "this one's for you, don't tell anybody".  Naturally the payment due would be reduced to the extent other jurisdictions had countered the measure.  To argue, as McD does, that ergo it is the other countries' fault is nonsense.
This is first and last about whether Apple got selective treatment, McD would have been better occupied addressing his legal brain to that point.


----------



## TheBigShort

Purple said:


> They could be on one side or the other but they sound political and therefore partisan.





Dan Murray said:


> What I am certain of is that this is, in absolute no way, an impartial article.



The clue was in my post when I referenced Tim Cooks view being "attacked".

Nevertheless, it adds to the debate, who is right, who is wrong? 
If we are to take solely the non-partisan approach, then we should ignore Gardner and Cook, and the Irish government and the Dail opposition.
In the end we are left with one view, the EU Commission.


----------



## Sophrosyne

Revenue would have no say in how a company arranges its business affairs. Therefore, I should be interested to know how the commissioner concluded that the Irish revenue "endorsed" a company's business decision.


----------



## Purple

TheBigShort said:


> If we are to take solely the non-partisan approach, then we should ignore Gardner and Cook, and the Irish government and the Dail opposition.
> In the end we are left with one view, the EU Commission.


Is it your opinion that the Commission is non-partisan?


----------



## Delboy

Sophrosyne said:


> Revenue would have no say in how a company arranges its business affairs.


Perhaps but they could most certainly have a huge influence on Company structures/revenue flows, depending on the tax interpretations provided


----------



## TheBigShort

Purple said:


> Is it your opinion that the Commission is non-partisan?



What I am suggesting is that there are a number of opinions offered on both sides the debate concerning the EU Commissions ruling on Apple.
I simply posted one opinion which I considered to be of some interest to the debate.


----------



## Gerry Canning

This whole row is way over my competency but from the threads and my reading I glean these ,I think ?

1. Apple have squirelled away billions tax free but know at some time, said billions will be repatriated to USA.
1a, Apple hold onto said funds in the hope USA tax rate will reduce from 35%.
2. Meantime those pesky Europeans want to grab some billions .
2a, that would reduce USA,s eventual tax take.The USA may have thought Apple and others were a savings fund, for the  future, but now Europe wants some of the cake.No wonder USA is crankey.
3. Now means Europe and USA are @ loggerheads.
4. Little old Ireland is the football twix them.
4a. 1991 was a different place, with hindsight the agreement should have been reviewed. 

I think we should appeal, for the simple reason ,that its very destabilising to backtrack on views freely honestly  given to Apple .In any event the world was so different in 1991.
By all means review taxes and indeed hit with penalties to a degree, but don't create instability, without thinking things through.

(An example of how back taxing on agreements is negative , is the way Government raided pension funds that were clearly understood to be safe , and that had effect of people shying from taking out pensions.)


----------



## TheBigShort

Duke of Marmalade said:


> _bigshort_ your leftie hero makes some laudable points I'm sure but on the key issue of selectivity he is off the wall. Your own example of Microsoft could surely afford the same expertise as Apple.



One, he is not my hero. Two, to me the crux of the issue will boil down to, not whether or whether or not Microsoft could afford the same expertise (of course they could) but whether or not Microsoft and others were facilitated by Irish authorities to avoid paying CT tax in this way.
If the facility is available to all corporations then fine, its a loophole that needs to be closed, but Apple should not be liable. But if its a facility only available to select corporations, then there is a problem.


----------



## Sophrosyne

Delboy said:


> Perhaps but they could most certainly have a huge influence on Company structures/revenue flows, depending on the tax interpretations provided


Revenue give rulings regarding the tax implications of various company actions. But that does not amount to endorsements of those actions. The commissioner has to explain what she means by endorsement.


----------



## Purple

TheBigShort said:


> to me the crux of the issue will boil down to, not whether or whether or not Microsoft could afford the same expertise (of course they) but whether or not Microsoft and others were facilitated by Irish authorities to avoid paying CT tax in this way.
> If the facility is available to all corporations then fine, its a loophole that needs to be closed, but Apple should not be liable. But if its a facility only available to select corporations, then there is a problem.


 Yep, that's my reading of it as well (for what that's worth!).


----------



## jim

isn't this a classic case of short term gain versus long term gain? If we accept the 13b isn't it likely that this would affect our credibility from a tax perspective with other large multinationals and therefore potentially negatively affect future tax revenue? Those other multinationals probably want to see the Irish Gove standing up for their tax regime and therefore appealing the decision.


----------



## Duke of Marmalade

_sophie_


			
				Ms V said:
			
		

> The Commission's investigation has shown that the tax rulings issued by Ireland endorsed an artificial internal allocation of profits within Apple Sales International and Apple Operations Europe, *which has no factual or economic justification*.


I think she means endorsed them as appropriate for tax. Of course Apple are free to allocate all their profits to the coffee machine but Revenue endorsement  is about taxable profits and that is within their gift to an extent.
_Bigshort_ I totally agree with your last assessment but that leftie chap specifically said Apple had an unfair advantage simply coz they can afford expensive lawyers and accountants.  Most MNCs have the same capacity so no way does this select Apple.


----------



## TheBigShort

Duke of Marmalade said:


> _Bigshort_ I totally agree with your last assessment but that leftie chap specifically said Apple had an unfair advantage simply coz they can afford expensive lawyers and accountants. Most MNCs have the same capacity so no way does this select Apple.



Perhaps the Microsoft comparison was a poor one to make. But couldn't any software developer arguably be a competitor of Apple? 
Similar to how a small b&b is in competition with a large hotel chain. If the large hotel chain can resource the financial expertise to concoct a tax avoidance scheme that meets with Revenue approval then it is a question of whether such a scheme puts them at unfair competitive advantage. The EU Commission is arguing that it does and I would be inclined to agree.
Collette Brown does a good piece in todays Irish Independent. She cites a Limerick company who were found to be in receipt of €10m state aid earlier this year. I dont know the circumstances of this case, I do know it did not register anywhere on the political radar. I certainly don't recall any claims of our sovereignty coming under attack.


----------



## Duke of Marmalade

_Bigshort_ I see where you are coming from.  If Ms V is arguing that Apple and similar MNCs had a selective advantage over Fred in the Shed I think that would be a very difficult case to win, after all the "standard" Double Irish was presumably only available to the few usual suspects.  And why is there not now a witch hunt against these other takers of the forbidden Apple. 

