Maybe but not over domestic policy and definitely not over taxation- the EU has absolutely no authority over national taxation- thus is essentially what this dispute is about, a land grab by the EU over national taxation policy.
If I were the Irish people, I'd want out of the EU. They'll remain a very attractive place for businesses to invest and locate if they maintain a very low rate of taxation. If they lose that advantage, the country is just going to be another whipping boy for the EU.
Which demonstrates your supreme ignorance on the matter. Ireland is attractive for foreign businesses only because they are a member of the EU. Setting up business in Ireland gives you immediate and open access to all the EU countries. No customs duties, no laborious border checks, no nothing. If Ireland leaves the EU, nobody, NOBODY, from outside Ireland will set up their European base of operations there. Even if Ireland pays them.
You ask any Irish person, none of them will want to leave the EU. They all know that EU membership has benefited them immensely. Not only economically but also in maintaining peace for their brothers and sisters in Northern Ireland.
And on top of all that, Ireland is a net recipient of EU funds. They get more than they pay into the EU.
Twenty-percent of Irish disagree with you. That's not a huge number, but it's also not "none of them".
What happens to the interest that accrues in the escrow account? With $15B in principal, each 1% of interest = $150 million. Alternatively -- if it does not accrue interest -- then that's a huge opportunity cost for other ways that Apple could have used the money.
Apple should ask for and receive damages when they win their appeal (not to be paid in pants from Capri)
How about a link to the Bloomberg piece in the article? AI is usually pretty good about including the link in the first paragraph, but I can't find it in this article. I want to read about how a nation couldn't figure out how to set up an escrow account in less than 7 months.
Neither Apple nor Ireland is in a hurry to agree to escrow terms and have (control of) the funds transferred. They both think (with, I believe, good reason) that it's wrong that Ireland is being told to collect these funds.
Further, Ireland is in a sticky situation when it comes to these escrowed funds. If Ireland and Apple win on appeal, those funds will need to be returned to Apple with interest. However the funds are managed in the meantime, it can't be in a way that risks any losses while at the same time it needs to be in a way that generates enough return to cover the interest that should be paid to Apple upon their return. Ireland doesn't want to be out of pocket, so to speak, if it prevails in this case. The only way to ensure that won't be the case is to have Apple agree that, based on the escrow terms the parties agree to, Apple will be considered made whole by the return of whatever funds are in the escrow account at the end of the process. So Apple has the leverage here. Practically speaking, it can dictate the escrow terms that it wants. And Ireland isn't going to want to force the transfer of funds until Apple is satisfied with those terms.
There is a lot of damage control in the different comments from Apple representatives.
I particularly take issue with the line that Apple paid all taxes legally due.
I think few people doubt that, but one of the potentially most damaging claims from the investigation was that Apple supposedly decided how much was taxable in the first place and then duly paid all taxes on that amount in completely legal fashion.
So yes, what they are claiming is technically true, but behind that is the issue of companies deciding for themselves what to make available for taxation.
One would expect this kind of behaviour (which isn't limited to Apple) will change in the future in the EU as all the investigations conclude and rulings are made which will serve as the basis for new practices. Whether Apple is found to have received what amounts to state aid or not will be decided down the line, but the fact the investigation was formerly concluded and the summary made public has helped to shed more light on the inner workings of multi national companies.
Tim Cook attended different meetings in Ireland and Brussels with the EU team carrying out the investigation and knows first hand exactly what the case against Apple is based on. Some of those meetings were reportedly 'heated'.
With a little luck these kinds of investigations will lead to a fairer system in the future.
Are their any corporate tax systems anywhere that aren't based on companies applying accounting rules to determine themselves how much taxes they pay? Corporate finances are incredibly complex for multinational corporations. Of course corporations do these calculations themselves, but to say that they "decide for themselves what to make available for taxation" is disingenuous. When some tax authority decides that the company didn't calculate things corrected, they get called on it (as has happened here). The odd part of the this case is that it's the EU who's complaining rather than the jurisdiction who is owned (or isn't owed) the money.
Complexity yes. Rules, definitely.
It seems like ages ago that I read the summary of the investigation but if I recall correctly it was almost as if Apple was making its own rules.
Although it's Bloomberg, this article is a nice read to get a feel of what has happened along the timeline.
Also, huge companies have actively added to the complexity of some operations, no doubt with the idea of making things difficult to unravel.
These kinds of long investigations play a positive role in reigning in part of these practices independently of the final rulings.
Apple has already changed how it operates in Ireland although the reasons for change vart depending on who you listen to.
The reason for the change which (I think) you are alluding to is that Ireland changed its tax rules. For whatever reasons - e.g., pressure from other members of the EU - it felt it should change certain general tax policies which had allowed Apple to operate, when it comes to Irish taxes, as it previously had. That's fine. What isn't fine is that the European Commission is, for all intents and purposes, trying to make the effects of those changes apply retroactively.
If you read the European Commission's full decision (of August 30th, 2016), what this is about becomes transparent. It is only superficially about the notion that Apple got a selective advantage from Ireland. Substantively it is about the Commission not liking Ireland's tax policies in general (and in combination) and the effects of those tax policies in particular situations.
Most of what the European Commission talks about in its decision is irrelevant if the issue really is demonstrating that Apple received a selective advantage from Ireland. It's only relevant if the issue is demonstrating that Ireland's tax policies are inappropriate. Also, the decision merely begs the question on a number of relevant points; it doesn't bother to substantively support the conclusion it reaches on those points.
The decision also finds repeatedly, and for various reasons, that Irish tax policy as it was applied to Apple's situation doesn't yield results which are consistent with "a market-based outcome in line with the arm's length principle." The exact phrasing used differs somewhat, but the decision ad nauseam reaches that conclusion and relies on that notion. The decision itself, however, acknowledges that Ireland isn't required to have tax policy (e.g., with regard to transfer pricing) that yields such results - i.e., that applies an arm's length principle. Even though the decision recognizes that reality (and Irish autonomy when it comes to deciding such aspects of its tax policy), it goes on to pretend that the contrary is true. So much of what the decision builds its case on is the notion that what Ireland did was wrong because it didn't require accounting (from Apple) which yielded results consistent with the application of an arm's length principle.
