France and Germany seek to plug tax loopholes exploited by Apple, other tech firms

Posted:
in General Discussion edited August 2017
France is working with Germany on European Union reforms aimed at plugging loopholes U.S. technology companies like Apple use to minimize taxes, tactics that give foreign entities a leg up on local competition.




French Finance Minister Bruno LeMaire on Friday announced the plans last week, saying France will propose "simpler rules" for a "real taxation" on tech firms, reports Bloomberg.

"Europe must learn to defend its economic interest much more firmly -- China does it, the U.S. does it," Le Maire said. "You cannot take the benefit of doing business in France or in Europe without paying the taxes that other companies -- French or European companies -- are paying."

France and Germany already discussed tax issues and potential solutions at a joint cabinet meeting last month, the report said. German finance ministry spokesman Denis Kolberg on Monday said the two countries will investigate specific proposals after Germanys national election on Sept. 24.

French President Emmanuel Macron's government is spearheading the initiative, which looks to close loopholes in the European tax system that currently work in favor of foreign companies like Amazon, Apple, Facebook, Google and other foreign tech firms. Macron is calling on 19 European countries to follow suit as he seeks to keep campaign promises of reducing domestic corporate tax rates by 25 percent.

Tech companies, through complex financial maneuvering, are able to reduce or completely skip out on hefty corporate taxes by shifting revenue across borders to states with favorable rates. Apple, for example, employs a "Double Irish with a Dutch Sandwich" scheme that funnels overseas profits through the Netherlands, as well as other ports, and into Ireland, where the company is not considered a tax resident. The scheme allowed Apple to pay extremely low tax rates, at some points down to 0.005 percent.

A recent European Commission investigation into Apple's tax practices found rates on the company's European profits illegally low, a determination that resulted in a $15.2 billion bill. Ireland, which has stood by Apple throughout the EU process, was subsequently accused of granting illegal tax benefits to the company and is being forced to recoup the funds. Both Apple and Ireland are appealing the ruling.
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Comments