No, to win, her case will surely have to be that it was much more selective than that.


----------



## Setanta12

Tax rulings are open to anyone.  The Revenue actually publish summary versions of them to assist other companies - the whole 'is this a trade liable to 12.5%' question on which the Revenue have published maybe about a 100 short summaries.

Being big is not a selective advantage.  The same arguments have been put forward for efficiently arranging your tax-affairs; claiming reliefs is not tax-evasion, or incorporating oneself's own business for tax-purposes is not tax-evasion (although it is legitimate tax-avoidance).

To repeat; tax rulings are not State-aid.  Closing off other countries' tax-loopholes should not be an Irish duty - we should just look after our own!


----------



## Purple

TheBigShort said:


> Similar to how a small b&b is in competition with a large hotel chain. If the large hotel chain can resource the financial expertise to concoct a tax avoidance scheme that meets with Revenue approval then it is a question of whether such a scheme puts them at unfair competitive advantage. The EU Commission is arguing that it does and I would be inclined to agree.


Where I work we compete against companies which are large enough to have a manufacturing base in China and transfer price back into Europe and then sell here at a lower price than we can offer. That gives them a competitive advantage in that regard but if we were big enough the same option would be open to us. In other words their competitive advantage is not based on government policy but issues outside of that. It's the same with the B&B versus the Hotel or Apple versus the little guy down the road.


----------



## TheBigShort

Duke of Marmalade said:


> _Bigshort_ I see where you are coming from.  If Ms V is arguing that Apple and similar MNCs had a selective advantage over Fred in the Shed I think that would be a very difficult case to win, after all the "standard" Double Irish was presumably only available to the few usual suspects.  And why is there not now a witch hunt against these other takers of the forbidden Apple.
> 
> No, to win, her case will surely have to be that it was much more selective than that.



Well the reason there isnt the witch hunt, as you say, is perhaps because the arrangements were not afforded to, or facilitated for, other MNC's despite such companies having the financial clout to devise such schemes? Hence, supporting the Commissions view.

I should add to that that there does appear to be serious moves afoot to hunt out facilitators and participators of such artificial tax avoidance schemes on both sides of the Atlantic.


----------



## Purple

TheBigShort said:


> Well the reason there isnt the witch hunt, as you say, is perhaps because the arrangements were not afforded to, or facilitated for, other MNC's despite such companies having the financial clout to devise such schemes? Hence, supporting the Commissions view.


Maybe, but if so then I don't think we would be objecting so strongly. Let's face it, they aren't here for our self classified "world class education system".


----------



## TheBigShort

Purple said:


> Maybe, but if so then I don't think we would be objecting so strongly. Let's face it, they aren't here for our self classified "world class education system".



But the objections are muddled at best. There is an apparent attack on our sovereignty - this is nonsense. 
The objections are loud nationalistic rhetoric designed to obfuscate the issue. I refer to Collette Brownes piece in the Indo today. It gives a reasoned view on what is happening here.


----------



## Purple

The issue for me is that Apple should pay their taxes but not here. They should pay them in America.
I don't see any substance in Colette Browne's opinion piece.


----------



## Duke of Marmalade

Colette Browne's piece is excellent.  Yes we should appeal,  I think.  But this indignant outrage at an attack on our sovereignty is a very dangerous game.  I really can't buy into the paranoia narrative.  We have been getting it very easy indeed from the EU and that includes the bail out from our reckless folly. We need a reality check here, now is the time to make friends and influence our EU partners, not the time to behave as spoiled brats.


----------



## odyssey06

Duke of Marmalade said:


> Colette Browne's piece is excellent.  Yes we should appeal,  I think.  But this indignant outrage at an attack on our sovereignty is a very dangerous game.  I really can't buy into the paranoia narrative.  We have been getting it very easy indeed from the EU and that includes the bail out from our reckless folly. We need a reality check here, now is the time to make friends and influence our EU partners, not the time to behave as spoiled brats.



This is a fantasy. Time and time again the EU has shown that there is one set of rules for small countries, and one for larger countries. Anyone who thinks Ireland can be a friend of Germany or France must have been living in a different universe for the last 10 years...
Ireland did not get an easy ride in the bailout. Look at what we were put through compared to Spain. There are only 'interests' in EU. If our interests do not align with Germany or France, they will steamroll us unless we stand up for ourselves - and steamroll us they did in 2010. If being a 'good European' got us that kind of treatment in 2010, maybe it's time to not pay any heed to that concept, and to be a 'bad European' from time to time.

If it was up to France, Ireland would not have a 12.5 corporation tax. France would be perfectly happy to reset Ireland back to a primarily agricultural economy - just don't try to sell any Irish produce into their markets and say nothing while they raid our fish stocks. 

Look at the different reaction to when France voted against the EU constitution, to when Ireland rejects an EU treaty.
Look at the different treatment meted out to Portugal and Ireland v Spain when it came to bailouts... Was Portugal or Ireland any more or less a 'good European' than Spain? No, the only thing that counted was size and power.

Does anyone really think whether Spain appealed or did not appeal the EU commission ruling against Santander etc made any difference at all to how they were treated in the EU?
http://www.rte.ie/news/2016/0902/813591-santander-apple/

Ireland is fully within its rights as an EU member state to appeal this decision. If  exercising our legitimate rights as an EU member state will turn us into "spoiled brats" in the eyes of our EU 'partners', I think you have shown yourself what a fiction the concept of 'friends' is in the EU.


----------



## Duke of Marmalade

_odyssey66_ ever hear of Article 50? Membership of the EU is entirely voluntary.  Strange that even today after all these terrible beatings up by our French/German masters there is not a whisper for Irexit.  Same goes for Portugal.  And as for Greece, despite the invocations of WWII massacres, the last thing the populace wanted was to be kicked out of this club, supposedly run by their German oppressors.

I understand the sense of cold turkey.  Having gotten hooked on bemoaning 800 years of victimisation by our nearest neighbour we badly need a replacement.

But let's get very real here. The EU has been and still is for Ireland "le poule aux oeufs d'or".


----------



## odyssey06

Duke of Marmalade said:


> _odyssey66_ ever hear of Article 50? Membership of the EU is entirely voluntary.  Strange that even today after all these terrible beatings up by our French/German masters there is not a whisper for Irexit.  Same goes for Portugal.  And as for Greece, despite the invocations of WWII massacres, the last thing the populace wanted was to be kicked out of this club, supposedly run by their German oppressors.
> 
> I understand the sense of cold turkey.  Having gotten hooked on bemoaning 800 years of victimisation by our nearest neighbour we badly need a replacement.
> 
> But let's get very real here. The EU has been and still is for Ireland "le poule aux oeufs d'or".



