Going back to the beginning - so often necessary to set the record straight tin convoluted and corrupt matters - which this definitely IS:
1) Apple wanted to do business in Ireleand
2) Ireland said "OK USA" (sorry. Bloodsport reference)
3) Ireland set the tax rate (any problem here was between Ireland the the EU - not Apple)
4) Apple agreed.
5) Business was done that benefitted Apple and Ireland - and by extension, the EU.
6) years later, the EU has an issue with this.
7) EU goes after Ireland and Apple.
8) Stupdity is on public display.
The EU is now trying to force people to pay for something they don't like - but which was never wrong.
You can change the rate NOW, but there is no such thing as RECOVERY in this case, because NOTHING IS OWED. Apple has payed what they owed. period.
time for a new strategy for the bad guys. Ireland can prosper without the EU.
But cut off Ireland AND Britain? Shooting itself in the foot - some try to say they benefitted from the EU - but the reality is that they are contributors.
the EU would suffer if this keeps up.
A good analysis -- until it got to the point that the EU benefited from the Apple deal rather than being harmed. The rest of your case is then negated because it rests on a false premise...
Why? Did EU not get part of the taxes Apple paid, through Ireland? If so, then is it considered harmful? Or do you mean, "being harmed" equals to "not getting enough money, according to EU wishes and attempts to apply law backwards in time passed the date it was signed into law?"
Of course now, EU is losing one if its key members, so they have to replace that income that Britain paid, with some other means of extracting money in order to continue running their little sh+tshow. Hence, all of a sudden, everyone is agitates and scrambling to find new sources of "income". That includes fining Google for "monopoly" even if they are not a monopoly in search engines, fining Apple for "underpaying taxes" in Ireland, even thought Apple followed the law of that country.
Great spin -- as well as a pretty good rewrite of history. .... It's the foundation of all great right-wing "thinkers": spin and lies...
Like all anti-taxers, Ireland entices multi-nationals to share in the benefits of a stable, well run society but who don't want to pay their part when the bill comes. ... Any waiter/waitress sees them on a regular basis. The ones who order the expensive appetizer and dessert and glasses of wine and then says: "How about we split the bill?"
Ireland cheated. And they got caught.
They "got caught" therefore their punishment is to receive billions of dollars from Apple? That makes zero sense. If the EU determines that Ireland's tax incentives are illegal then they should compel Ireland to change those laws. But the retroactive part of this is crazy.
Imagine that the Federal government in the US decided that Maryland's property taxes were "unfair" and illegal because some people got tax breaks that others didn't get. The fix wouldn't be to force people--who complied 100% with the laws in Maryland at the time--to pay back taxes on 5 years of income. If you really wanted to "punish" Maryland for this behavior, you should require them to refund taxes to others who should have been given these same breaks. That would be more fair than the alternative.
Ireland got caught by the EU for breaking its laws in order to bring in Apple business. Why is that hard to understand?
And, I like your idea of penalizing a state that undermines interstate commerce in order to produce a level playing field for our country. I've had it with corporations moving out of my state to take advantage of temporary incentives from another state and leaving their old state with empty hulks rusting away along with high unemployment rates. Very foolish and wasteful way for us to manage our country. ... It's nothing more than an internal variation of Trump's war on international trade.
I'm not an international lawyer (or any kind of lawyer) so I don't know if Ireland broke EU law or not. But I'm perfectly willing to concede that it's possible that Ireland violated some EU law regarding tax preference (although Ireland insists it didn't and the rules that applied to Apple also applied to other companies).
My point is, if Ireland broke the law (for the sake of argument), WTF is Apple paying the price and Ireland getting the benefit? If Ireland broke EU law, fine Ireland and compel them to fix their tax code. But going after entities that acted in good faith years ago for Ireland's screw up (hypothetically), is insane. What this would tell me as a businessman is "be careful about doing business in the EU because they can retroactively change the rules of the game with catastrophic consequences for your business." That's not good for the EU.
Did Ireland break EU laws? That's what the courts decide. And its sounding like they did. But, your question: "WTF is Apple paying the price". They aren't. The case is against Ireland.
Further, you ask/state: "going after entities that acted in good faith years ago for Ireland's screw up" I am not at all sure that Apple was all that innocent. Ireland has been known for many years as a tax haven nation similar to off-shore islands like the Caymen's... While I don't blame Apple for taking advantage of legal loopholes, I do think that these havens from taxes and the rule of law need to be shut down.
But attempting to collect taxes retroactively is terrible policy and is legally and ethically dodgy.
If they demonstrate it was an illegal state aid, retroactive collection (without fines) is just the best case.
I agree. But where is the evidence? They have presented none as far as I know. Ireland strongly disagrees and says all companies have been treated the same and Apple has not received any special treatment.
But attempting to collect taxes retroactively is terrible policy and is legally and ethically dodgy.
If they demonstrate it was an illegal state aid, retroactive collection (without fines) is just the best case.
I agree. But where is the evidence? They have presented none as far as I know. Ireland strongly disagrees and says all companies have been treated the same and Apple has not received any special treatment.
The EU Commission released boatloads of evidence supporting their accusations. If you spend a few minutes searching you can find it. Whether it all holds up at a High Court should it go that far, perhaps not. Or perhaps so.
Ireland is in a tricky spot when it comes to collecting these funds. I think I made that point a few months ago when this collection issue was in the news. Apple has the leverage when it comes to negotiating the escrow terms. Ireland needs Apple to agree to terms more than Apple needs Ireland to, which means that Apple gets to dictate what those terms are.
It also might be tricky legally for Ireland to try to use government authority to compel Apple to remit the funds, as what it's being told (by the European Commission) to do runs counter to its own laws. Its own laws and tax policies (as they existed during the relevant time period) don't dictate that Apple owes this money.
None of that is meant to suggest that Ireland really wants to collect these funds.
But attempting to collect taxes retroactively is terrible policy and is legally and ethically dodgy.
If they demonstrate it was an illegal state aid, retroactive collection (without fines) is just the best case.
I agree. But where is the evidence? They have presented none as far as I know. Ireland strongly disagrees and says all companies have been treated the same and Apple has not received any special treatment.
The EU Commission released boatloads of evidence supporting their accusations. If you spend a few minutes searching you can find it. Whether it all holds up at a High Court should it go that far, perhaps not. Or perhaps so.
Have you read the European Commission's full decision (of August 30th, 2016) in this matter? It superficially (and repeatedly) asserts that Ireland gave Apple a selective advantage. But while it goes on at length ostensibly supporting that assertion, it never substantively does. It substantively supports a different assertion, i.e. that Ireland's tax policies were (in combination and because of their effects in some situations) improper. But it acknowledges that Ireland is free to choose such tax policies.
The European Commission lacks authority to take the actions it did against Ireland based on Ireland's tax policies not having been what the European Commission (and others) would consider proper. So it pretends that it demonstrated a selective advantage even though it didn't really try to do so. The European Commission's substantive arguments focused on supporting the idea that Ireland's tax policies were improper, not on supporting the idea that Apple got a selective advantage.
In order to do A, the Commission needed to demonstrate X. So it asserted X, demonstrated Y, claimed to have demonstrated X, and did A.
I've asked others this question, and never gotten a substantive answer: If Ireland allowed Apple to do something that it didn't allow other similarly situated parties (who desired to do that something) to do, what specifically is that something?
Use transfer pricing not based on the application of an arm's length principle? Not be considered tax resident in Ireland, under certain circumstances, even though they were incorporated in Ireland and weren't considered tax resident anywhere else? Use transfer pricing between Irish and non-Irish branches of Irish corporations? Something else? Some combination? I'd like for someone to tell what specifically it is that they believe Apple was allowed to do which other similarly situated parties would not have been allowed to do.
But attempting to collect taxes retroactively is terrible policy and is legally and ethically dodgy.
If they demonstrate it was an illegal state aid, retroactive collection (without fines) is just the best case.
I agree. But where is the evidence? They have presented none as far as I know. Ireland strongly disagrees and says all companies have been treated the same and Apple has not received any special treatment.
The EU Commission released boatloads of evidence supporting their accusations. If you spend a few minutes searching you can find it. Whether it all holds up at a High Court should it go that far, perhaps not. Or perhaps so.
Have you read the European Commission's full decision (of August 30th, 2016) in this matter? It superficially (and repeatedly) asserts that Ireland gave Apple a selective advantage. But while it goes on at length ostensibly supporting that assertion, it never substantively does. It substantively supports a different assertion, i.e. that Ireland's tax policies were (in combination and because of their effects in some situations) improper. But it acknowledges that Ireland is free to choose such tax policies.
The European Commission lacks authority to take the actions it did against Ireland based on Ireland's tax policies not having been what the European Commission (and others) would consider proper. So it pretends that it demonstrated a selective advantage even though it didn't really try to do so. The European Commission's substantive arguments focused on supporting the idea that Ireland's tax policies were improper, not on supporting the idea that Apple got a selective advantage.
In order to do A, the Commission needed to demonstrate X. So it asserted X, demonstrated Y, claimed to have demonstrated X, and did A.