If the point was to establish that Irish tax policy was improper as not being consistent with that of other nations (and, e.g., recommendations of the OECD), then the decision does a fair job of supporting that conclusion. What it doesn't do is demonstrate that Apple received a selective advantage from Ireland. The decision pretends that it's doing the latter while substantively it's only doing the former, because if all the Commission can do is the former then it lacks authority to do much about the problem that it perceives - improper Irish tax policy.
How about a link to the Bloomberg piece in the article? AI is usually pretty good about including the link in the first paragraph, but I can't find it in this article. I want to read about how a nation couldn't figure out how to set up an escrow account in less than 7 months.
Neither Apple nor Ireland is in a hurry to agree to escrow terms and have (control of) the funds transferred. They both think (with, I believe, good reason) that it's wrong that Ireland is being told to collect these funds.
Further, Ireland is in a sticky situation when it comes to these escrowed funds. If Ireland and Apple win on appeal, those funds will need to be returned to Apple with interest. However the funds are managed in the meantime, it can't be in a way that risks any losses while at the same time it needs to be in a way that generates enough return to cover the interest that should be paid to Apple upon their return. Ireland doesn't want to be out of pocket, so to speak, if it prevails in this case. The only way to ensure that won't be the case is to have Apple agree that, based on the escrow terms the parties agree to, Apple will be considered made whole by the return of whatever funds are in the escrow account at the end of the process. So Apple has the leverage here. Practically speaking, it can dictate the escrow terms that it wants. And Ireland isn't going to want to force the transfer of funds until Apple is satisfied with those terms.
Money held in escrow won't be earning interest, most likely.
How about a link to the Bloomberg piece in the article? AI is usually pretty good about including the link in the first paragraph, but I can't find it in this article. I want to read about how a nation couldn't figure out how to set up an escrow account in less than 7 months.
Neither Apple nor Ireland is in a hurry to agree to escrow terms and have (control of) the funds transferred. They both think (with, I believe, good reason) that it's wrong that Ireland is being told to collect these funds.
Further, Ireland is in a sticky situation when it comes to these escrowed funds. If Ireland and Apple win on appeal, those funds will need to be returned to Apple with interest. However the funds are managed in the meantime, it can't be in a way that risks any losses while at the same time it needs to be in a way that generates enough return to cover the interest that should be paid to Apple upon their return. Ireland doesn't want to be out of pocket, so to speak, if it prevails in this case. The only way to ensure that won't be the case is to have Apple agree that, based on the escrow terms the parties agree to, Apple will be considered made whole by the return of whatever funds are in the escrow account at the end of the process. So Apple has the leverage here. Practically speaking, it can dictate the escrow terms that it wants. And Ireland isn't going to want to force the transfer of funds until Apple is satisfied with those terms.
Money held in escrow won't be earning interest, most likely.
It will certainly be earning returns, likely largely in the form of interest.
That's part of what the negotiations are about, and part of what has to be figured out. Who will be chosen to manage the funds? How much will they be paid? What kind of rules will they be operating under?
One way or another, the funds will be loaned to other entities or otherwise invested - similar to how they are held now. That being the case, those funds will earn returns (or, in theory possibly though in reality not likely, see loses). That's the reality of how money works, how it exists. It isn't going to be held as actual currency in a vault somewhere. It is going to exist as financial instruments or on account with other entities that will pay interest in return for the use of that money.
There is a lot of damage control in the different comments from Apple representatives.
I particularly take issue with the line that Apple paid all taxes legally due.
I think few people doubt that, but one of the potentially most damaging claims from the investigation was that Apple supposedly decided how much was taxable in the first place and then duly paid all taxes on that amount in completely legal fashion.
So yes, what they are claiming is technically true, but behind that is the issue of companies deciding for themselves what to make available for taxation.
One would expect this kind of behaviour (which isn't limited to Apple) will change in the future in the EU as all the investigations conclude and rulings are made which will serve as the basis for new practices. Whether Apple is found to have received what amounts to state aid or not will be decided down the line, but the fact the investigation was formerly concluded and the summary made public has helped to shed more light on the inner workings of multi national companies.
Tim Cook attended different meetings in Ireland and Brussels with the EU team carrying out the investigation and knows first hand exactly what the case against Apple is based on. Some of those meetings were reportedly 'heated'.
With a little luck these kinds of investigations will lead to a fairer system in the future.
Are their any corporate tax systems anywhere that aren't based on companies applying accounting rules to determine themselves how much taxes they pay? Corporate finances are incredibly complex for multinational corporations. Of course corporations do these calculations themselves, but to say that they "decide for themselves what to make available for taxation" is disingenuous. When some tax authority decides that the company didn't calculate things corrected, they get called on it (as has happened here). The odd part of the this case is that it's the EU who's complaining rather than the jurisdiction who is owned (or isn't owed) the money.
Complexity yes. Rules, definitely.
It seems like ages ago that I read the summary of the investigation but if I recall correctly it was almost as if Apple was making its own rules.
Although it's Bloomberg, this article is a nice read to get a feel of what has happened along the timeline.
Also, huge companies have actively added to the complexity of some operations, no doubt with the idea of making things difficult to unravel.
These kinds of long investigations play a positive role in reigning in part of these practices independently of the final rulings.
Apple has already changed how it operates in Ireland although the reasons for change vart depending on who you listen to.
The reason for the change which (I think) you are alluding to is that Ireland changed its tax rules. For whatever reasons - e.g., pressure from other members of the EU - it felt it should change certain general tax policies which had allowed Apple to operate, when it comes to Irish taxes, as it previously had. That's fine. What isn't fine is that the European Commission is, for all intents and purposes, trying to make the effects of those changes apply retroactively.
If you read the European Commission's full decision (of August 30th, 2016), what this is about becomes transparent. It is only superficially about the notion that Apple got a selective advantage from Ireland. Substantively it is about the Commission not liking Ireland's tax policies in general (and in combination) and the effects of those tax policies in particular situations.
Most of what the European Commission talks about in its decision is irrelevant if the issue really is demonstrating that Apple received a selective advantage from Ireland. It's only relevant if the issue is demonstrating that Ireland's tax policies are inappropriate. Also, the decision merely begs the question on a number of relevant points; it doesn't bother to substantively support the conclusion it reaches on those points.