You mean whatever treatment is meted out to an EU member state, if the member state doesn't leave, it must be alright and fair and legitimate treatment and beyond criticism? Even if it means one set of rules for big countries, and one set of rules for small nations? Really?
So if someone in working in a company, no matter badly they are treated, as long as they didn't quit the treatment must have been fair and equitable?
That's the logic of your argument? I hope you never sit on an Employment Tribunal.

If you support Ireland's opposition to an EU decision, it's only because of some post-colonial psychological kneejerk reaction? Not because of the merits of the arguments or Ireland's national interest.
Really? I think you are the one obsessed with oppressors.

Do you think the Spanish press talked of Franco during the Santander case?
I repeat, does anyone really think whether Spain appealed or did not appeal the EU commission ruling against Santander etc made any difference at all to how they were treated in the EU?
If someone can find examples of how small 'good' EU states evaded punishment by virtue of their friends then I'm all ears.

For the act of appealing the decision - which is entirely within our legitimate rights as an EU member state - we would be spoiled brats?
Somehow, I think if other EU member states could think that of Ireland, there is no realistic chance we will ever be their 'friends'. All we can do is fight our corner within the rights we still have in the EU, with due consideration our national interest. Playing the 'good' European game to make friends is not something worthy of consideration in that assessment, as it's been shown time and time again to be a failed strategy.
So let's appeal.


----------



## TheBigShort

Duke of Marmalade said:


> I really can't buy into the paranoia narrative. We have been getting it very easy indeed from the EU and that includes the bail out from our reckless folly.



For every reckless borrower there was a reckless lender. The difference between the two is that the borrower would tend to take one loan at a time, at infrequent intervals. The lender gave out loan after loan after loan, day after day after day, all day long.


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## Duke of Marmalade

_Odyssey_ think about it.  Not enough that we have the lowest CT rate in the EU, we let Apple set up two Irish companies, one a shell managed in Bermuda or wherever, and the other the trading company.  Reducing the tax rate to nearly zero.  And for heaven sake cut this "it's the fault of other tax jurisdictions for leaving the loophole".

Now that is the Wild West of tax havens.  I presume we haven't an ounce of sympathy from any of the other members, large or small.  And let me get this straight, in whinging about our tax sovereignty are Noonan and Henda claiming we should still be allowed to facilitate .05% tax rate? none of Brussels' damn business.

But sure let's appeal.  Tim Cook's wrath would be more harmful to Ireland than that of any EU institution.  And I mean that.


----------



## Purple

Duke of Marmalade said:


> _Odyssey_ think about it.  Not enough that we have the lowest CT rate in the EU, we let Apple set up two Irish companies, one a shell managed in Bermuda or wherever, and the other the trading company.  Reducing the tax rate to nearly zero.  And for heaven sake cut this "it's the fault of other tax jurisdictions for leaving the loophole".


 Anyone can set up any company they like. If Revenue say that the company is not run from Ireland then they cannot avail of our 12.5% tax rate.

Do you think an American company conducting business in India should be taxed in Ireland?




Duke of Marmalade said:


> Now that is the Wild West of tax havens.  I presume we haven't an ounce of sympathy from any of the other members, large or small.  And let me get this straight, in whinging about our tax sovereignty are Noonan and Henda claiming we should still be allowed to facilitate .05% tax rate? none of Brussels' damn business.


 I presume the City of London, the world’s oldest and biggest tax haven, is keeping its collective heads down. I presume Luxembourg is also keeping schtum.

As for the EU being a fair arbiter of their own rules; remind me again which countries broke the Growth and Stability Pact first and what was done to them. (Hint: the big boys were bad and so just changed to rules to suit them).



Duke of Marmalade said:


> But sure let's appeal.  Tim Cook's wrath would be more harmful to Ireland than that of any EU institution.  And I mean that.


 France and Germany getting their way on tax harmonisation certainly would be more harmful than anything Tim Cook could do.

This isn’t about post-colonial inferiority syndrome, it’s about not wanting to be a colony again.


----------



## Duke of Marmalade

_Purple_

I note your recognition that Revenue have a lot of discretion in deciding how companies are taxed.  I think the mainstream defence is that Revenue merely interpret the law of the land.

Ireland has had exemption from the S&G pact seemingly forever.

Oh dear, Ireland becoming a colony, I see you have become a full blown disciple of Mr Master Stroke.  Remind me what was the equivalent of Article 50 when we were a colony?


----------



## TheBigShort

Duke of Marmalade said:


> But sure let's appeal. Tim Cook's wrath would be more harmful to Ireland than that of any EU institution. And I mean that.



I doubt it. Corporations exist to satisfy shareholders. And they will do as they see fit for their interests, and their interests only,  regardless of any appeal or not, regardless if any appeal is successful or not.

Ireland stands to be made complete idiots, if Ireland appeals and wins, there is still nothing to stop Apple up and leaving if they concoct a better deal elsewhere.

Remember, some of this relates to a period where Ireland was bankrupt, the government bank gaurantee helped gaurantee the bank deposits of Apple. In this time, did Apple approach Revenue or the government to see how perhaps they could contribute something a bit closer to 12.5% CT? I doubt it.

We are being taken for fools once more, how often have we heard about our much vaunted 12.5%, only to discover the effective rate is 2-4% for many corporations?
How did our much vaunted 12.5% CT become obscured by the 'Double Irish' or artificial tax avoidance schemes?
How many times do we have to put on the green jersey to bailout multi billion dollar institutions?

This is not a government of the people. It is an extension of international corporate boardrooms that ply their trade by gutting social services (tax avoidance) for their own profit, and gutting social services for their own salvation (bailouts).


----------



## odyssey06

Duke of Marmalade said:


> _Odyssey_ think about it.  Not enough that we have the lowest CT rate in the EU, we let Apple set up two Irish companies, one a shell managed in Bermuda or wherever, and the other the trading company.  Reducing the tax rate to nearly zero.  And for heaven sake cut this "it's the fault of other tax jurisdictions for leaving the loophole".