I've asked others this question, and never gotten a substantive answer: If Ireland allowed Apple to do something that it didn't allow other similarly situated parties (who desired to do that something) to do, what specifically is that something?
Use transfer pricing not based on the application of an arm's length principle? Not be considered tax resident in Ireland, under certain circumstances, even though they were incorporated in Ireland and weren't considered tax resident anywhere else? Use transfer pricing between Irish and non-Irish branches of Irish corporations? Something else? Some combination? I'd like for someone to tell what specifically it is that they believe Apple was allowed to do which other similarly situated parties would not have been allowed to do.
Yes I have read it, more than once. I also followed the linked documents establishing that Apple received a very special tax rate purportedly intended to apply to their Irish manufacturing activities (which would include the now transferred out of the US and very profitable intellectual property licensing reading on iPhones and other Apple products sold in foreign markets). And what basis was given for the revenue's that Apple would make available for taxation? An apparently random one suggested by Apple and accepted by the Irish tax agency representative in private meetings, and in practice FAR below the already quite low standard 12.5% corporate rate. IIRC it limited Apple's tax exposure to a few million dollars. Would you claim that was a tax rate or even tax basis available to all other Irish corporations? That's at least one instance off the top of my head.
FWIW now that the "non-taxable in any state" tax-avoidance scheme has been widely exposed the Irish have closed that little known and impossible for most companies to use loophole and sunsetting Apple using it for tax avoidance as of last year, but I'd have to look to confirm. The other better-known and oft-used "Double-Irish" scheme has it's sunset coming up in 2021, again if I've read correctly. Why so long? IMHO to give multinational corporations operating in Ireland time to craft new Irish tax avoidance schemes that get Irish government approval but avoid EU sanctions.
Actually, this whole thingee is a microcosm of a world wide problem. It has become standard practice for international corporations to: Sell their products in successful fully developed countries with high tax rates -- but record the sale in lower income countries (like Ireland or the Caymen Islands) where they get enormous tax breaks and lax oversight. It is why corporations (like Apple) have tens of billions of profits sitting in overseas bank accounts. It's not an Apple problem and its not an Ireland problem or an EU problem. It's an international problem.
But attempting to collect taxes retroactively is terrible policy and is legally and ethically dodgy.
If they demonstrate it was an illegal state aid, retroactive collection (without fines) is just the best case.
I agree. But where is the evidence? They have presented none as far as I know. Ireland strongly disagrees and says all companies have been treated the same and Apple has not received any special treatment.
The EU Commission released boatloads of evidence supporting their accusations. If you spend a few minutes searching you can find it. Whether it all holds up at a High Court should it go that far, perhaps not. Or perhaps so.
Have you read the European Commission's full decision (of August 30th, 2016) in this matter? It superficially (and repeatedly) asserts that Ireland gave Apple a selective advantage. But while it goes on at length ostensibly supporting that assertion, it never substantively does. It substantively supports a different assertion, i.e. that Ireland's tax policies were (in combination and because of their effects in some situations) improper. But it acknowledges that Ireland is free to choose such tax policies.
The European Commission lacks authority to take the actions it did against Ireland based on Ireland's tax policies not having been what the European Commission (and others) would consider proper. So it pretends that it demonstrated a selective advantage even though it didn't really try to do so. The European Commission's substantive arguments focused on supporting the idea that Ireland's tax policies were improper, not on supporting the idea that Apple got a selective advantage.
In order to do A, the Commission needed to demonstrate X. So it asserted X, demonstrated Y, claimed to have demonstrated X, and did A.
I've asked others this question, and never gotten a substantive answer: If Ireland allowed Apple to do something that it didn't allow other similarly situated parties (who desired to do that something) to do, what specifically is that something?
Use transfer pricing not based on the application of an arm's length principle? Not be considered tax resident in Ireland, under certain circumstances, even though they were incorporated in Ireland and weren't considered tax resident anywhere else? Use transfer pricing between Irish and non-Irish branches of Irish corporations? Something else? Some combination? I'd like for someone to tell what specifically it is that they believe Apple was allowed to do which other similarly situated parties would not have been allowed to do.
Yes I have read it, more than once. I also followed the linked documents establishing that Apple received a very special tax rate purportedly intended to apply to their Irish manufacturing activities (which would include the now transferred out of the US intellectual property licensing reading on iPhones and other Apple products sold in foreign markets). And what basis was given for the revenue's that Apple would make available for taxation? An apparently random one suggested by Apple and accepted by the Irish tax agency representative in private meetings, and in practice FAR below the already quite low standard 12.5% corporate rate. IIRC it limited Apple's tax exposure to a few million dollars. Would you claim that was a tax rate available to all other Irish corporations? That's at least one instance off the top of my head.
First, the issue isn't whether certain tax policies apply to all Irish corporations. Ireland can, as all nations do, have tax policies which apply differently in different situations. For instance, married people are treated different than single people, corporations are treated different than individuals, resident corporations are treated different than non-resident corporations. The issue is whether certain tax policies apply to other similarly situated parties. (This is an area where the European Commission, in its decision, merely begs the question.)
Second, Apple wasn't given a lowered tax rate. A lower effective tax rate was the result of what Apple was allowed to do - which is what Ireland says was allowed under its existing tax laws and policies. Apple having paid a lower effective tax rate (based on the assumption that the proper taxable income of the Irish branches should have been higher than it was) doesn't represent something that Apple was allowed to do that others wouldn't have been allowed to do. The issue would be whether the accounting used to determine how much taxable income those Irish branches had was allowed under Ireland's tax laws and policies. The actual rate applied to that taxable income wasn't some lowered rate granted to Apple.
Third, in determining how much taxable income the Irish branches had, what was Apple allowed to do that others wouldn't have been allowed to do? That's the issue. Apple asked Ireland if, in accordance with Ireland's tax laws and policies, it could determine that taxable income in certain ways. That's what parties do in order to get clarity (and create reliance interests) on how tax laws and policies would apply in particular circumstances. It's something that happens quite often. Ireland told Apple that its tax laws and policies allowed Apple to determine that taxable income in certain ways.
That those ways seem improper to some doesn't demonstrate a selective advantage. The issue is, were others - or would others have been - not allowed to determine taxable income for Irish branches (of non-tax-resident Irish companies) in the same way? For instance, would Ireland have required others to apply an arm's length principle in determining the transfer pricing which dictated how much taxable income their Irish branches had? If someone can make that case, then a selective advantage might be demonstrated.
Apple calculating the taxable income of Irish branches based on, e.g., applying a percentage to the expenses of those branches wouldn't demonstrate a selective advantage. Again, Ireland is allowed to choose its tax policies. Those policies can include, e.g., not requiring the application of an arm's length principle in allocating profits as between Irish and non-Irish branches. Those claiming selective advantage need to demonstrate that others wouldn't have been allowed to use the same kinds of profit allocation methods that Apple used.
The European Commission didn't do that. Instead, it essentially argued that - although Ireland wasn't required to require the application of an arm's length principle - what Ireland allowed Apple to do didn't yield results consistent with the application of an arm's length principle, so it must have differed from what Ireland's general tax policies allow. Surely Ireland means, in general and through its tax policies, to yield results which are consistent with the application of an arm's length principle, so the reality that that didn't happen in Apple's case means that Ireland allowed something in Apple's case that it wouldn't allow in other cases. Never mind the reality that Ireland insists that it doesn't mean to require the application of an arm's length principle in such contexts.
The Commission admits that it doesn't get to decide what Ireland's tax policies are (or what they mean to achieve), yet insists that Ireland wouldn't have chosen tax policies which are different (or meant to achieve something different) than what the Commission thinks they should have been (or meant to achieve). The Commission presumes to know what Ireland meant to achieve, despite Ireland's assertions to the contrary. So since Ireland's application of tax policies to Apple didn't achieve that, that application to Apple must have been contrary to what Ireland means to achieve in general and thus represents a selective advantage. Ireland, rightfully, calls BS - the Commission is wrong with regard to what our tax policies are meant to achieve.
But attempting to collect taxes retroactively is terrible policy and is legally and ethically dodgy.
If they demonstrate it was an illegal state aid, retroactive collection (without fines) is just the best case.
I agree. But where is the evidence? They have presented none as far as I know. Ireland strongly disagrees and says all companies have been treated the same and Apple has not received any special treatment.
The EU Commission released boatloads of evidence supporting their accusations. If you spend a few minutes searching you can find it. Whether it all holds up at a High Court should it go that far, perhaps not. Or perhaps so.
Have you read the European Commission's full decision (of August 30th, 2016) in this matter? It superficially (and repeatedly) asserts that Ireland gave Apple a selective advantage. But while it goes on at length ostensibly supporting that assertion, it never substantively does. It substantively supports a different assertion, i.e. that Ireland's tax policies were (in combination and because of their effects in some situations) improper. But it acknowledges that Ireland is free to choose such tax policies.
The European Commission lacks authority to take the actions it did against Ireland based on Ireland's tax policies not having been what the European Commission (and others) would consider proper. So it pretends that it demonstrated a selective advantage even though it didn't really try to do so. The European Commission's substantive arguments focused on supporting the idea that Ireland's tax policies were improper, not on supporting the idea that Apple got a selective advantage.
