Should Ireland appeal the Apple ruling

[Protocol]

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.

 

[cremeegg]

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

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."

 

[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.

 

[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?

 

[ppmeath]

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?

"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?

 

[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

 

[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.

 

[ppmeath]

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.

 

[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.

 

[Purple]

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.

 

[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.

 

[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.

 

[cremeegg]

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.

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."

 

[johnny1234]

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

 

[Protocol]

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.

 

[Protocol]

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.

 

[SlugBreath]

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?

 

[Firefly]

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!

 

[Boyd]

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.

 

[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.