The money is taxable in the US when it is repatriated, either via US corporation tax on Apple profits, or on US equivalent of CGT on Apple dividends.
Can someone explain to me how these profits can be released in value to Apple shareholders without one or other of those taxes being paid to the proper US authorities?

If Apple want to make use of the money, and not just sit on a pile of cash, that is.
A Bermudan holding company pays Bermudan taxes, which are deducted from the US tax liability on the funds - when repatriated.
It is not Ireland's fault that the US sets no deadline on the repatriation. The US politicians kicking up a fuss about the case would be better served by addressing themselves to that than criticising Apple, Ireland or even the EU. Piles of cash have a way of attracting attention.
It's not just Apple. There are $2.1 trillion dollars sitting out there awaiting repatriation by the top 500 US companies.

As far as I know, the only thing that happened in the EU was that the devices were sold there. They weren't developed or built in the EU. Apple is paying tax on its economic activity (6000 staff) here, and should pay the 12.5% on that - but the real economic activity triggering the 13 billion tax liability happened outside the EU and should be taxed outside the EU. If any EU member state has a problem with it, jack up the sales tax on electronics.


----------



## Duke of Marmalade

_Bigshort_ I nearly give you a Like after reading the first part of your post. What would you give for a Like from the duke?
Then you regressed to your signature leftie rant. But getting back to the earlier reasonable part of your post.  Clearly the government disagree.  They are willing to risk the wrath of every other EU country and institution not to mention 13/19bn rather than offend Tim Cook's sensibilities and they are probably right.  So who is colonising us? the EU or Tim Cook.

On that 13/19bn forget the 20 hospitals, that is a new car for every household in the country.


----------



## Sophrosyne

Duke of Marmalade said:


> _sophie_
> I think she means endorsed them as appropriate for tax. Of course Apple are free to allocate all their profits to the coffee machine but Revenue endorsement  is about taxable profits and that is within their gift to an extent.


What does that mean though? 
Is the commissioner suggesting that the Irish revenue should dictate where a multi-national should allocate its profits or tax them when they are clearly out of Ireland's jurisdiction?


----------



## TheBigShort

odyssey06 said:


> but the real economic activity triggering the 13 billion tax liability happened outside the EU and should be taxed outside the EU.



But where exactly? Apple havent given an answer to that.
And if the Cork plant also represents real economic activity. It cant be dismissed.


----------



## odyssey06

TheBigShort said:


> But where exactly? Apple havent given an answer to that.
> And if the Cork plant also represents real economic activity. It cant be dismissed.



Well apple employs 66000 employees in the US. Not dismissing its Ireland operations but that's ten times the number employed in Ireland. Their global workforce is 100000, but most of their overseas staff are in retail stores not RnD.
Seems like the majority of the tax should  be liable in the US and it must be the US if they want to release those profits back to their shareholders at some point?


----------



## TheBigShort

odyssey06 said:


> Can someone explain to me how these profits can be released in value to Apple shareholders without one or other of those taxes being paid to the proper US authorities?



The profits arent released as dividends to shareholders. They are held on balance by the company boosting its capital reserve and subsequently its share price.

If the profits are liable for taxation in the US then fine, Apple just has to declare that. But it chooses not to. Instead it chooses to opt for an elaborate tax avoidance scheme.


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## Firefly

A consequence of all this, should Ireland be "forced" to take the filthy lucre from Apple, would be pressure on the US to change its own tax laws and force US companies to repatriate more of their earnings home for tax purposes.


----------



## odyssey06

TheBigShort said:


> The profits arent released as dividends to shareholders. They are held on balance by the company boosting its capital reserve and subsequently its share price. If the profits are liable for taxation in the US then fine, Apple just has to declare that. But it chooses not to. Instead it chooses to opt for an elaborate tax avoidance scheme.



I would be in favour of any pressure the US or Ireland can apply to get that money declared... but slight disagreement... it's not avoidance... it's deferral... at some point the money has to come back to the US otherwise its value as a reserve is useless for share price. If Apple's share price is higher than it would be because of it, then the US treasury is benefitting in terms of taxes on sales of Apple shares by shareholders taking advantage of the higher share price.


----------



## odyssey06

Firefly said:


> A consequence of all this, should Ireland be "forced" to take the filthy lucre from Apple, would be pressure on the US to change its own tax laws and force US companies to repatriate more of their earnings home for tax purposes.



I would rather see than done in terms of something agreed "going forwards" between the US and EU.
I think that the retrospective nature of the EU ruling is very concerning.


----------



## Firefly

TheBigShort said:


> Remember, some of this relates to a period where Ireland was bankrupt, the government bank gaurantee helped gaurantee the bank deposits of Apple. In this time, did Apple approach Revenue or the government to see how perhaps they could contribute something a bit closer to 12.5% CT? I doubt it.
> 
> We are being taken for fools once more, how often have we heard about our much vaunted 12.5%, only to discover the effective rate is 2-4% for many corporations?
> How did our much vaunted 12.5% CT become obscured by the 'Double Irish' or artificial tax avoidance schemes?
> How many times do we have to put on the green jersey to bailout multi billion dollar institutions?
> 
> This is not a government of the people. It is an extension of international corporate boardrooms that ply their trade by gutting social services (tax avoidance) for their own profit, and gutting social services for their own salvation (bailouts).



I blame the civil servants in Revenue who approved these "deals"


----------



## Protocol

TheBigShort said:


> The profits arent released as dividends to shareholders. They are held on balance by the company boosting its capital reserve and subsequently its share price.
> 
> If the profits are liable for taxation in the US then fine, Apple just has to declare that. But it chooses not to. Instead it chooses to opt for an elaborate tax avoidance scheme.



These profits are liable to US CT, when repatriated to the USA.

Given the 35% US CTR, the firm don't repatriate the profits, yet.

So ASI/AOE profits will, eventually, be taxed by the US IRS, as it's in the USA where all the work was done to earn the profits.

The work done in the Irish branch is reflected in the share of ASI/AOE profits attributable to the Cork operations.


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## Duke of Marmalade

I see your point _Protocol_.  Hard to see 6,000 employees in Cork generating 100bn in profits, that would be 16m per employee.


----------



## Firefly

Duke of Marmalade said:


> I see your point _Protocol_.  Hard to see 6,000 employees in Cork generating 100bn in profits, that would be 16m per employee.



We're fierce productive down here I'll have you know boy!


----------



## Dan Murray

Protocol said:


> ....as it's in the USA where all the work was done to earn the profits.