The decision also finds repeatedly, and for various reasons, that Irish tax policy as it was applied to Apple's situation doesn't yield results which are consistent with "a market-based outcome in line with the arm's length principle." The exact phrasing used differs somewhat, but the decision ad nauseam reaches that conclusion and relies on that notion. The decision itself, however, acknowledges that Ireland isn't required to have tax policy (e.g., with regard to transfer pricing) that yields such results - i.e., that applies an arm's length principle. Even though the decision recognizes that reality (and Irish autonomy when it comes to deciding such aspects of its tax policy), it goes on to pretend that the contrary is true. So much of what the decision builds its case on is the notion that what Ireland did was wrong because it didn't require accounting (from Apple) which yielded results consistent with the application of an arm's length principle.
If the point was to establish that Irish tax policy was improper as not being consistent with that of other nations (and, e.g., recommendations of the OECD), then the decision does a fair job of supporting that conclusion. What it doesn't do is demonstrate that Apple received a selective advantage from Ireland. The decision pretends that it's doing the latter while substantively it's only doing the former, because if all the Commission can do is the former then it lacks authority to do much about the problem that it perceives - improper Irish tax policy.
You will not find any substantiated claims because AFAIK the EU has so far issued only a summary of its investigation (although highlights of the investigation were Included). However, these two paragraphs are important to keep in mind.
"Following an in-depth state aid investigation launched in June 2014, the European Commission has concluded that two tax rulings issued by Ireland to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991'
And
"This decision does not call into question Ireland's general tax system or its corporate tax rate.
I don't think it is superficially about selective tax breaks or focussed on the EU not liking Ireland's tax setup as the EU has made it explicitly clear in the summary that this is not about Ireland's tax model and mentions two specific instances where (according to the investigators) Apple received special treatment. Those two instances will be put under the microscope while the case is heard but obviously haven't been detailed publicly yet.
There is a lot of damage control in the different comments from Apple representatives.
I particularly take issue with the line that Apple paid all taxes legally due.
I think few people doubt that, but one of the potentially most damaging claims from the investigation was that Apple supposedly decided how much was taxable in the first place and then duly paid all taxes on that amount in completely legal fashion.
So yes, what they are claiming is technically true, but behind that is the issue of companies deciding for themselves what to make available for taxation.
One would expect this kind of behaviour (which isn't limited to Apple) will change in the future in the EU as all the investigations conclude and rulings are made which will serve as the basis for new practices. Whether Apple is found to have received what amounts to state aid or not will be decided down the line, but the fact the investigation was formerly concluded and the summary made public has helped to shed more light on the inner workings of multi national companies.
Tim Cook attended different meetings in Ireland and Brussels with the EU team carrying out the investigation and knows first hand exactly what the case against Apple is based on. Some of those meetings were reportedly 'heated'.
With a little luck these kinds of investigations will lead to a fairer system in the future.
Are their any corporate tax systems anywhere that aren't based on companies applying accounting rules to determine themselves how much taxes they pay? Corporate finances are incredibly complex for multinational corporations. Of course corporations do these calculations themselves, but to say that they "decide for themselves what to make available for taxation" is disingenuous. When some tax authority decides that the company didn't calculate things corrected, they get called on it (as has happened here). The odd part of the this case is that it's the EU who's complaining rather than the jurisdiction who is owned (or isn't owed) the money.
Complexity yes. Rules, definitely.
It seems like ages ago that I read the summary of the investigation but if I recall correctly it was almost as if Apple was making its own rules.
Although it's Bloomberg, this article is a nice read to get a feel of what has happened along the timeline.
Also, huge companies have actively added to the complexity of some operations, no doubt with the idea of making things difficult to unravel.
These kinds of long investigations play a positive role in reigning in part of these practices independently of the final rulings.
Apple has already changed how it operates in Ireland although the reasons for change vart depending on who you listen to.
The reason for the change which (I think) you are alluding to is that Ireland changed its tax rules. For whatever reasons - e.g., pressure from other members of the EU - it felt it should change certain general tax policies which had allowed Apple to operate, when it comes to Irish taxes, as it previously had. That's fine. What isn't fine is that the European Commission is, for all intents and purposes, trying to make the effects of those changes apply retroactively.
If you read the European Commission's full decision (of August 30th, 2016), what this is about becomes transparent. It is only superficially about the notion that Apple got a selective advantage from Ireland. Substantively it is about the Commission not liking Ireland's tax policies in general (and in combination) and the effects of those tax policies in particular situations.
Most of what the European Commission talks about in its decision is irrelevant if the issue really is demonstrating that Apple received a selective advantage from Ireland. It's only relevant if the issue is demonstrating that Ireland's tax policies are inappropriate. Also, the decision merely begs the question on a number of relevant points; it doesn't bother to substantively support the conclusion it reaches on those points.
The decision also finds repeatedly, and for various reasons, that Irish tax policy as it was applied to Apple's situation doesn't yield results which are consistent with "a market-based outcome in line with the arm's length principle." The exact phrasing used differs somewhat, but the decision ad nauseam reaches that conclusion and relies on that notion. The decision itself, however, acknowledges that Ireland isn't required to have tax policy (e.g., with regard to transfer pricing) that yields such results - i.e., that applies an arm's length principle. Even though the decision recognizes that reality (and Irish autonomy when it comes to deciding such aspects of its tax policy), it goes on to pretend that the contrary is true. So much of what the decision builds its case on is the notion that what Ireland did was wrong because it didn't require accounting (from Apple) which yielded results consistent with the application of an arm's length principle.
If the point was to establish that Irish tax policy was improper as not being consistent with that of other nations (and, e.g., recommendations of the OECD), then the decision does a fair job of supporting that conclusion. What it doesn't do is demonstrate that Apple received a selective advantage from Ireland. The decision pretends that it's doing the latter while substantively it's only doing the former, because if all the Commission can do is the former then it lacks authority to do much about the problem that it perceives - improper Irish tax policy.
You will not find any substantiated claims because AFAIK the EU has so far issued only a summary of its investigation (although highlights of the investigation were Included). However, these two paragraphs are important to keep in mind.
"Following an in-depth state aid investigation launched in June 2014, the European Commission has concluded that two tax rulings issued by Ireland to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991'
And
"This decision does not call into question Ireland's general tax system or its corporate tax rate.