In order to do A, the Commission needed to demonstrate X. So it asserted X, demonstrated Y, claimed to have demonstrated X, and did A.
I've asked others this question, and never gotten a substantive answer: If Ireland allowed Apple to do something that it didn't allow other similarly situated parties (who desired to do that something) to do, what specifically is that something?
Use transfer pricing not based on the application of an arm's length principle? Not be considered tax resident in Ireland, under certain circumstances, even though they were incorporated in Ireland and weren't considered tax resident anywhere else? Use transfer pricing between Irish and non-Irish branches of Irish corporations? Something else? Some combination? I'd like for someone to tell what specifically it is that they believe Apple was allowed to do which other similarly situated parties would not have been allowed to do.
Yes I have read it, more than once. I also followed the linked documents establishing that Apple received a very special tax rate purportedly intended to apply to their Irish manufacturing activities (which would include the now transferred out of the US intellectual property licensing reading on iPhones and other Apple products sold in foreign markets). And what basis was given for the revenue's that Apple would make available for taxation? An apparently random one suggested by Apple and accepted by the Irish tax agency representative in private meetings, and in practice FAR below the already quite low standard 12.5% corporate rate. IIRC it limited Apple's tax exposure to a few million dollars. Would you claim that was a tax rate available to all other Irish corporations? That's at least one instance off the top of my head.
First, the issue isn't whether certain tax policies apply to all Irish corporations.
I would disagree with the very first sentence of your reply. Isn't that exactly what the issue is, that Apple was given select competitive advantages by special tax exceptions not typically available to nor made public to all other Irish/European Corporations, which in effect becomes the illegal state aid the EU is claiming?
How is the Irish situation different than the similar illegal state aid tax claims made against the country of Luxembourg and the privately negotiated and not publically announced special tax exceptions they crafted for select companies, or the Dutch who also made the same non-public tax exceptions for only a few select companies. All three countries have been accused of fostering an uncompetitive business environment by offering specially crafted and private state aid agreements enabling only specific large and already wealthy companies to avoid the taxes other competitors (perhaps much smaller) are required by law to pay. All three countries have been found liable for recovering the taxes they should have collecting all along and restoring competitive balance at least as far as taxation is concerned.
The initial EU Commission ruling on the special tax arrangements offered by certain countries might be easier grasp for the reasoning behind it. That one did not involve Apple and does seem to explain things more simply that the ruling you've been relying on in the Apple specific one. http://europa.eu/rapid/press-release_IP-15-5880_en.htm
FWIW Amazon is now the latest multinational dinged for taxes due to special tax agreements ruled to be illegal.
But attempting to collect taxes retroactively is terrible policy and is legally and ethically dodgy.
If they demonstrate it was an illegal state aid, retroactive collection (without fines) is just the best case.
I agree. But where is the evidence? They have presented none as far as I know. Ireland strongly disagrees and says all companies have been treated the same and Apple has not received any special treatment.
The EU Commission released boatloads of evidence supporting their accusations. If you spend a few minutes searching you can find it. Whether it all holds up at a High Court should it go that far, perhaps not. Or perhaps so.
Have you read the European Commission's full decision (of August 30th, 2016) in this matter? It superficially (and repeatedly) asserts that Ireland gave Apple a selective advantage. But while it goes on at length ostensibly supporting that assertion, it never substantively does. It substantively supports a different assertion, i.e. that Ireland's tax policies were (in combination and because of their effects in some situations) improper. But it acknowledges that Ireland is free to choose such tax policies.
The European Commission lacks authority to take the actions it did against Ireland based on Ireland's tax policies not having been what the European Commission (and others) would consider proper. So it pretends that it demonstrated a selective advantage even though it didn't really try to do so. The European Commission's substantive arguments focused on supporting the idea that Ireland's tax policies were improper, not on supporting the idea that Apple got a selective advantage.
In order to do A, the Commission needed to demonstrate X. So it asserted X, demonstrated Y, claimed to have demonstrated X, and did A.
I've asked others this question, and never gotten a substantive answer: If Ireland allowed Apple to do something that it didn't allow other similarly situated parties (who desired to do that something) to do, what specifically is that something?
Use transfer pricing not based on the application of an arm's length principle? Not be considered tax resident in Ireland, under certain circumstances, even though they were incorporated in Ireland and weren't considered tax resident anywhere else? Use transfer pricing between Irish and non-Irish branches of Irish corporations? Something else? Some combination? I'd like for someone to tell what specifically it is that they believe Apple was allowed to do which other similarly situated parties would not have been allowed to do.
Yes I have read it, more than once. I also followed the linked documents establishing that Apple received a very special tax rate purportedly intended to apply to their Irish manufacturing activities (which would include the now transferred out of the US intellectual property licensing reading on iPhones and other Apple products sold in foreign markets). And what basis was given for the revenue's that Apple would make available for taxation? An apparently random one suggested by Apple and accepted by the Irish tax agency representative in private meetings, and in practice FAR below the already quite low standard 12.5% corporate rate. IIRC it limited Apple's tax exposure to a few million dollars. Would you claim that was a tax rate available to all other Irish corporations? That's at least one instance off the top of my head.
First, the issue isn't whether certain tax policies apply to all Irish corporations.
I would disagree with the very first sentence of your reply. Isn't that exactly what the issue is, that Apple was given select competitive advantages by special tax exceptions not typically available to nor made public to all over other Irish/EU Corporations which in effect becomes illegal state aid?
How is the Irish situation different than the similar illegal state aid tax claims made against the country of Luxembourg and the privately negotiated and not publically announced special tax exceptions they crafted for select companies, or the Dutch who also made the same non-public tax exceptions for only a few select companies. All three countries have been accused of fostering an uncompetitive business environment by offering specially crafted and private state aid agreements enabling only specific large and already wealthy companies to avoid the taxes other competitors (perhaps much smaller) are required by law to pay. All three countries have been found liable for recovering the taxes they should have collecting all along and restoring competitive balance at least as far as taxation is concerned.
The initial EU Commission ruling on the special tax arrangements offered by certain countries might be easier grasp for the reasoning behind it. That one did not involve Apple and does seem to explain things more simply that the ruling you've been relying on in the Apple specific one. http://europa.eu/rapid/press-release_IP-15-5880_en.htm
FWIW Amazon is now the latest multinational dinged for taxes due to special tax agreements ruled to be illegal.
Is it your suggestion that, under EU rules, member states are not allowed to have tax policies which treat different kinds of entities (i.e. Irish corporations and non-Irish corporations, or for-profit corporations and non-profit corporations, or tax-resident corporations and non-tax-resident-corporations) differently? If so, that would be stunning. Of course tax policies treat different kinds of entities differently. That, almost by necessity, happens all the time. If that is your contention, then do you have a basis for it? Perhaps a particular article from one of the EU's treaties (e.g. Article 107 of the TFEU)? Or an established interpretation thereof?
The issue is whether similarly situated parties are treated differently, with a particular party being given an advantage that others don't (or wouldn't) have. The comparison is between parties "who, in light of
the objectives intrinsic to the system, are in a comparable factual and legal situation." As I suggested before, this is an area where the Commission just begged the question.
If it were the case that all Irish corporations had to be treated the same (in all regards) for tax purposes, it would have been very easy to demonstrate that they weren't. Ireland's laws treated certain Irish corporations as non tax resident if they met certain conditions, and that clearly allowed for different tax treatment. I don't think anyone (at least not many) would dispute that.
But attempting to collect taxes retroactively is terrible policy and is legally and ethically dodgy.
If they demonstrate it was an illegal state aid, retroactive collection (without fines) is just the best case.
I agree. But where is the evidence? They have presented none as far as I know. Ireland strongly disagrees and says all companies have been treated the same and Apple has not received any special treatment.
The EU Commission released boatloads of evidence supporting their accusations. If you spend a few minutes searching you can find it. Whether it all holds up at a High Court should it go that far, perhaps not. Or perhaps so.
Have you read the European Commission's full decision (of August 30th, 2016) in this matter? It superficially (and repeatedly) asserts that Ireland gave Apple a selective advantage. But while it goes on at length ostensibly supporting that assertion, it never substantively does. It substantively supports a different assertion, i.e. that Ireland's tax policies were (in combination and because of their effects in some situations) improper. But it acknowledges that Ireland is free to choose such tax policies.
The European Commission lacks authority to take the actions it did against Ireland based on Ireland's tax policies not having been what the European Commission (and others) would consider proper. So it pretends that it demonstrated a selective advantage even though it didn't really try to do so. The European Commission's substantive arguments focused on supporting the idea that Ireland's tax policies were improper, not on supporting the idea that Apple got a selective advantage.
In order to do A, the Commission needed to demonstrate X. So it asserted X, demonstrated Y, claimed to have demonstrated X, and did A.
I've asked others this question, and never gotten a substantive answer: If Ireland allowed Apple to do something that it didn't allow other similarly situated parties (who desired to do that something) to do, what specifically is that something?