Duke of Marmalade said:


> Hard to see 6,000 employees in Cork generating 100bn in profits, that would be 16m per employee.



Above comments imply no "work" or "contribution to profits", respectively, from the non-Irish European-based employees. Maybe you should do HR consulting to Apple if you really believe this?!


----------



## Purple

Duke of Marmalade said:


> I see your point _Protocol_.  Hard to see 6,000 employees in Cork generating 100bn in profits, that would be 16m per employee.


That's the whole point of all of this.


----------



## Firefly

It's very easy to come down on the admittedly very low taxes the multinational pay here. It grabs headlines and sells papers. It even brings the loonies on the left out for a bit of grandstanding. The thing is though, they multinationals pay very good wages and support a ton of dependent companies up and down the country who in turn pay shed loads of income tax and VAT on purchases. The multinationals are keeping the lights on in this country and we all know it. The other thing we all know is that the are here because of our low taxes. This is Ireland's unique selling point...sure we're English speaking with so-so educational standards, but do you really think that's why all of these companies are here? It's not - it's because of our taxes. Raise these and the multinationals will fly. 

The large EU countries, by and large, have large domestic industries so they would lose an absolute fortune if they reduced their own taxes to 12.5% to simply attract the multinationals we have. Better to get us to raise our rates right?

Now there are moves now to harmonise CT tax across Europe. Great...let's sign up only if the rate is 12.5%!


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## odyssey06

Ireland is an island on the periphery of Europe. We should be under no obligation to set our rates the same as those of the central european core.
It is an entirely legitimate strategy for peripheral regions to offer such incentives to attract business to their regions. That applies to Croatia and Latvia and Cyprus just as much as Ireland. We can no longer compete through currency devaluation due to the Euro & ERM. Peripheral countries have to have some levers to operate.

A *minimum *rate rather than a *harmonised *rate could be agreeable, but with a national veto on any moves to increase it, and, the initial minimum should be set at 12.5%.

Also, let's not forget that some of the business that is coming into Ireland is as a result of global competition rather than internal EU competition. If we didn't have a 12.5% tax rate they wouldn't be basing that operation in the EU at all. Perhaps some differential tax rate recognising international competition versus intra-EU competition would also make sense if practicable.


----------



## Duke of Marmalade

The CT rate itself is now more or less accepted as a national competence, same as income taxes, VAT etc. In fact I think it is now accepted that for example the UK could tax corporations in NI at less than on the mainland.

The focus has now turned to where the profits are economically earned.   I think that notwithstanding the tremendous productivity of Cork folk even they would admit that they do not make €1m profits p.a. per employee. Or if they do believe that they are suckers for not negotiating huge pay rises

No, the profits are mostly earned from intellectual property created in the US, partly earned from sales activity in the EU and to the least extent by whatever Cork folk are doing.

The solution to this has been in the making for some time and this Apple fiasco will hasten its final arrival.  It will not be good for Ireland at all.  It will involve allocating taxable profits to wherever they are economically earned.  Ireland will be allowed to have a zero CT rate if it wants but our CT advantage will be gone.


----------



## Firefly

odyssey06 said:


> Ireland is an island on the periphery of Europe. We should be under no obligation to set our rates the same as those of the central european core.



I agree and you know what, it could be argued that forcing us to change raise our tax rates, thereby affecting our competitiveness, is anti-competitive in the first place, which would be ironic as this is what this whole Apple affair is about!


----------



## Purple

Duke of Marmalade said:


> The CT rate itself is now more or less accepted as a national competence, same as income taxes, VAT etc. In fact I think it is now accepted that for example the UK could tax corporations in NI at less than on the mainland.


 The UK doesn't get to tax companies on the mainland as they are an island off the mainland, just like us. 






Duke of Marmalade said:


> No, the profits are mostly earned from intellectual property created in the US, partly earned from sales activity in the EU and to the least extent by whatever Cork folk are doing.


 Most of the economic activity took place outside the EU. 



Duke of Marmalade said:


> The solution to this has been in the making for some time and this Apple fiasco will hasten its final arrival.  It will not be good for Ireland at all.  It will involve allocating taxable profits to wherever they are economically earned.  Ireland will be allowed to have a zero CT rate if it wants but our CT advantage will be gone.


Not is that intellectual property is registered here. That's why the whole Knowledge Development Box thingie is such a big deal.


----------



## Duke of Marmalade

_Purple_ what's that smell emanating from the KDB


----------



## TheBigShort

Firefly said:


> It's not - it's because of our taxes. Raise these and the multinationals will fly.



Where will they go? It would appear anywhere else in the EU is out, the US is out (why did they move operations in the first place?). The UK is out because of the uncertainty about Brexit. 
And while we are at it, isnt the reason they are here is because of our 12.5% CT or because its actually anything from 0.005% to 12.5%


----------



## TheBigShort

odyssey06 said:


> Ireland is an island on the periphery of Europe. We should be under no obligation to set our rates the same as those of the central european core.



This is an important point. Throughout the history of the EU (EEC) the move towards further integration has only been possible on the basis that member countries retain their sovereignty.
Its only when we are required to vote a second time that its for our interest to remain at the "heart of Europe", otherwise we are always on the periphery.
I would argue that these companies would be in Europe regardless of our CT. Europe is a lucrative market with 400m pop. Having a presence in the EU, I would imagine, facilitates not having to negotiate a trade agreement.
I should add that in Apples case, the option of paying 12.5% on all there profits is still more desirable than alternatives in the rest of EU or US.


----------



## odyssey06

Tony Connelly again, with an in depth look on the likelihood of a successful appeal... and how it'll be affected by the Spain\Santander case that's currently being appealed:
http://analysis.rte.ie/business/2016/09/02/apple-ireland-and-the-spanish-connection/


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## Delboy

I don't think most people here have an issue with the 12.5% rate.
It's the 0.005% rates that we're not told about whilst paying 52% ourselves on anything over 33k thats the killer.

We either have a 12.5% rate or we don't. Right now, we don't.
Noonan made a fool of himself today out in Europe. The Dail committee yesterday that raised this at the end of business with a EU Commissioner here on a different matter....again, they sounded like right eejits defending our so called 12.5% corporation tax rate.


----------



## Protocol

There is no 0.05% or 0.005% rate.

We have a 12.5% main rate of CT, that's it.