  • Reply 1 of 48
    steven n.steven n. Posts: 1,215member
    Legislation vs the kangaroo European Commission's  whim of the week re-interpretation of existing laws and applying them retroactively is the correct way to fix this. Get the member states to agree to concrete laws placing every country on the same competitive footing.
    mike1jbdragon
  • Reply 2 of 48
    22july201322july2013 Posts: 2,355member
    I am not a lawyer or a constitutional expert, but I thought in some countries it was written in the constitution that laws of punishment cannot be made retroactive. I have no problem with any country changing its mind on any law including tax laws, but those that do change the law frequently or retroactively risk the chance that companies won't invest there. Which is actually good news for countries with stable laws like the USA.
    baconstangSpamSandwichjbdragon
  • Reply 3 of 48
    tallest skiltallest skil Posts: 43,399member
    steven n. said:
    Legislation vs the kangaroo European Commission's  whim of the week re-interpretation of existing laws and applying them retroactively is the correct way to fix this.
    You know, if those countries actually had control over their own laws, they wouldn't have this problem. Imagine that; a nation actually being sovereign.
    JanNLSpamSandwichjbdragonbshankdasanman69
  • Reply 4 of 48
    rob53rob53 Posts: 2,526member
    steven n. said:
    Legislation vs the kangaroo European Commission's  whim of the week re-interpretation of existing laws and applying them retroactively is the correct way to fix this.
    You know, if those countries actually had control over their own laws, they wouldn't have this problem. Imagine that; a nation actually being sovereign.
    Someone thought making Europe one big happy family would work, but anyone from a large family knows that as the kids grow up, there are guaranteed conflicts because each kid (member nation) thinks their way is the best. Maybe the EU was good for something at one time but now it looks like any other failed corporation where each department what's to tell the other one what to do. I think the leaders of the EU need to go to a feel-good session and get back to reality, finding ways to help each country while not driving businesses away.
    tallest skiljbdragonbshank
  • Reply 5 of 48
    sflocalsflocal Posts: 5,619member
    rob53 said:
    steven n. said:
    Legislation vs the kangaroo European Commission's  whim of the week re-interpretation of existing laws and applying them retroactively is the correct way to fix this.
    You know, if those countries actually had control over their own laws, they wouldn't have this problem. Imagine that; a nation actually being sovereign.
    Someone thought making Europe one big happy family would work, but anyone from a large family knows that as the kids grow up, there are guaranteed conflicts because each kid (member nation) thinks their way is the best. Maybe the EU was good for something at one time but now it looks like any other failed corporation where each department what's to tell the other one what to do. I think the leaders of the EU need to go to a feel-good session and get back to reality, finding ways to help each country while not driving businesses away.
    Or, a large family will have that one parasite that sucks all the money and expects others to take up the work.  Hello Greece?
    SpamSandwichmike1GeorgeBMac
  • Reply 6 of 48
    tallest skiltallest skil Posts: 43,399member
    sflocal said:
    Or, a large family will have that one parasite that sucks all the money and expects others to take up the work.  Hello Greece?
    The average Greek is working a full 40% longer than the average German. Sounds more like the problem is socialism–and all its attendant fantasies and mental illnesses–than “who works longer” or “harder” or “better.” *sound of oven timer* And that’s my cue to drop the subject. I’m out now. All in good fun.
    SpamSandwichmike1jbdragon
  • Reply 7 of 48
    bshankbshank Posts: 200member
     Can anyone tell me how European competition husband I would indicated by Apple only because Apple pays less taxes? Was Nokia going to come out with an iPhone killer but it had to pay a little more tax and couldn't bring it to market? Then you get the tax excuse out of the way when Microsoft buys Nokia and enjoys these lower taxes. Still no iPhone killer. Hmmm... maybe it's not the taxes 🤔
    watto_cobratallest skiljbdragon
  • Reply 8 of 48
    bshankbshank Posts: 200member
     Can anyone tell me how European competition has been out-innovated by Apple only because Apple pays less taxes? Was Nokia going to come out with an iPhone killer but it had to pay a little more tax and couldn't bring it to market? Then you get the tax excuse out of the way when Microsoft buys Nokia and enjoys these lower taxes. Still no iPhone killer. Hmmm... maybe it's not the taxes ߤ伯textarea>
    watto_cobrajbdragon
  • Reply 9 of 48
    JanNLJanNL Posts: 307member
    steven n. said:
    Legislation vs the kangaroo European Commission's  whim of the week re-interpretation of existing laws and applying them retroactively is the correct way to fix this.
    You know, if those countries actually had control over their own laws, they wouldn't have this problem. Imagine that; a nation actually being sovereign.
    That's it exactly.
    SpamSandwichtallest skiljbdragon
  • Reply 10 of 48
    I am not a lawyer or a constitutional expert, but I thought in some countries it was written in the constitution that laws of punishment cannot be made retroactive. I have no problem with any country changing its mind on any law including tax laws, but those that do change the law frequently or retroactively risk the chance that companies won't invest there. Which is actually good news for countries with stable laws like the USA.
    Germany and France are looking into proposing new laws or changes to existing laws - that won't be and can't be used retrospectively to punish. Similar to how I can legally drive my 1972 VW campervan on black plates and my 5 year old can legally NOT wear a seatbelt in the back (not that I would do such a thing) - these things are illegal on modern day cars. The Irish case however is completely different in that the Irish government contravened existing EU law in undercutting fellow member states with favourable tax deals. 
  • Reply 11 of 48
    Rayz2016Rayz2016 Posts: 6,779member
    I am not a lawyer or a constitutional expert, but I thought in some countries it was written in the constitution that laws of punishment cannot be made retroactive. I have no problem with any country changing its mind on any law including tax laws, but those that do change the law frequently or retroactively risk the chance that companies won't invest there. Which is actually good news for countries with stable laws like the USA.
    But not having a stable president can often negate those advantages. 

    And who said anything about applying these laws retroactively? The EU case against Apple states that the Irish broke existing EU rules by offering Apple a special deal that they didn't offer to other companies. This is not a retroactive application because the law existed while Ireland was allegedly breaking it. 

    The problem I have the EU is judge and jury in these cases, which is ridiculous. (Have you ever seen them lose? Funny that).
  • Reply 12 of 48
    monstrositymonstrosity Posts: 2,234member
    I look forward to the day the EU crumbles. Brexit FTW.
    SpamSandwich
  • Reply 13 of 48
    YvLyYvLy Posts: 89member
    adm1 said:
    The Irish case however is completely different in that the Irish government contravened existing EU law in undercutting fellow member states with favourable tax deals. 
    Wrong. When I moved to Ireland (1991) the Irish already had tax laws aimed at persuading companies from the IT sector to set up business there. That was long before the Euro (1995) and long before the European Parliament had any real power. (Back then even smoking was allowed in planes.)The fact is: NOBODY can be blamed, not APPLE, neither the IRISH, nor the European Parliament. Its simply that times are changing .... and so do laws. I doubt that a back-payment will ever be enforced ...
    SpamSandwich
  • Reply 14 of 48
    YvLyYvLy Posts: 89member
    Quote: The Irish case however is completely different in that the Irish government contravened existing EU law in undercutting fellow member states with favourable tax deals. --- Wrong. When I moved to Ireland (1991) the Irish already had tax laws aimed at persuading companies from the IT sector to set up business there. That was long before the Euro (1995) and long before the European Parliament had any real power. (Back then even smoking was allowed in planes.)The fact is: NOBODY can be blamed, not APPLE, neither the IRISH, nor the European Parliament. Its simply that times are changing .... and so do laws. I doubt that a back-payment will ever be enforced ...
    SpamSandwich
  • Reply 15 of 48
    avon b7avon b7 Posts: 5,767member
    YvLy said:
    Quote: The Irish case however is completely different in that the Irish government contravened existing EU law in undercutting fellow member states with favourable tax deals. --- Wrong. When I moved to Ireland (1991) the Irish already had tax laws aimed at persuading companies from the IT sector to set up business there. That was long before the Euro (1995) and long before the European Parliament had any real power. (Back then even smoking was allowed in planes.)The fact is: NOBODY can be blamed, not APPLE, neither the IRISH, nor the European Parliament. Its simply that times are changing .... and so do laws. I doubt that a back-payment will ever be enforced ...
    Quote: The Irish case however is completely different in that the Irish government contravened existing EU law in undercutting fellow member states with favourable tax deals. --- Wrong."