Use transfer pricing not based on the application of an arm's length principle? Not be considered tax resident in Ireland, under certain circumstances, even though they were incorporated in Ireland and weren't considered tax resident anywhere else? Use transfer pricing between Irish and non-Irish branches of Irish corporations? Something else? Some combination? I'd like for someone to tell what specifically it is that they believe Apple was allowed to do which other similarly situated parties would not have been allowed to do.
Yes I have read it, more than once. I also followed the linked documents establishing that Apple received a very special tax rate purportedly intended to apply to their Irish manufacturing activities (which would include the now transferred out of the US intellectual property licensing reading on iPhones and other Apple products sold in foreign markets). And what basis was given for the revenue's that Apple would make available for taxation? An apparently random one suggested by Apple and accepted by the Irish tax agency representative in private meetings, and in practice FAR below the already quite low standard 12.5% corporate rate. IIRC it limited Apple's tax exposure to a few million dollars. Would you claim that was a tax rate available to all other Irish corporations? That's at least one instance off the top of my head.
First, the issue isn't whether certain tax policies apply to all Irish corporations.
I would disagree with the very first sentence of your reply. Isn't that exactly what the issue is, that Apple was given select competitive advantages by special tax exceptions not typically available to nor made public to all over other Irish/EU Corporations which in effect becomes illegal state aid?
How is the Irish situation different than the similar illegal state aid tax claims made against the country of Luxembourg and the privately negotiated and not publically announced special tax exceptions they crafted for select companies, or the Dutch who also made the same non-public tax exceptions for only a few select companies. All three countries have been accused of fostering an uncompetitive business environment by offering specially crafted and private state aid agreements enabling only specific large and already wealthy companies to avoid the taxes other competitors (perhaps much smaller) are required by law to pay. All three countries have been found liable for recovering the taxes they should have collecting all along and restoring competitive balance at least as far as taxation is concerned.
The initial EU Commission ruling on the special tax arrangements offered by certain countries might be easier grasp for the reasoning behind it. That one did not involve Apple and does seem to explain things more simply that the ruling you've been relying on in the Apple specific one. http://europa.eu/rapid/press-release_IP-15-5880_en.htm
FWIW Amazon is now the latest multinational dinged for taxes due to special tax agreements ruled to be illegal.
You can't blame Apple for seeking an advantage. Nor can you blame Ireland for seeking an advantage.
But then, that's why we have laws. To make sure that everybody plays by the same rules and to prevent things from getting too far out of control. For instance: special considerations were at the heart of the 2008 crash: the banksters used off-shore accounts in states with lax regulations to transform bad loans into AAA investments that were then sold to unsuspecting investors. Or, Panama is still being used to launder IDs and money.
The EU is simply telling Ireland that, if they want to enjoy the privileges and advantages of being in the EU, then they have to play by the rules.
But attempting to collect taxes retroactively is terrible policy and is legally and ethically dodgy.
If they demonstrate it was an illegal state aid, retroactive collection (without fines) is just the best case.
I agree. But where is the evidence? They have presented none as far as I know. Ireland strongly disagrees and says all companies have been treated the same and Apple has not received any special treatment.
The EU Commission released boatloads of evidence supporting their accusations. If you spend a few minutes searching you can find it. Whether it all holds up at a High Court should it go that far, perhaps not. Or perhaps so.
Have you read the European Commission's full decision (of August 30th, 2016) in this matter? It superficially (and repeatedly) asserts that Ireland gave Apple a selective advantage. But while it goes on at length ostensibly supporting that assertion, it never substantively does. It substantively supports a different assertion, i.e. that Ireland's tax policies were (in combination and because of their effects in some situations) improper. But it acknowledges that Ireland is free to choose such tax policies.
The European Commission lacks authority to take the actions it did against Ireland based on Ireland's tax policies not having been what the European Commission (and others) would consider proper. So it pretends that it demonstrated a selective advantage even though it didn't really try to do so. The European Commission's substantive arguments focused on supporting the idea that Ireland's tax policies were improper, not on supporting the idea that Apple got a selective advantage.
In order to do A, the Commission needed to demonstrate X. So it asserted X, demonstrated Y, claimed to have demonstrated X, and did A.
I've asked others this question, and never gotten a substantive answer: If Ireland allowed Apple to do something that it didn't allow other similarly situated parties (who desired to do that something) to do, what specifically is that something?
Use transfer pricing not based on the application of an arm's length principle? Not be considered tax resident in Ireland, under certain circumstances, even though they were incorporated in Ireland and weren't considered tax resident anywhere else? Use transfer pricing between Irish and non-Irish branches of Irish corporations? Something else? Some combination? I'd like for someone to tell what specifically it is that they believe Apple was allowed to do which other similarly situated parties would not have been allowed to do.
Yes I have read it, more than once. I also followed the linked documents establishing that Apple received a very special tax rate purportedly intended to apply to their Irish manufacturing activities (which would include the now transferred out of the US intellectual property licensing reading on iPhones and other Apple products sold in foreign markets). And what basis was given for the revenue's that Apple would make available for taxation? An apparently random one suggested by Apple and accepted by the Irish tax agency representative in private meetings, and in practice FAR below the already quite low standard 12.5% corporate rate. IIRC it limited Apple's tax exposure to a few million dollars. Would you claim that was a tax rate available to all other Irish corporations? That's at least one instance off the top of my head.
First, the issue isn't whether certain tax policies apply to all Irish corporations.
I would disagree with the very first sentence of your reply. Isn't that exactly what the issue is, that Apple was given select competitive advantages by special tax exceptions not typically available to nor made public to all over other Irish/EU Corporations which in effect becomes illegal state aid?
How is the Irish situation different than the similar illegal state aid tax claims made against the country of Luxembourg and the privately negotiated and not publically announced special tax exceptions they crafted for select companies, or the Dutch who also made the same non-public tax exceptions for only a few select companies. All three countries have been accused of fostering an uncompetitive business environment by offering specially crafted and private state aid agreements enabling only specific large and already wealthy companies to avoid the taxes other competitors (perhaps much smaller) are required by law to pay. All three countries have been found liable for recovering the taxes they should have collecting all along and restoring competitive balance at least as far as taxation is concerned.
The initial EU Commission ruling on the special tax arrangements offered by certain countries might be easier grasp for the reasoning behind it. That one did not involve Apple and does seem to explain things more simply that the ruling you've been relying on in the Apple specific one. http://europa.eu/rapid/press-release_IP-15-5880_en.htm
FWIW Amazon is now the latest multinational dinged for taxes due to special tax agreements ruled to be illegal.
Is it your suggestion that, under EU rules, member states are not allowed to have tax policies which treat different kinds of entities (i.e. Irish corporations and non-Irish corporations, or for-profit corporations and non-profit corporations, or tax-resident corporations and non-tax-resident-corporations) differently? If so, that would be stunning. Of course tax policies treat different kinds of entities differently. That, almost by necessity, happens all the time. If that is your contention, then do you have a basis for it? Perhaps a particular article from one of the EU's treaties (e.g. Article 107 of the TFEU)? Or an established interpretation thereof?
Of course there can be different rules for different types of organizations or family structure. I feel you're now intentionally being intellectually dishonest, trying to muddy the EU's claims by equating it to the typical taxpayer categories we all deal with at tax time. Am I filing single or with dependents. Am I incorporated or a sole proprietor and based on the answers paying the appropriate statutory rate for my tax group.
So here's what it comes down to: Consistency. That's the key. If all other companies with operations in other countries were invited to meet privately with Irish government representatives to declare what they be willing to pay in taxes each year for the next several years then there is consistency. Companies of that organizational type are always allowed to set their own tax basis and declare how much revenue they will make available for taxation. But they aren't. The EU is claiming that Ireland is NOT consistently applying their own tax laws and rules, instead creating arbitrary carve-outs arranged by individual negotiations with select companies. That can create an anti-competitive environment where one company has an unfair and substantial monetary advantage over another simply because Ireland's tax agents are willing to extend the supposed legal cover of Government approval for it.
I've had a consistent respect for the knowledge and detailed explanation of certain issues you bring to the forum. You're one of a few who generally avoids commenting at all unless you have a pertinent contribution to make, and always doing so politely and with respect to members you might be replying to. In this particular case it's beginning to feel as tho you have a vested personal interest in how the Irish and/or Apple tax issues are perceived and their outcome, and trying to craft the story that gets you there. Just my perception of course and I could well be mistaken.
I've no idea what the outcome will be once all the drama has run it's course, but I can certainly understand and appreciate the arguments on both sides. that you refuse to acknowledge the veracity of any of the claims made by the EU Commission is telling IMO. FWIW I do personally believe that "the rich get richer" is not particularly beneficial to the economy as a whole. Benefiting the few at the cost to the many eventually leads to anger rearing it's head. Throughout history when the purposefully disadvantaged finally have their fill of an entitled and controlling minority disconnected from the tribulations of everyday life it usually ends ugly. End of social commentary.
But attempting to collect taxes retroactively is terrible policy and is legally and ethically dodgy.