How they arrived at the 0.05% effective rate:

Example:

ASI has 36 bn USD in profits, of which, say 50m euro profits are attributed to the Irish branch.

Irish CT = 50m * 12.5% = 6.25m euro

Then, divide 6.25m euro into 30 bn euro approx profits, and you get 0.002%.


----------



## Protocol

ASI Ireland branch details:


----------



## Protocol

ASI details:


----------



## TheBigShort

Protocol said:


> There is no 0.05% or 0.005% rate.
> 
> We have a 12.5% main rate of CT, that's it.
> 
> How they arrived at the 0.05% effective rate:
> 
> Example:
> 
> ASI has 36 bn USD in profits, of which, say 50m euro profits are attributed to the Irish branch.
> 
> Irish CT = 50m * 12.5% = 6.25m euro
> 
> Then, divide 6.25m euro into 30 bn euro approx profits, and you get 0.002%.



And the issue is, is that the Irish tax system facilitates the other €35.950 bn to sit in 'the cloud' or wherever.
That is, as far as I can see it, is the issue. The Irish tax system can, in certain circumstances, facilitate a corporation to effectively park its profits in 'no mans land', and the Commission has ruled that this amounts to effective state aid.


----------



## TheBigShort

Protocol said:


> ASI details:



Im not sure where you sourced those figures but they are pretty damning of the entire CT code.


----------



## Delboy

Protocol said:


> There is no 0.05% or 0.005% rate.
> 
> We have a 12.5% main rate of CT, that's it.
> 
> How they arrived at the 0.05% effective rate:
> 
> Example:
> 
> ASI has 36 bn USD in profits, of which, say 50m euro profits are attributed to the Irish branch.
> 
> Irish CT = 50m * 12.5% = 6.25m euro
> 
> Then, divide 6.25m euro into 30 bn euro approx profits, and you get 0.002%.


So what your saying is that there's a 12.5% rate for the small bits
And a non-existent rate for the big money that we all pretend is just 'resting' in Ireland!


----------



## odyssey06

TheBigShort said:


> And the issue is, is that the Irish tax system facilitates the other €35.950 bn to sit in 'the cloud' or wherever.
> That is, as far as I can see it, is the issue. The Irish tax system can, in certain circumstances, facilitate a corporation to effectively park its profits in 'no mans land', and the Commission has ruled that this amounts to effective state aid.



Not exactly. If other corporations can use the cloud also, its not state aid without a selectivity aspect ... also what goes up into the cloud must come down at some point...


----------



## Protocol

TheBigShort said:


> Im not sure where you sourced those figures but they are pretty damning of the entire CT code.



Please read the great work done by Seamus Coffey, UCC.

http://economic-incentives.blogspot.ie/

several posts on the Apple case


http://economic-incentives.blogspot.ie/2016/09/does-arithmetic-behind-13-billion-stack.html

http://economic-incentives.blogspot.ie/2016/09/why-tax-campaigners-should-be-aghast-at.html


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## Protocol

A profile of ASI:

http://economic-incentives.blogspot.ie/2016/03/apple-sales-internationalby-numbers.html


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## Protocol

Delboy said:


> So what your saying is that there's a 12.5% rate for the small bits
> And a non-existent rate for the big money that we all pretend is just 'resting' in Ireland!



The balance of ASI profits are to be taxed in the USA, where the activity happens that leads to the profits.

The Irish branch, with very little R&D, does not generate the huge profits.

Many hundreds, thousands, of engineers in California generate those profits.


----------



## Protocol

More to read, again by Seamus Coffey:

http://www.irisheconomy.ie/index.php/2016/09/09/the-apple-ruling-what-do-we-know/

And more here:

http://www.irisheconomy.ie/index.ph...reated-irelands-real-and-less-real-economies/


----------



## TheBigShort

Protocol said:


> Please read the great work done by Seamus Coffey, UCC.
> 
> http://economic-incentives.blogspot.ie/
> 
> several posts on the Apple case
> 
> 
> http://economic-incentives.blogspot.ie/2016/09/does-arithmetic-behind-13-billion-stack.html
> 
> http://economic-incentives.blogspot.ie/2016/09/why-tax-campaigners-should-be-aghast-at.html



Thank you, much appreciated. 
 I wasn't doubting your information btw,  I was just alarmed at the bare faced nature of tax avoidance that is being shown in those figures.


----------



## Protocol

Note that ASI is not tax-resident in Ireland, so it doesn't owe any Irish CT.


----------



## TheBigShort

Protocol said:


> Note that ASI is not tax-resident in Ireland, so it doesn't owe any Irish CT.


So to who does it owe?


----------



## Delboy

Protocol said:


> The balance of ASI profits are to be taxed in the USA, where the activity happens that leads to the profits.


IF the profits are brought into the USA, IF


----------



## Protocol

TheBigShort said:


> So to who does it owe?



USA.

Well, I'm not so sure.

You see, it wasn't tax resident anywhere.............

It eventually owes CT on the profits to the USA.

But the USA allows a deferred liability until you repatriate.


----------



## Sophrosyne

While not arguing the rights and wrongs of Apple's tax avoidance, our problem is that the EU are using State Aid rules as a back door to attack our taxation policies.

The commissioner stated:

"In fact, the tax treatment in Ireland enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire EU Single Market. This is due to *Apple's *decision to record all sales in Ireland rather than in the countries where the products were sold. *This structure is however outside the remit of EU state aid control.
If other countries were to require Apple to pay more tax on the profits of the two companies over the same period under their national taxation rules, this would reduce the amount to be recovered by Ireland".

Apple *and not the Irish revenue exploited the mismatch between Irish and US tax law.

It was *Apple's *decision to record all sales in Ireland.

As the commissioner stated, this arrangement is outside the remit of EU State Aid rules and the EU can do nothing about it.

Instead, she is trying to make this Ireland's problem by citing two tax rulings which, she claims "endorsed" Apple's arrangement.

The rulings have not been published, but tax rulings do *not* endorse business arrangements, they are rather Revenue's opinion as to how Irish tax is to be applied in a given set of circumstances.

As Protocol has repeatedly and correctly stated, the Irish revenue and Irish tax law is only concerned with what is taxable in Ireland. Profits that are or ought to be taxable elsewhere has nothing whatever to do with Ireland.


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## Duke of Marmalade

_sophie_ the issue is was Apple's ruling selective.  As I understand Seamus Coffey, if the arrangement is openly permissible in our legislation then it is not selective.  If however it depended on a fairly contrived interpretation and the Revenue did not make the ruling publicly available then it is probably selective.