I don't think it is superficially about selective tax breaks or focussed on the EU not liking Ireland's tax setup as the EU has made it explicitly clear in the summary that this is not about Ireland's tax model and mentions two specific instances where (according to the investigators) Apple received special treatment. Those two instances will be put under the microscope while the case is heard but obviously haven't been detailed publicly yet.
The European Commission has published its final decision in which it details its findings and lays out its arguments in support of those findings. It had previously only released what might be considered a summary of those findings and arguments, I suspect that is what you are referring to.
That said, of course the Commission claims (in vague, summary-like statements) that it isn't questioning Ireland's tax policies but rather has found that Apple received selective advantages. That's what it has to do in order to support taking the action that it has taken. My point is that those are superficial claims, they aren't effectively supported by the Commission's findings and arguments. If you read the full decision, you see that what the Commission is really taking issue with is Ireland's tax policies and how they have combined to allow Apple to do what it did. The decision does not demonstrate that Apple got selective advantages; it does not demonstrate that other similarly situated entities could not have done much the same things. It has not demonstrated that the tax rulings in question amount to special treatment of Apple rather than just guidance for case specific application of Ireland's general tax policies - which is the point of such rulings.
The point is, in the decision, the European Commission substantively demonstrated X (or, at least, made a substantive case in support of X). But X is not what it needed to demonstrate in order to take action. So it just superficially claimed that what it had demonstrated was Y, which is what it needed to demonstrate in order to take action. Its summaries and conclusions of course assert that it demonstrated Y, and that its focus wasn't X. But the findings and arguments made in the decision - what it actually focuses on and makes the case for - belie(s) that assertion.
Further, the decision is full of question begging and is logically inconsistent. For instance, it essentially and repeatedly argues that the implementation of Irish tax law with regard to Apple must represent selective advantage because it yields results which aren't consistent with market-based outcomes in keeping with the arm's length principle. That argument is based on the notion that Irish tax law, in general and in relevant regards, requires the application of such principle. However, the decision itself recognizes that Irish tax law isn't required to apply such principle and it does not demonstrate that Irish tax law does, in general and in relevant regards, apply such principle. In other words, the decision doesn't demonstrate selective advantage, it just demonstrates that Irish tax law doesn't do what it should do (i.e. what the Commission thinks it should do). Ireland claims that its tax policies don't, in relevant regards, apply such principle.
Maybe but not over domestic policy and definitely not over taxation- the EU has absolutely no authority over national taxation- thus is essentially what this dispute is about, a land grab by the EU over national taxation policy.
If I were the Irish people, I'd want out of the EU. They'll remain a very attractive place for businesses to invest and locate if they maintain a very low rate of taxation. If they lose that advantage, the country is just going to be another whipping boy for the EU.
Which demonstrates your supreme ignorance on the matter. Ireland is attractive for foreign businesses only because they are a member of the EU. Setting up business in Ireland gives you immediate and open access to all the EU countries. No customs duties, no laborious border checks, no nothing. If Ireland leaves the EU, nobody, NOBODY, from outside Ireland will set up their European base of operations there. Even if Ireland pays them.
You ask any Irish person, none of them will want to leave the EU. They all know that EU membership has benefited them immensely. Not only economically but also in maintaining peace for their brothers and sisters in Northern Ireland.
And on top of all that, Ireland is a net recipient of EU funds. They get more than they pay into the EU.
Twenty-percent of Irish disagree with you. That's not a huge number, but it's also not "none of them".
You're right. I should have said "You ask any reasonably well-informed and intelligent Irish person . . ." In fact, now that the UK has decided to leave the EU, Ireland becomes an even more attractive location for a European base of operations. That makes It an even bigger act of folly to leave the EU.
There is a lot of damage control in the different comments from Apple representatives.
I particularly take issue with the line that Apple paid all taxes legally due.
I think few people doubt that, but one of the potentially most damaging claims from the investigation was that Apple supposedly decided how much was taxable in the first place and then duly paid all taxes on that amount in completely legal fashion.
So yes, what they are claiming is technically true, but behind that is the issue of companies deciding for themselves what to make available for taxation.
One would expect this kind of behaviour (which isn't limited to Apple) will change in the future in the EU as all the investigations conclude and rulings are made which will serve as the basis for new practices. Whether Apple is found to have received what amounts to state aid or not will be decided down the line, but the fact the investigation was formerly concluded and the summary made public has helped to shed more light on the inner workings of multi national companies.
Tim Cook attended different meetings in Ireland and Brussels with the EU team carrying out the investigation and knows first hand exactly what the case against Apple is based on. Some of those meetings were reportedly 'heated'.
With a little luck these kinds of investigations will lead to a fairer system in the future.
Are their any corporate tax systems anywhere that aren't based on companies applying accounting rules to determine themselves how much taxes they pay? Corporate finances are incredibly complex for multinational corporations. Of course corporations do these calculations themselves, but to say that they "decide for themselves what to make available for taxation" is disingenuous. When some tax authority decides that the company didn't calculate things corrected, they get called on it (as has happened here). The odd part of the this case is that it's the EU who's complaining rather than the jurisdiction who is owned (or isn't owed) the money.
Complexity yes. Rules, definitely.
It seems like ages ago that I read the summary of the investigation but if I recall correctly it was almost as if Apple was making its own rules.
Although it's Bloomberg, this article is a nice read to get a feel of what has happened along the timeline.
Also, huge companies have actively added to the complexity of some operations, no doubt with the idea of making things difficult to unravel.
These kinds of long investigations play a positive role in reigning in part of these practices independently of the final rulings.
Apple has already changed how it operates in Ireland although the reasons for change vart depending on who you listen to.
The reason for the change which (I think) you are alluding to is that Ireland changed its tax rules. For whatever reasons - e.g., pressure from other members of the EU - it felt it should change certain general tax policies which had allowed Apple to operate, when it comes to Irish taxes, as it previously had. That's fine. What isn't fine is that the European Commission is, for all intents and purposes, trying to make the effects of those changes apply retroactively.
If you read the European Commission's full decision (of August 30th, 2016), what this is about becomes transparent. It is only superficially about the notion that Apple got a selective advantage from Ireland. Substantively it is about the Commission not liking Ireland's tax policies in general (and in combination) and the effects of those tax policies in particular situations.