If they demonstrate it was an illegal state aid, retroactive collection (without fines) is just the best case.
I agree. But where is the evidence? They have presented none as far as I know. Ireland strongly disagrees and says all companies have been treated the same and Apple has not received any special treatment.
The EU Commission released boatloads of evidence supporting their accusations. If you spend a few minutes searching you can find it. Whether it all holds up at a High Court should it go that far, perhaps not. Or perhaps so.
Have you read the European Commission's full decision (of August 30th, 2016) in this matter? It superficially (and repeatedly) asserts that Ireland gave Apple a selective advantage. But while it goes on at length ostensibly supporting that assertion, it never substantively does. It substantively supports a different assertion, i.e. that Ireland's tax policies were (in combination and because of their effects in some situations) improper. But it acknowledges that Ireland is free to choose such tax policies.
The European Commission lacks authority to take the actions it did against Ireland based on Ireland's tax policies not having been what the European Commission (and others) would consider proper. So it pretends that it demonstrated a selective advantage even though it didn't really try to do so. The European Commission's substantive arguments focused on supporting the idea that Ireland's tax policies were improper, not on supporting the idea that Apple got a selective advantage.
In order to do A, the Commission needed to demonstrate X. So it asserted X, demonstrated Y, claimed to have demonstrated X, and did A.
I've asked others this question, and never gotten a substantive answer: If Ireland allowed Apple to do something that it didn't allow other similarly situated parties (who desired to do that something) to do, what specifically is that something?
Use transfer pricing not based on the application of an arm's length principle? Not be considered tax resident in Ireland, under certain circumstances, even though they were incorporated in Ireland and weren't considered tax resident anywhere else? Use transfer pricing between Irish and non-Irish branches of Irish corporations? Something else? Some combination? I'd like for someone to tell what specifically it is that they believe Apple was allowed to do which other similarly situated parties would not have been allowed to do.
Yes I have read it, more than once. I also followed the linked documents establishing that Apple received a very special tax rate purportedly intended to apply to their Irish manufacturing activities (which would include the now transferred out of the US intellectual property licensing reading on iPhones and other Apple products sold in foreign markets). And what basis was given for the revenue's that Apple would make available for taxation? An apparently random one suggested by Apple and accepted by the Irish tax agency representative in private meetings, and in practice FAR below the already quite low standard 12.5% corporate rate. IIRC it limited Apple's tax exposure to a few million dollars. Would you claim that was a tax rate available to all other Irish corporations? That's at least one instance off the top of my head.
First, the issue isn't whether certain tax policies apply to all Irish corporations.
I would disagree with the very first sentence of your reply. Isn't that exactly what the issue is, that Apple was given select competitive advantages by special tax exceptions not typically available to nor made public to all over other Irish/EU Corporations which in effect becomes illegal state aid?
How is the Irish situation different than the similar illegal state aid tax claims made against the country of Luxembourg and the privately negotiated and not publically announced special tax exceptions they crafted for select companies, or the Dutch who also made the same non-public tax exceptions for only a few select companies. All three countries have been accused of fostering an uncompetitive business environment by offering specially crafted and private state aid agreements enabling only specific large and already wealthy companies to avoid the taxes other competitors (perhaps much smaller) are required by law to pay. All three countries have been found liable for recovering the taxes they should have collecting all along and restoring competitive balance at least as far as taxation is concerned.
The initial EU Commission ruling on the special tax arrangements offered by certain countries might be easier grasp for the reasoning behind it. That one did not involve Apple and does seem to explain things more simply that the ruling you've been relying on in the Apple specific one. http://europa.eu/rapid/press-release_IP-15-5880_en.htm
FWIW Amazon is now the latest multinational dinged for taxes due to special tax agreements ruled to be illegal.
Is it your suggestion that, under EU rules, member states are not allowed to have tax policies which treat different kinds of entities (i.e. Irish corporations and non-Irish corporations, or for-profit corporations and non-profit corporations, or tax-resident corporations and non-tax-resident-corporations) differently? If so, that would be stunning. Of course tax policies treat different kinds of entities differently. That, almost by necessity, happens all the time. If that is your contention, then do you have a basis for it? Perhaps a particular article from one of the EU's treaties (e.g. Article 107 of the TFEU)? Or an established interpretation thereof?
Of course there can be different rules for different types of organizations or family structure. I feel you're now intentionally being intellectually dishonest, trying to muddy the EU's claims by equating it to the typical taxpayer categories we all deal with at tax time. Am I filing single or with dependents. Am I incorporated or a sole proprietor and based on the answers paying the appropriate statutory rate for my tax group.
I'm not being at all intellectually dishonest or trying to muddy the EU's claims. I'm trying to be completely clear on what is and is not being asserted and what assertions the Commission has and has not supported. Being quite clear on those things - resolving and focusing on the issues rather than leaving them as a vague cloud of accusation - favors Apple and Ireland's position in this matter. If anything, it is the Commission which has tried to muddy the issues. And, it seems, it has been somewhat successful in that.
If you agree that Ireland can have tax policies which treat different kinds of entities differently, then why did you disagree with what I had said in the previous post? I said:
First, the issue isn't whether certain tax policies apply to all Irish corporations. Ireland can, as all nations do, have tax policies which apply differently in different situations. For instance, married people are treated different than single people, corporations are treated different than individuals, resident corporations are treated different than non-resident corporations. The issue is whether certain tax policies apply to other similarly situated parties. (This is an area where the European Commission, in its decision, merely begs the question.)
It is the case that the issue isn't whether certain tax policies apply to all Irish corporations. If that were the case, it would mean that Ireland couldn't have tax policies which treat different kinds of corporations differently. The best I can tell, you're now agreeing on that point. If not, you can let me know.
So here's what it comes down to: Consistency. That's the key. If all other companies with operations in other countries were invited to meet privately with Irish government representatives to declare what they be willing to pay in taxes each year for the next several years then there is consistency. Companies of that organizational type are always allowed to set their own tax basis and declare how much revenue they will make available for taxation. The EU is claiming that Ireland is NOT consistently applying their own tax laws and rules, instead creating arbitrary carve-outs via individual negotiations with select companies. That can create an anti-competitive environment where one company have an unfair and substantial monetary advantage over another simply because Ireland's tax agents are willing to extend the supposed legal cover of Government approval for it.
Other companies with operations in other countries can (and do) ask Ireland's tax authorities for advance opinions which clarify what is allowed under Ireland's tax laws and policies, to include how profit can be allocated between various branches of Irish corporations. That is what we are talking about. Apple asked questions, and Ireland provided answers, relating to Apple's tax situation. Ireland refers to such things as advance opinions. We have something similar in the United States which are referred to as private letter rulings.
There is nothing wrong with issuing such tax rulings - private letter rulings, advance opinions, whatever they are referred to as. They are a necessary part of the enforcement of tax policies. The issue is, were other similarly situated entities not allowed to do what Apple was allowed to do? Not allowed, e.g., to allocate profit between branches in the same way(s) Apple was? Is there something in Irish law that prohibits companies in such situations from allocating profits in such ways? Some principle underlying its other tax policy rulings? Ireland says no, that its tax rulings for Apple weren't inconsistent with its tax policies as those policies apply to similar circumstances. The question is, can someone point to something, e.g. in Irish law, that demonstrates otherwise? Can they point to tax rulings given to other companies which say those companies can't do meaningfully the same things in similar circumstances? Again, if other parties have questions about what they can and can't do in accordance with Irish tax policies, they can ask Ireland for clarity (or certainty) just as Apple did. That's a normal function of tax authorities.
I'm aware of what the Commission has claimed. My point is that it has only superficially made that claim. It has not supported that claim. Rather, it went on at length supporting a different claim - a claim that doesn't matter when it comes to invoking the authority it invoked in this matter. That other claim, the one which it actually supported, matters in the court of public opinion I suspect. But it doesn't justify the Commission's actions.
What it comes down to is this: Can anyone identify something in Irish law, or in other advance opinions which Ireland has issued, which - under comparable circumstances - prohibits the methods of inter-branch profit allocation which Apple was allowed to us?
If the answer is yes, then the claim that Ireland gave Apple a selective advantage might be supportable.
But attempting to collect taxes retroactively is terrible policy and is legally and ethically dodgy.
If they demonstrate it was an illegal state aid, retroactive collection (without fines) is just the best case.
I agree. But where is the evidence? They have presented none as far as I know. Ireland strongly disagrees and says all companies have been treated the same and Apple has not received any special treatment.
The EU Commission released boatloads of evidence supporting their accusations. If you spend a few minutes searching you can find it. Whether it all holds up at a High Court should it go that far, perhaps not. Or perhaps so.
Have you read the European Commission's full decision (of August 30th, 2016) in this matter? It superficially (and repeatedly) asserts that Ireland gave Apple a selective advantage. But while it goes on at length ostensibly supporting that assertion, it never substantively does. It substantively supports a different assertion, i.e. that Ireland's tax policies were (in combination and because of their effects in some situations) improper. But it acknowledges that Ireland is free to choose such tax policies.