On the politics of it, yes it is a back door approach, not so much to get Apple to pay Ireland 13/19bn but to bring to a head the mighty irritant which Ireland's tax arrangements have been.

I am seeing no sympathy for our behaviour except from rabid Brexiteers and that is not a good place to be.


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## elacsaplau

I've just read this thread so thanks to all. I now understand quite a bit more than when I started and would be very grateful if someone could take the time to *very briefly* answer the following questions please. This will certainly help me and perhaps some others in relation to all this. Some questions, as you see, are very basic.

1. If an US MNC who was not based in the EU sold a product in the EU, what CT and other taxes would be levied on the US MNC and by whom?

2. What taxation advantages have historically been available to US MNCs establishing in Ireland? Specifically, is it just the nominal lower rate or are there additional "avoidance" mechanisms not available elsewhere and if so, what precisely?

3. For US MNCs that were established in Ireland, are they or not subject to CT within each of the EU countries that they operate?

4. Did the Irish Revenue share its 2007 ruling with its counterparts within the EU at that time?

5. Does the Irish Revenue typically publish its rulings and what happened in the Apple case?

6. I understand that there was a provisional EU ruling in relation to Apple in 2014, which was broadly validated by the final ruling. Is it known, what arguments Apple/the Irish authorities made to the Commission between 2014 and 2016 and the reasons such arguments were rejected?

7. In 2007, if the Irish Revenue had said that the structure of Apple's European's businesses was inappropriate - how realistic/attainable would it have been for Apple to re-structure its businesses to substantially avoid CT within Europe (e.g. some variation of a Double Irish)? [You will note from Protocol's post #153 that _pretty much_ all the action - in terms of profits - occurred post 2007!]

8. To put question 7 another way - if Apple's goal was to pay zero or minimal CT on the majority of its EU income (in the knowledge that such profits may ultimately be subject to CT upon repatriation to the US) - what specific advantages did the 2007 Revenue ruling confer that was not available to other MNCs?

9. To put question 7 yet another way, do we have comparative figures to posts 152/153 for the top 5/10 US MNCs operating in Ireland? If not, could this information be deduced from annual reports, etc?

10. I understand that the CT regime is scheduled to change for existing MNCs in 2020/1? Any chance of a micro summary of what the changes mean?

11. FINALLY, how could the Apple ruling impact of these scheduled changes?

Any light on any of these would be much appreciated. Oh yeah, I'm not expecting one person to have all the answers!!


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## Sophrosyne

Duke of Marmalade said:


> _sophie_ the issue is was Apple's ruling selective.  As I understand Seamus Coffey, if the arrangement is openly permissible in our legislation then it is not selective.  If however it depended on a fairly contrived interpretation and the Revenue did not make the ruling publicly available then it is probably selective.
> 
> I am seeing no sympathy for our behaviour except from rabid Brexiteers and that is not a good place to be.



It is only an issue if you buy into the commissioner's rhetoric.

There is no reason to suppose that the tax rulings were selective.

The tax rulings simply applied Irish tax law.

The difference in how companies are taxed under Irish and US legislation is and was well known to any international tax practitioner worth their salt and could have been exploited by any multi-national.


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## Duke of Marmalade

Most of the informed commentary is coming to the same cul de sac.  If the ruling has convincing arguments that it was a selective sweetheart deal for Apple then it's hands up.  We won't know until we see the actual ruling and we mightn't even know then, after all it must be sufficiently unconvincing to persuade the government to appeal.


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## Firefly

TheBigShort said:


> Where will they go?



The truth is I don't have that information, however, I am sure the IDA and Revenue have looked into this and have advised the government in this regard.



TheBigShort said:


> And while we are at it, isnt the reason they are here is because of our 12.5% CT or because its actually anything from 0.005% to 12.5%



I think you are right actually, the 12.5% is the headline rate. Of course, multinationals employ both their own experts and also hire external experts on taxation to try to reduce their tax burden as much as possible within the confines of the law - I don't see anything wrong with that in the same way a lot of PAYE workers put money into pensions to avail of tax deductions. All perfectly legal.

From a moral perspective, I would like the companies to pay more tax for sure, however, again I am sure the IDA and Revenue have looked into this and have helped government policy in this regard. I imagine many cost-benefit analysis have been done over the years and given how driven the EU seem to be in grabbing some of our cake, we're probably doing something right.


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## TheBigShort

https://www.rt.com/shows/keiser-report/358886-episode-max-keiser-965/



Firefly said:


> I imagine many cost-benefit analysis have been done over the years



Perhaps, but the show above has a half hour discussion on the Apple tax. One point made was that because of our supposed 26% increase in GDP (apparently because MNC posting additional profits in Ireland) we are in hoc to an additional €320m to the EU funds. 
This equates to about 5,500 jobs at €70,000 pa at Apple.


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## Firefly

TheBigShort said:


> https://www.rt.com/shows/keiser-report/358886-episode-max-keiser-965/
> 
> 
> 
> Perhaps, but the show above has a half hour discussion on the Apple tax. One point made was that because of our supposed 26% increase in GDP (apparently because MNC posting additional profits in Ireland) we are in hoc to an additional €320m to the EU funds.
> This equates to about 5,500 jobs at €70,000 pa at Apple.



It's a fair point and who can forget the Leprechaun economics from the CSO!


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## elacsaplau

elacsaplau said:


> I've just read this thread so thanks to all. I now understand quite a bit more than when I started and would be very grateful if someone could take the time to *very briefly* answer the following questions please. This will certainly help me and perhaps some others in relation to all this. Some questions, as you see, are very basic.
> 
> 1. If an US MNC.....



Just bumping this post - anybody able to explain even some of the questions?


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## TheBigShort

http://www.rte.ie/news/2016/0926/819281-budget-2017/

Green jersey "attack on sovereignty" mantra is looking somewhat silly now. 
Very much a softening of approach, negotiations would appear to be working well behind-the-scenes.


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## odyssey06

TheBigShort said:


> http://www.rte.ie/news/2016/0926/819281-budget-2017/
> Green jersey "attack on sovereignty" mantra is looking somewhat silly now.
> Very much a softening of approach, negotiations would appear to be working well behind-the-scenes.