Most of what the European Commission talks about in its decision is irrelevant if the issue really is demonstrating that Apple received a selective advantage from Ireland. It's only relevant if the issue is demonstrating that Ireland's tax policies are inappropriate. Also, the decision merely begs the question on a number of relevant points; it doesn't bother to substantively support the conclusion it reaches on those points.
The decision also finds repeatedly, and for various reasons, that Irish tax policy as it was applied to Apple's situation doesn't yield results which are consistent with "a market-based outcome in line with the arm's length principle." The exact phrasing used differs somewhat, but the decision ad nauseam reaches that conclusion and relies on that notion. The decision itself, however, acknowledges that Ireland isn't required to have tax policy (e.g., with regard to transfer pricing) that yields such results - i.e., that applies an arm's length principle. Even though the decision recognizes that reality (and Irish autonomy when it comes to deciding such aspects of its tax policy), it goes on to pretend that the contrary is true. So much of what the decision builds its case on is the notion that what Ireland did was wrong because it didn't require accounting (from Apple) which yielded results consistent with the application of an arm's length principle.
If the point was to establish that Irish tax policy was improper as not being consistent with that of other nations (and, e.g., recommendations of the OECD), then the decision does a fair job of supporting that conclusion. What it doesn't do is demonstrate that Apple received a selective advantage from Ireland. The decision pretends that it's doing the latter while substantively it's only doing the former, because if all the Commission can do is the former then it lacks authority to do much about the problem that it perceives - improper Irish tax policy.
You will not find any substantiated claims because AFAIK the EU has so far issued only a summary of its investigation (although highlights of the investigation were Included). However, these two paragraphs are important to keep in mind.
"Following an in-depth state aid investigation launched in June 2014, the European Commission has concluded that two tax rulings issued by Ireland to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991'
And
"This decision does not call into question Ireland's general tax system or its corporate tax rate.
I don't think it is superficially about selective tax breaks or focussed on the EU not liking Ireland's tax setup as the EU has made it explicitly clear in the summary that this is not about Ireland's tax model and mentions two specific instances where (according to the investigators) Apple received special treatment. Those two instances will be put under the microscope while the case is heard but obviously haven't been detailed publicly yet.
The European Commission has published its final decision in which it details its findings and lays out its arguments in support of those findings. It had previously only released what might be considered a summary of those findings and arguments, I suspect that is what you are referring to.
That said, of course the Commission claims (in vague, summary-like statements) that it isn't questioning Ireland's tax policies but rather has found that Apple received selective advantages. That's what it has to do in order to support taking the action that it has taken. My point is that those are superficial claims, they aren't effectively supported by the Commission's findings and arguments. If you read the full decision, you see that what the Commission is really taking issue with is Ireland's tax policies and how they have combined to allow Apple to do what it did. The decision does not demonstrate that Apple got selective advantages; it does not demonstrate that other similarly situated entities could not have done much the same things. It has not demonstrated that the tax rulings in question amount to special treatment of Apple rather than just guidance for case specific application of Ireland's general tax policies - which is the point of such rulings.
The point is, in the decision, the European Commission substantively demonstrated X (or, at least, made a substantive case in support of X). But X is not what it needed to demonstrate in order to take action. So it just superficially claimed that what it had demonstrated was Y, which is what it needed to demonstrate in order to take action. Its summaries and conclusions of course assert that it demonstrated Y, and that its focus wasn't X. But the findings and arguments made in the decision - what it actually focuses on and makes the case for - belie(s) that assertion.
Further, the decision is full of question begging and is logically inconsistent. For instance, it essentially and repeatedly argues that the implementation of Irish tax law with regard to Apple must represent selective advantage because it yields results which aren't consistent with market-based outcomes in keeping with the arm's length principle. That argument is based on the notion that Irish tax law, in general and in relevant regards, requires the application of such principle. However, the decision itself recognizes that Irish tax law isn't required to apply such principle and it does not demonstrate that Irish tax law does, in general and in relevant regards, apply such principle. In other words, the decision doesn't demonstrate selective advantage, it just demonstrates that Irish tax law doesn't do what it should do (i.e. what the Commission thinks it should do). Ireland claims that its tax policies don't, in relevant regards, apply such principle.
Until the case is formerly heard we won't know what the EU plans to put on the table as evidence to support its claims. The Irish Government and Apple already know, of course and have appealed.
The decision was taken on the fruits of a three year investigation and I haven't seen any of that documentarion made public and I don't know if it will be made public at some point in the future.
The two key points in the investigators' work supposedly led to a multi billion euro tax break for Apple. If they can be successfully demonstrated Apple will have no option but to return the calculated sum to the Irish government.
But whatever the outcome of the case, I'm convinced Apple declare far more taxable income than it has to date.
How about a link to the Bloomberg piece in the article? AI is usually pretty good about including the link in the first paragraph, but I can't find it in this article. I want to read about how a nation couldn't figure out how to set up an escrow account in less than 7 months.
Neither Apple nor Ireland is in a hurry to agree to escrow terms and have (control of) the funds transferred. They both think (with, I believe, good reason) that it's wrong that Ireland is being told to collect these funds.
Further, Ireland is in a sticky situation when it comes to these escrowed funds. If Ireland and Apple win on appeal, those funds will need to be returned to Apple with interest. However the funds are managed in the meantime, it can't be in a way that risks any losses while at the same time it needs to be in a way that generates enough return to cover the interest that should be paid to Apple upon their return. Ireland doesn't want to be out of pocket, so to speak, if it prevails in this case. The only way to ensure that won't be the case is to have Apple agree that, based on the escrow terms the parties agree to, Apple will be considered made whole by the return of whatever funds are in the escrow account at the end of the process. So Apple has the leverage here. Practically speaking, it can dictate the escrow terms that it wants. And Ireland isn't going to want to force the transfer of funds until Apple is satisfied with those terms.
Money held in escrow won't be earning interest, most likely.
It will certainly be earning returns, likely largely in the form of interest.
That's part of what the negotiations are about, and part of what has to be figured out. Who will be chosen to manage the funds? How much will they be paid? What kind of rules will they be operating under?
One way or another, the funds will be loaned to other entities or otherwise invested - similar to how they are held now. That being the case, those funds will earn returns (or, in theory possibly though in reality not likely, see loses). That's the reality of how money works, how it exists. It isn't going to be held as actual currency in a vault somewhere. It is going to exist as financial instruments or on account with other entities that will pay interest in return for the use of that money.