The European Commission lacks authority to take the actions it did against Ireland based on Ireland's tax policies not having been what the European Commission (and others) would consider proper. So it pretends that it demonstrated a selective advantage even though it didn't really try to do so. The European Commission's substantive arguments focused on supporting the idea that Ireland's tax policies were improper, not on supporting the idea that Apple got a selective advantage.
In order to do A, the Commission needed to demonstrate X. So it asserted X, demonstrated Y, claimed to have demonstrated X, and did A.
I've asked others this question, and never gotten a substantive answer: If Ireland allowed Apple to do something that it didn't allow other similarly situated parties (who desired to do that something) to do, what specifically is that something?
Use transfer pricing not based on the application of an arm's length principle? Not be considered tax resident in Ireland, under certain circumstances, even though they were incorporated in Ireland and weren't considered tax resident anywhere else? Use transfer pricing between Irish and non-Irish branches of Irish corporations? Something else? Some combination? I'd like for someone to tell what specifically it is that they believe Apple was allowed to do which other similarly situated parties would not have been allowed to do.
Yes I have read it, more than once. I also followed the linked documents establishing that Apple received a very special tax rate purportedly intended to apply to their Irish manufacturing activities (which would include the now transferred out of the US intellectual property licensing reading on iPhones and other Apple products sold in foreign markets). And what basis was given for the revenue's that Apple would make available for taxation? An apparently random one suggested by Apple and accepted by the Irish tax agency representative in private meetings, and in practice FAR below the already quite low standard 12.5% corporate rate. IIRC it limited Apple's tax exposure to a few million dollars. Would you claim that was a tax rate available to all other Irish corporations? That's at least one instance off the top of my head.
First, the issue isn't whether certain tax policies apply to all Irish corporations.
I would disagree with the very first sentence of your reply. Isn't that exactly what the issue is, that Apple was given select competitive advantages by special tax exceptions not typically available to nor made public to all over other Irish/EU Corporations which in effect becomes illegal state aid?
How is the Irish situation different than the similar illegal state aid tax claims made against the country of Luxembourg and the privately negotiated and not publically announced special tax exceptions they crafted for select companies, or the Dutch who also made the same non-public tax exceptions for only a few select companies. All three countries have been accused of fostering an uncompetitive business environment by offering specially crafted and private state aid agreements enabling only specific large and already wealthy companies to avoid the taxes other competitors (perhaps much smaller) are required by law to pay. All three countries have been found liable for recovering the taxes they should have collecting all along and restoring competitive balance at least as far as taxation is concerned.
The initial EU Commission ruling on the special tax arrangements offered by certain countries might be easier grasp for the reasoning behind it. That one did not involve Apple and does seem to explain things more simply that the ruling you've been relying on in the Apple specific one. http://europa.eu/rapid/press-release_IP-15-5880_en.htm
FWIW Amazon is now the latest multinational dinged for taxes due to special tax agreements ruled to be illegal.
Is it your suggestion that, under EU rules, member states are not allowed to have tax policies which treat different kinds of entities (i.e. Irish corporations and non-Irish corporations, or for-profit corporations and non-profit corporations, or tax-resident corporations and non-tax-resident-corporations) differently? If so, that would be stunning. Of course tax policies treat different kinds of entities differently. That, almost by necessity, happens all the time. If that is your contention, then do you have a basis for it? Perhaps a particular article from one of the EU's treaties (e.g. Article 107 of the TFEU)? Or an established interpretation thereof?
Of course there can be different rules for different types of organizations or family structure. I feel you're now intentionally being intellectually dishonest, trying to muddy the EU's claims by equating it to the typical taxpayer categories we all deal with at tax time. Am I filing single or with dependents. Am I incorporated or a sole proprietor and based on the answers paying the appropriate statutory rate for my tax group.
I'm not being at all intellectually dishonest or trying to muddy the EU's claims. I'm trying to be completely clear on what is and is not being asserted and what assertions the Commission has and has not supported. Being quite clear on those things - resolving and focusing on the issues rather than leaving them as a vague cloud of accusation - favors Apple and Ireland's position in this matter. If anything, it is the Commission which has tried to muddy the issues. And, it seems, it has been somewhat successful in that.
So here's what it comes down to: Consistency. That's the key. If all other companies with operations in other countries were invited to meet privately with Irish government representatives to declare what they be willing to pay in taxes each year for the next several years then there is consistency. Companies of that organizational type are always allowed to set their own tax basis and declare how much revenue they will make available for taxation. The EU is claiming that Ireland is NOT consistently applying their own tax laws and rules, instead creating arbitrary carve-outs via individual negotiations with select companies. That can create an anti-competitive environment where one company have an unfair and substantial monetary advantage over another simply because Ireland's tax agents are willing to extend the supposed legal cover of Government approval for it.
Other companies with operations in other countries can (and do) ask Ireland's tax authorities for advance opinions which clarify what is allowed under Ireland's tax laws and policies, to include how profit can be allocated between various branches of Irish corporations. That is what we are talking about.
Had you taken the time to read the link I offered you to the initial EU determination of illegal state aid from a couple years ago you would know that is exactly NOT what we're talking about. The EU paper discusses the legal opinions profered by various countries tax agencies in response to taxpayer inquiries. I'll quote it for you so you don't have to follow the link if you'd rather not:
"Tax rulings as such are perfectly legal. They are comfort letters issued by tax authorities to give a company clarity on how its corporate tax will be calculated or on the use of special tax provisions. However, the two tax rulings (Fiat and Starbucks) under investigation endorsed artificial and complex methods to establish taxable profits for the companies. They do not reflect economic reality. This is done, in particular, by setting prices for goods and services sold between companies of the Fiat and Starbucks groups (so-called "transfer prices") that do not correspond to market conditions. As a result, most of the profits of Starbucks' coffee roasting company are shifted abroad, where they are also not taxed, and Fiat's financing company only paid taxes on underestimated profits.
This is illegal under EU state aid rules: Tax rulings cannot use methodologies, no matter how complex, to establish transfer prices with no economic justification and which unduly shift profits to reduce the taxes paid by the company. It would give that company an unfair competitive advantage over other companies (typically SMEs) that are taxed on their actual profits because they pay market prices for the goods and services they use." http://europa.eu/rapid/press-release_IP-15-5880_en.htm
But attempting to collect taxes retroactively is terrible policy and is legally and ethically dodgy.
If they demonstrate it was an illegal state aid, retroactive collection (without fines) is just the best case.
I agree. But where is the evidence? They have presented none as far as I know. Ireland strongly disagrees and says all companies have been treated the same and Apple has not received any special treatment.
The EU Commission released boatloads of evidence supporting their accusations. If you spend a few minutes searching you can find it. Whether it all holds up at a High Court should it go that far, perhaps not. Or perhaps so.
Have you read the European Commission's full decision (of August 30th, 2016) in this matter? It superficially (and repeatedly) asserts that Ireland gave Apple a selective advantage. But while it goes on at length ostensibly supporting that assertion, it never substantively does. It substantively supports a different assertion, i.e. that Ireland's tax policies were (in combination and because of their effects in some situations) improper. But it acknowledges that Ireland is free to choose such tax policies.
The European Commission lacks authority to take the actions it did against Ireland based on Ireland's tax policies not having been what the European Commission (and others) would consider proper. So it pretends that it demonstrated a selective advantage even though it didn't really try to do so. The European Commission's substantive arguments focused on supporting the idea that Ireland's tax policies were improper, not on supporting the idea that Apple got a selective advantage.
In order to do A, the Commission needed to demonstrate X. So it asserted X, demonstrated Y, claimed to have demonstrated X, and did A.
I've asked others this question, and never gotten a substantive answer: If Ireland allowed Apple to do something that it didn't allow other similarly situated parties (who desired to do that something) to do, what specifically is that something?
Use transfer pricing not based on the application of an arm's length principle? Not be considered tax resident in Ireland, under certain circumstances, even though they were incorporated in Ireland and weren't considered tax resident anywhere else? Use transfer pricing between Irish and non-Irish branches of Irish corporations? Something else? Some combination? I'd like for someone to tell what specifically it is that they believe Apple was allowed to do which other similarly situated parties would not have been allowed to do.
Yes I have read it, more than once. I also followed the linked documents establishing that Apple received a very special tax rate purportedly intended to apply to their Irish manufacturing activities (which would include the now transferred out of the US intellectual property licensing reading on iPhones and other Apple products sold in foreign markets). And what basis was given for the revenue's that Apple would make available for taxation? An apparently random one suggested by Apple and accepted by the Irish tax agency representative in private meetings, and in practice FAR below the already quite low standard 12.5% corporate rate. IIRC it limited Apple's tax exposure to a few million dollars. Would you claim that was a tax rate available to all other Irish corporations? That's at least one instance off the top of my head.
First, the issue isn't whether certain tax policies apply to all Irish corporations.
I would disagree with the very first sentence of your reply. Isn't that exactly what the issue is, that Apple was given select competitive advantages by special tax exceptions not typically available to nor made public to all over other Irish/EU Corporations which in effect becomes illegal state aid?