_The Director of the OECD's tax policy and administration unit has said... Most of Apple's tax liability belonged with the US, as this was where Apple's intellectual property was developed, and it was fundamental to the OECD/G20 approach that taxation should be aligned with activity that generates profits - in this case the research and development that produced the intellectual property that Apple makes the bulk of its profits from._

Let's hope the EU comes to the same sensible conclusion,


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## Sophrosyne

Apple and Ireland have won their appeal against the European Commission's €13.1bn tax ruling.

The General Court of the European Union has annulled the decision taken by the Commission regarding the Irish tax rulings in favour of Apple.

The Commission is expected to appeal the decision.


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## Purple

Good news for this country and our continued policy of stealing taxes from the poorest people in the world in order to fund our public services.


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## Sophrosyne

The Commission considered that the tax rulings in question constituted State aid *unlawfully* put into effect by Ireland. The aid was declared incompatible with the internal market. The Commission demanded the recovery of the aid in question. According to the Commission’s calculations, Ireland had granted Apple 13 billion euro in unlawful tax advantages.

The decision of the General Court of the European Union was that it annulled the contested decision because the Commission did not succeed in showing to the requisite legal standard that there was an advantage for the purposes of Article 107(1) TFEU.

Article 107(1) TFEU: ‘Save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market.’


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## cremeegg

Firefly said:


> As a line in the sand, our current national debt is:
> 
> € 184,903,776,192
> 
> Let's see what our national debt figure rises to before this Apple tax issue is concluded.



*€ 185,391,155,980*

According to this. http://www.financedublin.com/debtclock.php 

Although the tax issue is hardly concluded.


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## cremeegg

Successive governments are to be commended for standing by Revenue and govt policy despite pressure over the years. This can only do irelands reputation and FDI prospects heart good. 

I note from the court's press release that;

NOTE: An appeal, limited to points of law only, may be brought before the Court of Justice against the decision of the General Court within two months and ten days of notification of the decision.

As the decision appears to me to be based on the facts of the case rather than any point of law an appeal would seem unlikely to succeed. That's my 5 minute free opinion, it will be interesting to see what the expensive legal opinion will be. (Of course the lawyers will want an appeal).

The most interesting outstanding issue I would like to understand is where are the corresponding profits being taxed since the laws in question were changes in 2014.


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## Gordon Gekko

The costs are to be borne by the European Commission as per the ruling.

The monies have been taxed in the US since they reduced their rates (it was always tax deferral until then).


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## NoRegretsCoyote

cremeegg said:


> The most interesting outstanding issue I would like to understand is where are the corresponding profits being taxed since the laws in question were changes in 2014.



As I understand it Apple on-shored a lot of the IP to Ireland even before the 2016 ruling.

Ireland's corporation tax take has more than doubled since 2014. Apple can't account for all or even a majority of this, but it certainly counts for a large amount.


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## Sophrosyne

Article by Seamus Coffey in today’s Irish Times

“Vestager grabbed the headlines with press-conference references to minuscule tax rates of 0.005 per cent and tax bills of €13 billion. But when the commission’s 130-page decision was published a few months later, it contained neither. They were provided for public consumption but were not part of the technical detail.”

Regarding yesterday’s ruling by the General Court of the European Union:-

“The key line of yesterday’s court ruling was that the commission’s state aid finding was done “without attempting to show that that income was representative of the value of the activities actually carried out by the [IRISH]branches themselves.”

From the outset, one of Ireland’s responses was that the only Apple profit that should be subject to tax in Ireland is profit that was actually generated in Ireland. The court has upheld that view.”

Regarding a possible appeal:-

“.. such was the overwhelming rejection of the commission’s case by the court that a successful appeal seems unlikely. The court left very few threads for the commission to cling on to.

Vestager issued a combative statement after the ruling was published, but it was hollow and noisy rather than making any substantive points.”


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## NoRegretsCoyote

Sophrosyne said:


> Regarding a possible appeal:-
> 
> “.. such was the overwhelming rejection of the commission’s case by the court that a successful appeal seems unlikely. The court left very few threads for the commission to cling on to.
> 
> Vestager issued a combative statement after the ruling was published, but it was hollow and noisy rather than making any substantive points.”



State aid is a dead end for the Commission now on corporate tax.

FT is reporting that it may use other approaches:



> In a statement, the commission said: “From the beginning of this mandate, the commission has been clear that we would explore how to make full use of the provisions in the treaties that allow taxation proposals to be adopted by qualified majority rather than unanimity. The commission is now looking at various options to deliver on this political commitment.”
> 
> Article 116 of the EU treaty gives Brussels the powers to correct “distortions” in the single market, but has never been used. The instrument allows the commission to propose a directive designed to correct distorting tax schemes and sue governments at the European Court of Justice if they do not comply.
> 
> The measure is likely to target schemes in countries such as the Netherlands, Luxembourg, Belgium and Ireland, said one official. Diplomats expect the plans to be fiercely resisted by some member states, opening up the prospect of years of lengthy legal battles at the ECJ.


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## Sophrosyne

Interesting article on EU moves to increase its taxation powers and create a more integrated, federalist Europe. This “loss of sovereignty” was one of the principal reasons for the UK’s departure from the EU.

“In the field of corporate tax, though, there is an increasing number of directives that harbour the sole objective of reducing tax competition between countries by preventing states from granting advantages to businesses.

This policy is dictated by the larger, more influential members of the EU – such as France and Germany – and imposed upon the smaller ones. Unlike France and Germany, countries such as Belgium, Luxembourg, the Netherlands and Ireland can’t offer businesses access to a wide net of customers. As a result, they have always felt the need to attract foreign companies through tax advantages. These tax advantages are lawful so long as they are not selective – that is, providing they are equally accessible to all.”

“The EU has made a significant contribution to the prosperity of its inhabitants by increasing freedoms, particularly through the creation of a single market. In doing so, it has somewhat reduced the influence states can impose on their citizens.

But this has also restricted some freedoms. When the EU moved towards becoming a political authority, it began to regulate whole areas of the economy and people’s lives. It has itself become a power that is exercised – directly or indirectly – on businesses and individuals. By granting additional capabilities to the EU, at best, one only shifts the burden from individual states to a higher level. This means that the principle of subsidiarity – according to which, decisions must be taken as close to citizens as possible – will be further eroded.”


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## roker

Let's take a simple approach no court case no expenses,
Split the difference 50% to Ireland 50% to Apple then everyone is happy


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