It may be a point of negotiation, but there's no requirement that money held in escrow must earn interest.
There is a lot of damage control in the different comments from Apple representatives.
I particularly take issue with the line that Apple paid all taxes legally due.
I think few people doubt that, but one of the potentially most damaging claims from the investigation was that Apple supposedly decided how much was taxable in the first place and then duly paid all taxes on that amount in completely legal fashion.
So yes, what they are claiming is technically true, but behind that is the issue of companies deciding for themselves what to make available for taxation.
One would expect this kind of behaviour (which isn't limited to Apple) will change in the future in the EU as all the investigations conclude and rulings are made which will serve as the basis for new practices. Whether Apple is found to have received what amounts to state aid or not will be decided down the line, but the fact the investigation was formerly concluded and the summary made public has helped to shed more light on the inner workings of multi national companies.
Tim Cook attended different meetings in Ireland and Brussels with the EU team carrying out the investigation and knows first hand exactly what the case against Apple is based on. Some of those meetings were reportedly 'heated'.
With a little luck these kinds of investigations will lead to a fairer system in the future.
Are their any corporate tax systems anywhere that aren't based on companies applying accounting rules to determine themselves how much taxes they pay? Corporate finances are incredibly complex for multinational corporations. Of course corporations do these calculations themselves, but to say that they "decide for themselves what to make available for taxation" is disingenuous. When some tax authority decides that the company didn't calculate things corrected, they get called on it (as has happened here). The odd part of the this case is that it's the EU who's complaining rather than the jurisdiction who is owned (or isn't owed) the money.
Complexity yes. Rules, definitely.
It seems like ages ago that I read the summary of the investigation but if I recall correctly it was almost as if Apple was making its own rules.
Although it's Bloomberg, this article is a nice read to get a feel of what has happened along the timeline.
Also, huge companies have actively added to the complexity of some operations, no doubt with the idea of making things difficult to unravel.
These kinds of long investigations play a positive role in reigning in part of these practices independently of the final rulings.
Apple has already changed how it operates in Ireland although the reasons for change vart depending on who you listen to.
The reason for the change which (I think) you are alluding to is that Ireland changed its tax rules. For whatever reasons - e.g., pressure from other members of the EU - it felt it should change certain general tax policies which had allowed Apple to operate, when it comes to Irish taxes, as it previously had. That's fine. What isn't fine is that the European Commission is, for all intents and purposes, trying to make the effects of those changes apply retroactively.
If you read the European Commission's full decision (of August 30th, 2016), what this is about becomes transparent. It is only superficially about the notion that Apple got a selective advantage from Ireland. Substantively it is about the Commission not liking Ireland's tax policies in general (and in combination) and the effects of those tax policies in particular situations.
Most of what the European Commission talks about in its decision is irrelevant if the issue really is demonstrating that Apple received a selective advantage from Ireland. It's only relevant if the issue is demonstrating that Ireland's tax policies are inappropriate. Also, the decision merely begs the question on a number of relevant points; it doesn't bother to substantively support the conclusion it reaches on those points.
The decision also finds repeatedly, and for various reasons, that Irish tax policy as it was applied to Apple's situation doesn't yield results which are consistent with "a market-based outcome in line with the arm's length principle." The exact phrasing used differs somewhat, but the decision ad nauseam reaches that conclusion and relies on that notion. The decision itself, however, acknowledges that Ireland isn't required to have tax policy (e.g., with regard to transfer pricing) that yields such results - i.e., that applies an arm's length principle. Even though the decision recognizes that reality (and Irish autonomy when it comes to deciding such aspects of its tax policy), it goes on to pretend that the contrary is true. So much of what the decision builds its case on is the notion that what Ireland did was wrong because it didn't require accounting (from Apple) which yielded results consistent with the application of an arm's length principle.
If the point was to establish that Irish tax policy was improper as not being consistent with that of other nations (and, e.g., recommendations of the OECD), then the decision does a fair job of supporting that conclusion. What it doesn't do is demonstrate that Apple received a selective advantage from Ireland. The decision pretends that it's doing the latter while substantively it's only doing the former, because if all the Commission can do is the former then it lacks authority to do much about the problem that it perceives - improper Irish tax policy.
You will not find any substantiated claims because AFAIK the EU has so far issued only a summary of its investigation (although highlights of the investigation were Included). However, these two paragraphs are important to keep in mind.
"Following an in-depth state aid investigation launched in June 2014, the European Commission has concluded that two tax rulings issued by Ireland to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991'
And
"This decision does not call into question Ireland's general tax system or its corporate tax rate.
I don't think it is superficially about selective tax breaks or focussed on the EU not liking Ireland's tax setup as the EU has made it explicitly clear in the summary that this is not about Ireland's tax model and mentions two specific instances where (according to the investigators) Apple received special treatment. Those two instances will be put under the microscope while the case is heard but obviously haven't been detailed publicly yet.
The European Commission has published its final decision in which it details its findings and lays out its arguments in support of those findings. It had previously only released what might be considered a summary of those findings and arguments, I suspect that is what you are referring to.
That said, of course the Commission claims (in vague, summary-like statements) that it isn't questioning Ireland's tax policies but rather has found that Apple received selective advantages. That's what it has to do in order to support taking the action that it has taken. My point is that those are superficial claims, they aren't effectively supported by the Commission's findings and arguments. If you read the full decision, you see that what the Commission is really taking issue with is Ireland's tax policies and how they have combined to allow Apple to do what it did. The decision does not demonstrate that Apple got selective advantages; it does not demonstrate that other similarly situated entities could not have done much the same things. It has not demonstrated that the tax rulings in question amount to special treatment of Apple rather than just guidance for case specific application of Ireland's general tax policies - which is the point of such rulings.
The point is, in the decision, the European Commission substantively demonstrated X (or, at least, made a substantive case in support of X). But X is not what it needed to demonstrate in order to take action. So it just superficially claimed that what it had demonstrated was Y, which is what it needed to demonstrate in order to take action. Its summaries and conclusions of course assert that it demonstrated Y, and that its focus wasn't X. But the findings and arguments made in the decision - what it actually focuses on and makes the case for - belie(s) that assertion.