How is the Irish situation different than the similar illegal state aid tax claims made against the country of Luxembourg and the privately negotiated and not publically announced special tax exceptions they crafted for select companies, or the Dutch who also made the same non-public tax exceptions for only a few select companies. All three countries have been accused of fostering an uncompetitive business environment by offering specially crafted and private state aid agreements enabling only specific large and already wealthy companies to avoid the taxes other competitors (perhaps much smaller) are required by law to pay. All three countries have been found liable for recovering the taxes they should have collecting all along and restoring competitive balance at least as far as taxation is concerned.
The initial EU Commission ruling on the special tax arrangements offered by certain countries might be easier grasp for the reasoning behind it. That one did not involve Apple and does seem to explain things more simply that the ruling you've been relying on in the Apple specific one. http://europa.eu/rapid/press-release_IP-15-5880_en.htm
FWIW Amazon is now the latest multinational dinged for taxes due to special tax agreements ruled to be illegal.
Is it your suggestion that, under EU rules, member states are not allowed to have tax policies which treat different kinds of entities (i.e. Irish corporations and non-Irish corporations, or for-profit corporations and non-profit corporations, or tax-resident corporations and non-tax-resident-corporations) differently? If so, that would be stunning. Of course tax policies treat different kinds of entities differently. That, almost by necessity, happens all the time. If that is your contention, then do you have a basis for it? Perhaps a particular article from one of the EU's treaties (e.g. Article 107 of the TFEU)? Or an established interpretation thereof?
Of course there can be different rules for different types of organizations or family structure. I feel you're now intentionally being intellectually dishonest, trying to muddy the EU's claims by equating it to the typical taxpayer categories we all deal with at tax time. Am I filing single or with dependents. Am I incorporated or a sole proprietor and based on the answers paying the appropriate statutory rate for my tax group.
I'm not being at all intellectually dishonest or trying to muddy the EU's claims. I'm trying to be completely clear on what is and is not being asserted and what assertions the Commission has and has not supported. Being quite clear on those things - resolving and focusing on the issues rather than leaving them as a vague cloud of accusation - favors Apple and Ireland's position in this matter. If anything, it is the Commission which has tried to muddy the issues. And, it seems, it has been somewhat successful in that.
So here's what it comes down to: Consistency. That's the key. If all other companies with operations in other countries were invited to meet privately with Irish government representatives to declare what they be willing to pay in taxes each year for the next several years then there is consistency. Companies of that organizational type are always allowed to set their own tax basis and declare how much revenue they will make available for taxation. The EU is claiming that Ireland is NOT consistently applying their own tax laws and rules, instead creating arbitrary carve-outs via individual negotiations with select companies. That can create an anti-competitive environment where one company have an unfair and substantial monetary advantage over another simply because Ireland's tax agents are willing to extend the supposed legal cover of Government approval for it.
Other companies with operations in other countries can (and do) ask Ireland's tax authorities for advance opinions which clarify what is allowed under Ireland's tax laws and policies, to include how profit can be allocated between various branches of Irish corporations. That is what we are talking about.
Had you taken the time to read the link I offered you to the initial EU determination of illegal state aid from a couple years ago you would know that is exactly NOT what we're talking about. The EU paper discusses the legal opinions profered by various countries tax agencies in response to taxpayer inquiries. I'll quote it for you so you don't have to follow the link if you'd rather not:
"Tax rulings as such are perfectly legal. They are comfort letters issued by tax authorities to give a company clarity on how its corporate tax will be calculated or on the use of special tax provisions. However, the two tax rulings (Fiat and Starbucks) under investigation endorsed artificial and complex methods to establish taxable profits for the companies. They do not reflect economic reality. This is done, in particular, by setting prices for goods and services sold between companies of the Fiat and Starbucks groups (so-called "transfer prices") that do not correspond to market conditions. As a result, most of the profits of Starbucks' coffee roasting company are shifted abroad, where they are also not taxed, and Fiat's financing company only paid taxes on underestimated profits.
This is illegal under EU state aid rules: Tax rulings cannot use methodologies, no matter how complex, to establish transfer prices with no economic justification and which unduly shift profits to reduce the taxes paid by the company. It would give that company an unfair competitive advantage over other companies (typically SMEs) that are taxed on their actual profits because they pay market prices for the goods and services they use." http://europa.eu/rapid/press-release_IP-15-5880_en.htm
I did read that link (i.e. that press release) and even went to the other two decisions themselves (i.e. those for Luxembourg / Fiat and Netherlands / Starbucks) and glanced through them.
How does what you've quoted demonstrate that, when it comes to the Ireland / Apple matter, it isn't tax rulings issued by Ireland (which Ireland refers to as advance opinions) which are the issue? Those advance opinions very much are what we're talking about. It is those advance opinions which the Commission claims represent illegal state aid given to Apple.
As I suggested, parties (e.g. Apple) can ask Ireland how certain things would work with regard to their tax situations - e.g., can they do this or that. Ireland issues advance opinions telling them how those things would work.
But attempting to collect taxes retroactively is terrible policy and is legally and ethically dodgy.
If they demonstrate it was an illegal state aid, retroactive collection (without fines) is just the best case.
I agree. But where is the evidence? They have presented none as far as I know. Ireland strongly disagrees and says all companies have been treated the same and Apple has not received any special treatment.
The EU Commission released boatloads of evidence supporting their accusations. If you spend a few minutes searching you can find it. Whether it all holds up at a High Court should it go that far, perhaps not. Or perhaps so.
Have you read the European Commission's full decision (of August 30th, 2016) in this matter? It superficially (and repeatedly) asserts that Ireland gave Apple a selective advantage. But while it goes on at length ostensibly supporting that assertion, it never substantively does. It substantively supports a different assertion, i.e. that Ireland's tax policies were (in combination and because of their effects in some situations) improper. But it acknowledges that Ireland is free to choose such tax policies.
The European Commission lacks authority to take the actions it did against Ireland based on Ireland's tax policies not having been what the European Commission (and others) would consider proper. So it pretends that it demonstrated a selective advantage even though it didn't really try to do so. The European Commission's substantive arguments focused on supporting the idea that Ireland's tax policies were improper, not on supporting the idea that Apple got a selective advantage.
In order to do A, the Commission needed to demonstrate X. So it asserted X, demonstrated Y, claimed to have demonstrated X, and did A.
I've asked others this question, and never gotten a substantive answer: If Ireland allowed Apple to do something that it didn't allow other similarly situated parties (who desired to do that something) to do, what specifically is that something?
Use transfer pricing not based on the application of an arm's length principle? Not be considered tax resident in Ireland, under certain circumstances, even though they were incorporated in Ireland and weren't considered tax resident anywhere else? Use transfer pricing between Irish and non-Irish branches of Irish corporations? Something else? Some combination? I'd like for someone to tell what specifically it is that they believe Apple was allowed to do which other similarly situated parties would not have been allowed to do.
Yes I have read it, more than once. I also followed the linked documents establishing that Apple received a very special tax rate purportedly intended to apply to their Irish manufacturing activities (which would include the now transferred out of the US intellectual property licensing reading on iPhones and other Apple products sold in foreign markets). And what basis was given for the revenue's that Apple would make available for taxation? An apparently random one suggested by Apple and accepted by the Irish tax agency representative in private meetings, and in practice FAR below the already quite low standard 12.5% corporate rate. IIRC it limited Apple's tax exposure to a few million dollars. Would you claim that was a tax rate available to all other Irish corporations? That's at least one instance off the top of my head.
First, the issue isn't whether certain tax policies apply to all Irish corporations.
I would disagree with the very first sentence of your reply. Isn't that exactly what the issue is, that Apple was given select competitive advantages by special tax exceptions not typically available to nor made public to all over other Irish/EU Corporations which in effect becomes illegal state aid?
How is the Irish situation different than the similar illegal state aid tax claims made against the country of Luxembourg and the privately negotiated and not publically announced special tax exceptions they crafted for select companies, or the Dutch who also made the same non-public tax exceptions for only a few select companies. All three countries have been accused of fostering an uncompetitive business environment by offering specially crafted and private state aid agreements enabling only specific large and already wealthy companies to avoid the taxes other competitors (perhaps much smaller) are required by law to pay. All three countries have been found liable for recovering the taxes they should have collecting all along and restoring competitive balance at least as far as taxation is concerned.
The initial EU Commission ruling on the special tax arrangements offered by certain countries might be easier grasp for the reasoning behind it. That one did not involve Apple and does seem to explain things more simply that the ruling you've been relying on in the Apple specific one. http://europa.eu/rapid/press-release_IP-15-5880_en.htm
FWIW Amazon is now the latest multinational dinged for taxes due to special tax agreements ruled to be illegal.
Is it your suggestion that, under EU rules, member states are not allowed to have tax policies which treat different kinds of entities (i.e. Irish corporations and non-Irish corporations, or for-profit corporations and non-profit corporations, or tax-resident corporations and non-tax-resident-corporations) differently? If so, that would be stunning. Of course tax policies treat different kinds of entities differently. That, almost by necessity, happens all the time. If that is your contention, then do you have a basis for it? Perhaps a particular article from one of the EU's treaties (e.g. Article 107 of the TFEU)? Or an established interpretation thereof?