    It isn't 'wrong'. The EU is claiming that the Irish government gave 'what amounts to illegal state aid'. Of course that would imply that other member states were put at a disadvantage. This based on existing EU rules. There is no moving of the goalposts as some have suggested.

    Who is actually right in all this will be decided at a future date but, as if today, these are the basic facts.

    I agree with the rest of your post in general, and, as a staunch pro European, feel that we have progressed incredibly well as Europeans in general. There are always exceptions but for me, I'm positive overall. 

    My only gripe is with some of my fellow Brits for the Brexit tragedy.


    fullesgatorguy
  • Reply 16 of 48
    carnegiecarnegie Posts: 944member
    adm1 said:
    I am not a lawyer or a constitutional expert, but I thought in some countries it was written in the constitution that laws of punishment cannot be made retroactive. I have no problem with any country changing its mind on any law including tax laws, but those that do change the law frequently or retroactively risk the chance that companies won't invest there. Which is actually good news for countries with stable laws like the USA.
    Germany and France are looking into proposing new laws or changes to existing laws - that won't be and can't be used retrospectively to punish. Similar to how I can legally drive my 1972 VW campervan on black plates and my 5 year old can legally NOT wear a seatbelt in the back (not that I would do such a thing) - these things are illegal on modern day cars. The Irish case however is completely different in that the Irish government contravened existing EU law in undercutting fellow member states with favourable tax deals. 
    Substantively, the European Commission's arguments against Ireland are about Ireland (previously) having (what the Commission considers) improper tax policies, not about Ireland having given Apple special deals. I know that the Commission superficially claims that its actions in the Ireland - Apple case are based on the latter. To exercise the authority it asserted, that's what it has to claim. But its own supporting arguments don't really support that contention.

    If you believe the European Commission's actions are justified, i.e. that it demonstrated that Ireland gave Apple a selective advantage, then I'd ask: What is it that Ireland let Apple do that it would have prohibited a different, similarly situated, company from doing? Responsive to that inquiry I'd ask two pointed questions...

    (1) During the period of time that the Commission's findings relate to, did Irish tax policy require that an arm's length principle be applied to profit allocation between Irish and non-Irish branches of non-resident Irish companies?

    (2) If the answer to the first question is no, was such Irish tax policy in violation of any EU rules? In other words, did EU rules require Ireland (and presumably other member states) to have tax policies which required the application of an arm's length principle in such contexts?
    edited August 2017
  • Reply 17 of 48
    GeorgeBMacGeorgeBMac Posts: 9,503member
    steven n. said:
    Legislation vs the kangaroo European Commission's  whim of the week re-interpretation of existing laws and applying them retroactively is the correct way to fix this.
    You know, if those countries actually had control over their own laws, they wouldn't have this problem. Imagine that; a nation actually being sovereign.
    Every form of government has its advantages and disadvantages....   Democracy has advantages over dictatorships and vice versa -- the same with nationalism vs collectivism....