Further, the decision is full of question begging and is logically inconsistent. For instance, it essentially and repeatedly argues that the implementation of Irish tax law with regard to Apple must represent selective advantage because it yields results which aren't consistent with market-based outcomes in keeping with the arm's length principle. That argument is based on the notion that Irish tax law, in general and in relevant regards, requires the application of such principle. However, the decision itself recognizes that Irish tax law isn't required to apply such principle and it does not demonstrate that Irish tax law does, in general and in relevant regards, apply such principle. In other words, the decision doesn't demonstrate selective advantage, it just demonstrates that Irish tax law doesn't do what it should do (i.e. what the Commission thinks it should do). Ireland claims that its tax policies don't, in relevant regards, apply such principle.
Until the case is formerly heard we won't know what the EU plans to put on the table as evidence to support its claims. The Irish Government and Apple already know, of course and have appealed.
The decision was taken on the fruits of a three year investigation and I haven't seen any of that documentarion made public and I don't know if it will be made public at some point in the future.
The two key points in the investigators' work supposedly led to a multi billion euro tax break for Apple. If they can be successfully demonstrated Apple will have no option but to return the calculated sum to the Irish government.
But whatever the outcome of the case, I'm convinced Apple declare far more taxable income than it has to date.
As I indicated, the European Commission has already detailed its findings and its arguments in support thereof. It published a lengthy final decision in which it tried to make the case that this kind of action is justified. Yes, on appeal evidence may be offered in support of certain factual assertions. But that's not what I'm criticizing; I'm not (for the most part) suggesting that the facts which the Commission relies on are false. I'm suggesting that the legal arguments it has made, even accepting certain facts as true, don't really make the case that Apple received selective advantages - they only make the case that Ireland's tax policies are improper. I would suggest to those that are really interested in the matter that they, if they haven't already, read the full decision.
As for the two key points you refer to, we don't have to rely on what they supposedly mean - i.e., how others characterize them in general. We can read the more detailed arguments and consider for ourselves what they really mean, whether they really amount to selective advantages.
As for Apple declaring more taxable income, I'm guessing you mean for Irish taxing purposes? If so, then yes, Apple already does because Ireland changed its tax policies such that Apple and others wouldn't be able to do some of the things to avoid (Irish) taxation of some income that they could before.
How about a link to the Bloomberg piece in the article? AI is usually pretty good about including the link in the first paragraph, but I can't find it in this article. I want to read about how a nation couldn't figure out how to set up an escrow account in less than 7 months.
Neither Apple nor Ireland is in a hurry to agree to escrow terms and have (control of) the funds transferred. They both think (with, I believe, good reason) that it's wrong that Ireland is being told to collect these funds.
Further, Ireland is in a sticky situation when it comes to these escrowed funds. If Ireland and Apple win on appeal, those funds will need to be returned to Apple with interest. However the funds are managed in the meantime, it can't be in a way that risks any losses while at the same time it needs to be in a way that generates enough return to cover the interest that should be paid to Apple upon their return. Ireland doesn't want to be out of pocket, so to speak, if it prevails in this case. The only way to ensure that won't be the case is to have Apple agree that, based on the escrow terms the parties agree to, Apple will be considered made whole by the return of whatever funds are in the escrow account at the end of the process. So Apple has the leverage here. Practically speaking, it can dictate the escrow terms that it wants. And Ireland isn't going to want to force the transfer of funds until Apple is satisfied with those terms.
Money held in escrow won't be earning interest, most likely.
It will certainly be earning returns, likely largely in the form of interest.
That's part of what the negotiations are about, and part of what has to be figured out. Who will be chosen to manage the funds? How much will they be paid? What kind of rules will they be operating under?
One way or another, the funds will be loaned to other entities or otherwise invested - similar to how they are held now. That being the case, those funds will earn returns (or, in theory possibly though in reality not likely, see loses). That's the reality of how money works, how it exists. It isn't going to be held as actual currency in a vault somewhere. It is going to exist as financial instruments or on account with other entities that will pay interest in return for the use of that money.
It may be a point of negotiation, but there's no requirement that money held in escrow must earn interest.
I wasn't suggesting that there was a general requirement that money held in escrow must earn interest. In some cases - e.g., involving smaller amounts or where funds would likely be held for shorter periods of time - escrow arrangements wouldn't result in interest or other returns being earned. But in cases like this one, and certainly in this case in particular, escrow would be set up such that returns will be generated.
The parties involved aren't going to forego the ability to generate an extra billion or two dollars, regardless of which party ends up getting it in the end. If these funds weren't earning a return, that might cost one party or the other more money in the end. And, from a practical standpoint, there really isn't a way to hold those kinds of funds where they aren't earning some kind of return (or at risk of some kind of loss).
Based on the price and volume pattern, I'd guess that someone was unloading a large position and - for whatever reason - wanted to do so fairly quickly. That was pretty unusual volume for that time of day, especially relative to the volume on today's open.
Comments
http://www.redcresearch.ie/brexit-little-impact-positive-support-eu-ireland/
Further, Ireland is in a sticky situation when it comes to these escrowed funds. If Ireland and Apple win on appeal, those funds will need to be returned to Apple with interest. However the funds are managed in the meantime, it can't be in a way that risks any losses while at the same time it needs to be in a way that generates enough return to cover the interest that should be paid to Apple upon their return. Ireland doesn't want to be out of pocket, so to speak, if it prevails in this case. The only way to ensure that won't be the case is to have Apple agree that, based on the escrow terms the parties agree to, Apple will be considered made whole by the return of whatever funds are in the escrow account at the end of the process. So Apple has the leverage here. Practically speaking, it can dictate the escrow terms that it wants. And Ireland isn't going to want to force the transfer of funds until Apple is satisfied with those terms.
The reason for the change which (I think) you are alluding to is that Ireland changed its tax rules. For whatever reasons - e.g., pressure from other members of the EU - it felt it should change certain general tax policies which had allowed Apple to operate, when it comes to Irish taxes, as it previously had. That's fine. What isn't fine is that the European Commission is, for all intents and purposes, trying to make the effects of those changes apply retroactively.
If you read the European Commission's full decision (of August 30th, 2016), what this is about becomes transparent. It is only superficially about the notion that Apple got a selective advantage from Ireland. Substantively it is about the Commission not liking Ireland's tax policies in general (and in combination) and the effects of those tax policies in particular situations.
Most of what the European Commission talks about in its decision is irrelevant if the issue really is demonstrating that Apple received a selective advantage from Ireland. It's only relevant if the issue is demonstrating that Ireland's tax policies are inappropriate. Also, the decision merely begs the question on a number of relevant points; it doesn't bother to substantively support the conclusion it reaches on those points.
The decision also finds repeatedly, and for various reasons, that Irish tax policy as it was applied to Apple's situation doesn't yield results which are consistent with "a market-based outcome in line with the arm's length principle." The exact phrasing used differs somewhat, but the decision ad nauseam reaches that conclusion and relies on that notion. The decision itself, however, acknowledges that Ireland isn't required to have tax policy (e.g., with regard to transfer pricing) that yields such results - i.e., that applies an arm's length principle. Even though the decision recognizes that reality (and Irish autonomy when it comes to deciding such aspects of its tax policy), it goes on to pretend that the contrary is true. So much of what the decision builds its case on is the notion that what Ireland did was wrong because it didn't require accounting (from Apple) which yielded results consistent with the application of an arm's length principle.
If the point was to establish that Irish tax policy was improper as not being consistent with that of other nations (and, e.g., recommendations of the OECD), then the decision does a fair job of supporting that conclusion. What it doesn't do is demonstrate that Apple received a selective advantage from Ireland. The decision pretends that it's doing the latter while substantively it's only doing the former, because if all the Commission can do is the former then it lacks authority to do much about the problem that it perceives - improper Irish tax policy.
That's part of what the negotiations are about, and part of what has to be figured out. Who will be chosen to manage the funds? How much will they be paid? What kind of rules will they be operating under?
One way or another, the funds will be loaned to other entities or otherwise invested - similar to how they are held now. That being the case, those funds will earn returns (or, in theory possibly though in reality not likely, see loses). That's the reality of how money works, how it exists. It isn't going to be held as actual currency in a vault somewhere. It is going to exist as financial instruments or on account with other entities that will pay interest in return for the use of that money.
"Following an in-depth state aid investigation launched in June 2014, the European Commission has concluded that two tax rulings issued by Ireland to Apple have substantially and artificially lowered the tax paid by Apple in Ireland since 1991'
And
"This decision does not call into question Ireland's general tax system or its corporate tax rate.
I don't think it is superficially about selective tax breaks or focussed on the EU not liking Ireland's tax setup as the EU has made it explicitly clear in the summary that this is not about Ireland's tax model and mentions two specific instances where (according to the investigators) Apple received special treatment. Those two instances will be put under the microscope while the case is heard but obviously haven't been detailed publicly yet.
That said, of course the Commission claims (in vague, summary-like statements) that it isn't questioning Ireland's tax policies but rather has found that Apple received selective advantages. That's what it has to do in order to support taking the action that it has taken. My point is that those are superficial claims, they aren't effectively supported by the Commission's findings and arguments. If you read the full decision, you see that what the Commission is really taking issue with is Ireland's tax policies and how they have combined to allow Apple to do what it did. The decision does not demonstrate that Apple got selective advantages; it does not demonstrate that other similarly situated entities could not have done much the same things. It has not demonstrated that the tax rulings in question amount to special treatment of Apple rather than just guidance for case specific application of Ireland's general tax policies - which is the point of such rulings.
The point is, in the decision, the European Commission substantively demonstrated X (or, at least, made a substantive case in support of X). But X is not what it needed to demonstrate in order to take action. So it just superficially claimed that what it had demonstrated was Y, which is what it needed to demonstrate in order to take action. Its summaries and conclusions of course assert that it demonstrated Y, and that its focus wasn't X. But the findings and arguments made in the decision - what it actually focuses on and makes the case for - belie(s) that assertion.
Further, the decision is full of question begging and is logically inconsistent. For instance, it essentially and repeatedly argues that the implementation of Irish tax law with regard to Apple must represent selective advantage because it yields results which aren't consistent with market-based outcomes in keeping with the arm's length principle. That argument is based on the notion that Irish tax law, in general and in relevant regards, requires the application of such principle. However, the decision itself recognizes that Irish tax law isn't required to apply such principle and it does not demonstrate that Irish tax law does, in general and in relevant regards, apply such principle. In other words, the decision doesn't demonstrate selective advantage, it just demonstrates that Irish tax law doesn't do what it should do (i.e. what the Commission thinks it should do). Ireland claims that its tax policies don't, in relevant regards, apply such principle.
In fact, now that the UK has decided to leave the EU, Ireland becomes an even more attractive location for a European base of operations. That makes It an even bigger act of folly to leave the EU.
Apple: Let's keep billions offshore and run all our EU profits through the Double Irish!!
Reality: Seems like people want to keep their money no matter how many inclusive platitudes they espouse.
The decision was taken on the fruits of a three year investigation and I haven't seen any of that documentarion made public and I don't know if it will be made public at some point in the future.
The two key points in the investigators' work supposedly led to a multi billion euro tax break for Apple. If they can be successfully demonstrated Apple will have no option but to return the calculated sum to the Irish government.
But whatever the outcome of the case, I'm convinced Apple declare far more taxable income than it has to date.
As for the two key points you refer to, we don't have to rely on what they supposedly mean - i.e., how others characterize them in general. We can read the more detailed arguments and consider for ourselves what they really mean, whether they really amount to selective advantages.
As for Apple declaring more taxable income, I'm guessing you mean for Irish taxing purposes? If so, then yes, Apple already does because Ireland changed its tax policies such that Apple and others wouldn't be able to do some of the things to avoid (Irish) taxation of some income that they could before.
I wasn't suggesting that there was a general requirement that money held in escrow must earn interest. In some cases - e.g., involving smaller amounts or where funds would likely be held for shorter periods of time - escrow arrangements wouldn't result in interest or other returns being earned. But in cases like this one, and certainly in this case in particular, escrow would be set up such that returns will be generated.
The parties involved aren't going to forego the ability to generate an extra billion or two dollars, regardless of which party ends up getting it in the end. If these funds weren't earning a return, that might cost one party or the other more money in the end. And, from a practical standpoint, there really isn't a way to hold those kinds of funds where they aren't earning some kind of return (or at risk of some kind of loss).