    But those who argue most vehemently are usually looking at only one side of the coin.
  • Reply 18 of 48
    GeorgeBMacGeorgeBMac Posts: 9,503member
    For all those bashing the EU for being inferior to separate nations:   You need to remember that European nations have been warring with each since the Roman Empire collapsed.   The EU is an effort to work together rather than fight one another.   There's no guarantee that it will work -- it largely depends on execution rather than design.  But, we know that the other way simply leads to war after war after war....   It's profitable for a few, but most object to having their kids killed.
  • Reply 19 of 48
    tallest skiltallest skil Posts: 43,399member
    adm1 said:
    ...that won't be and can't be used retrospectively to punish.
    I'm not sure what you're saying here. Governments can–and will–do absolutely everything they can get away with. The US Constitution, for example, is not a magical piece of paper that actually prevents the government from doing things it says they can't do. It is simply a social framework around which the government was originally designed. The rights protected by the Constitution have been completely and utterly destroyed, save for the first amendment. It's literally the only thing that remains. You don't even have the right to life anymore. So when you say that a law won't be applied retrospectively, on what are you basing that claim? The word or good faith of the legislators themselves? Always say to yourself: you mean the ones who knowingly lied about the intent of the Immigration and Nationality Act of 1965? and you mean the ones who knowingly lied about the intent of the Affordable Care Act?
    ...warring... 
    Okay, one last thing to say: Please drop this canard. It's literally the only "argument" any EU supporter has ever been able to use, and it's not even legtimate. Conflict is part of the human condition and always will be. There is absolutely nothing you can do to stop it, nor should you. You know what the response is to social engineering? The mass execution of the people who try to do it. We don't take kindly to that sort of thing. Liberalism is an idealistic ideology, grounded in French enlightenment thinking, in which some believe that, with the right amount of education and wise government effort, you can eliminate the impulse for violence and natural human vices, and make these faults the exceptions rather than the norm. It’s a lovely ideology. Very nice, idealistic, utopian. It promises peace, happiness, a certain equality and mutual understanding. How could people not fall in love with it? Unfortunately, it runs completely at odds with 13,000 years of human history. We are creatures of conflict by our very nature. We’ve been killing each other with rocks since the very beginning, and not even for good (meaning practical) reasons. We understand sin is bad; we fall into it regardless. There are too many temptations, too many inclinations. Limited resources, conflicting personal view sand opinions, disagreements over everything under the sun. In the end, it’s a naive and unrealistic way of thinking that seeks to wish away the harsh truths of the world, almost pretending that they don’t exist. Should we give up striving forward to do better? Absolutely not. We should always try to do better with our kind. But we shouldn’t lie to ourselves into thinking that all can be resolved with a bit of education here, some funding there, and a few rules over there. This is something that goes down to our very nature, to who we really are. Just giving some people some “rights” that we made up won’t solve everything just like that. The modern liberal (I’m talking about the average one; the properly educated ones tend to be a bit more mature) just can’t accept this. They want instant gratification, and will wage war against real and perceived obstructions to their vision of ideal society. The worst part is, it’s an endless cycle. There must always be more enemies for the liberals to combat. There must always be more wrongs to be corrected. If there isn’t, the whole thing falls apart.
    GeorgeBMac said:
    Democracy has advantages over dictatorships and vice versa
    Democracy is dictatorship. It's just "decentralized." It gives the appearance of multiple people dictating rule, when in reality it's just oligarchy.
    But those who argue most vehemently are usually looking at only one side of the coin.
    Almost as though truth is objective or something.  :p ;)
    edited August 2017
  • Reply 20 of 48
    steven n.steven n. Posts: 1,215member
    avon b7 said:
    YvLy said:
    Quote: The Irish case however is completely different in that the Irish government contravened existing EU law in undercutting fellow member states with favourable tax deals. --- Wrong. When I moved to Ireland (1991) the Irish already had tax laws aimed at persuading companies from the IT sector to set up business there. That was long before the Euro (1995) and long before the European Parliament had any real power. (Back then even smoking was allowed in planes.)The fact is: NOBODY can be blamed, not APPLE, neither the IRISH, nor the European Parliament. Its simply that times are changing .... and so do laws. I doubt that a back-payment will ever be enforced ...
    Quote: The Irish case however is completely different in that the Irish government contravened existing EU law in undercutting fellow member states with favourable tax deals. --- Wrong."

    It isn't 'wrong'. The EU is claiming that the Irish government gave 'what amounts to illegal state aid'. Of course that would imply that other member states were put at a disadvantage. This based on existing EU rules. There is no moving of the goalposts as some have suggested.

    Who is actually right in all this will be decided at a future date but, as if today, these are the basic facts.

    I agree with the rest of your post in general, and, as a staunch pro European, feel that we have progressed incredibly well as Europeans in general. There are always exceptions but for me, I'm positive overall. 

    My only gripe is with some of my fellow Brits for the Brexit tragedy.


    Of course the goal post is a moving goal post. Otherwise, this would have been brought up 30+ years ago. But the EC is likeva patent troll looking for money and what constitutes "illegal state aid" is HIGHLY arbitrary.

    the EC has turned into a kangaroo court at best and is embarrassing as Trump. 
    bshank
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