Of course there can be different rules for different types of organizations or family structure. I feel you're now intentionally being intellectually dishonest, trying to muddy the EU's claims by equating it to the typical taxpayer categories we all deal with at tax time. Am I filing single or with dependents. Am I incorporated or a sole proprietor and based on the answers paying the appropriate statutory rate for my tax group.
I'm not being at all intellectually dishonest or trying to muddy the EU's claims. I'm trying to be completely clear on what is and is not being asserted and what assertions the Commission has and has not supported. Being quite clear on those things - resolving and focusing on the issues rather than leaving them as a vague cloud of accusation - favors Apple and Ireland's position in this matter. If anything, it is the Commission which has tried to muddy the issues. And, it seems, it has been somewhat successful in that.
So here's what it comes down to: Consistency. That's the key. If all other companies with operations in other countries were invited to meet privately with Irish government representatives to declare what they be willing to pay in taxes each year for the next several years then there is consistency. Companies of that organizational type are always allowed to set their own tax basis and declare how much revenue they will make available for taxation. The EU is claiming that Ireland is NOT consistently applying their own tax laws and rules, instead creating arbitrary carve-outs via individual negotiations with select companies. That can create an anti-competitive environment where one company have an unfair and substantial monetary advantage over another simply because Ireland's tax agents are willing to extend the supposed legal cover of Government approval for it.
Other companies with operations in other countries can (and do) ask Ireland's tax authorities for advance opinions which clarify what is allowed under Ireland's tax laws and policies, to include how profit can be allocated between various branches of Irish corporations. That is what we are talking about.
Had you taken the time to read the link I offered you to the initial EU determination of illegal state aid from a couple years ago you would know that is exactly NOT what we're talking about. The EU paper discusses the legal opinions profered by various countries tax agencies in response to taxpayer inquiries. I'll quote it for you so you don't have to follow the link if you'd rather not:
"Tax rulings as such are perfectly legal. They are comfort letters issued by tax authorities to give a company clarity on how its corporate tax will be calculated or on the use of special tax provisions. However, the two tax rulings (Fiat and Starbucks) under investigation endorsed artificial and complex methods to establish taxable profits for the companies. They do not reflect economic reality. This is done, in particular, by setting prices for goods and services sold between companies of the Fiat and Starbucks groups (so-called "transfer prices") that do not correspond to market conditions. As a result, most of the profits of Starbucks' coffee roasting company are shifted abroad, where they are also not taxed, and Fiat's financing company only paid taxes on underestimated profits.
This is illegal under EU state aid rules: Tax rulings cannot use methodologies, no matter how complex, to establish transfer prices with no economic justification and which unduly shift profits to reduce the taxes paid by the company. It would give that company an unfair competitive advantage over other companies (typically SMEs) that are taxed on their actual profits because they pay market prices for the goods and services they use." http://europa.eu/rapid/press-release_IP-15-5880_en.htm
I did read that link (i.e. that press release) and even went to the other two decisions themselves (i.e. those for Luxembourg / Fiat and Netherlands / Starbucks) and glanced through them.
How does what you've quoted demonstrate that, when it comes to the Ireland / Apple matter, it isn't tax rulings issued by Ireland (which Ireland refers to as advance opinions) which are the issue? Those advance opinions very much are what we're talking about. It is those advance opinions which the Commission claims represent illegal state aid given to Apple.
As I suggested, parties (e.g. Apple) can ask Ireland how certain things would work with regard to their tax situations - e.g., can they do this or that. Ireland issues advance opinions telling them how those things would work.
I really do believe you know better. You're a really smart guy. Just as the EU letter acknowledges advance opinions, aka "comfort letters", are perfectly proper. That's not the issue and never was.
But attempting to collect taxes retroactively is terrible policy and is legally and ethically dodgy.
If they demonstrate it was an illegal state aid, retroactive collection (without fines) is just the best case.
I agree. But where is the evidence? They have presented none as far as I know. Ireland strongly disagrees and says all companies have been treated the same and Apple has not received any special treatment.
The EU Commission released boatloads of evidence supporting their accusations. If you spend a few minutes searching you can find it. Whether it all holds up at a High Court should it go that far, perhaps not. Or perhaps so.
Have you read the European Commission's full decision (of August 30th, 2016) in this matter? It superficially (and repeatedly) asserts that Ireland gave Apple a selective advantage. But while it goes on at length ostensibly supporting that assertion, it never substantively does. It substantively supports a different assertion, i.e. that Ireland's tax policies were (in combination and because of their effects in some situations) improper. But it acknowledges that Ireland is free to choose such tax policies.
The European Commission lacks authority to take the actions it did against Ireland based on Ireland's tax policies not having been what the European Commission (and others) would consider proper. So it pretends that it demonstrated a selective advantage even though it didn't really try to do so. The European Commission's substantive arguments focused on supporting the idea that Ireland's tax policies were improper, not on supporting the idea that Apple got a selective advantage.
In order to do A, the Commission needed to demonstrate X. So it asserted X, demonstrated Y, claimed to have demonstrated X, and did A.
I've asked others this question, and never gotten a substantive answer: If Ireland allowed Apple to do something that it didn't allow other similarly situated parties (who desired to do that something) to do, what specifically is that something?
Use transfer pricing not based on the application of an arm's length principle? Not be considered tax resident in Ireland, under certain circumstances, even though they were incorporated in Ireland and weren't considered tax resident anywhere else? Use transfer pricing between Irish and non-Irish branches of Irish corporations? Something else? Some combination? I'd like for someone to tell what specifically it is that they believe Apple was allowed to do which other similarly situated parties would not have been allowed to do.
Yes I have read it, more than once. I also followed the linked documents establishing that Apple received a very special tax rate purportedly intended to apply to their Irish manufacturing activities (which would include the now transferred out of the US intellectual property licensing reading on iPhones and other Apple products sold in foreign markets). And what basis was given for the revenue's that Apple would make available for taxation? An apparently random one suggested by Apple and accepted by the Irish tax agency representative in private meetings, and in practice FAR below the already quite low standard 12.5% corporate rate. IIRC it limited Apple's tax exposure to a few million dollars. Would you claim that was a tax rate available to all other Irish corporations? That's at least one instance off the top of my head.
First, the issue isn't whether certain tax policies apply to all Irish corporations.
I would disagree with the very first sentence of your reply. Isn't that exactly what the issue is, that Apple was given select competitive advantages by special tax exceptions not typically available to nor made public to all over other Irish/EU Corporations which in effect becomes illegal state aid?
How is the Irish situation different than the similar illegal state aid tax claims made against the country of Luxembourg and the privately negotiated and not publically announced special tax exceptions they crafted for select companies, or the Dutch who also made the same non-public tax exceptions for only a few select companies. All three countries have been accused of fostering an uncompetitive business environment by offering specially crafted and private state aid agreements enabling only specific large and already wealthy companies to avoid the taxes other competitors (perhaps much smaller) are required by law to pay. All three countries have been found liable for recovering the taxes they should have collecting all along and restoring competitive balance at least as far as taxation is concerned.
The initial EU Commission ruling on the special tax arrangements offered by certain countries might be easier grasp for the reasoning behind it. That one did not involve Apple and does seem to explain things more simply that the ruling you've been relying on in the Apple specific one. http://europa.eu/rapid/press-release_IP-15-5880_en.htm
FWIW Amazon is now the latest multinational dinged for taxes due to special tax agreements ruled to be illegal.
Is it your suggestion that, under EU rules, member states are not allowed to have tax policies which treat different kinds of entities (i.e. Irish corporations and non-Irish corporations, or for-profit corporations and non-profit corporations, or tax-resident corporations and non-tax-resident-corporations) differently? If so, that would be stunning. Of course tax policies treat different kinds of entities differently. That, almost by necessity, happens all the time. If that is your contention, then do you have a basis for it? Perhaps a particular article from one of the EU's treaties (e.g. Article 107 of the TFEU)? Or an established interpretation thereof?
Of course there can be different rules for different types of organizations or family structure. I feel you're now intentionally being intellectually dishonest, trying to muddy the EU's claims by equating it to the typical taxpayer categories we all deal with at tax time. Am I filing single or with dependents. Am I incorporated or a sole proprietor and based on the answers paying the appropriate statutory rate for my tax group.
I'm not being at all intellectually dishonest or trying to muddy the EU's claims. I'm trying to be completely clear on what is and is not being asserted and what assertions the Commission has and has not supported. Being quite clear on those things - resolving and focusing on the issues rather than leaving them as a vague cloud of accusation - favors Apple and Ireland's position in this matter. If anything, it is the Commission which has tried to muddy the issues. And, it seems, it has been somewhat successful in that.
So here's what it comes down to: Consistency. That's the key. If all other companies with operations in other countries were invited to meet privately with Irish government representatives to declare what they be willing to pay in taxes each year for the next several years then there is consistency. Companies of that organizational type are always allowed to set their own tax basis and declare how much revenue they will make available for taxation. The EU is claiming that Ireland is NOT consistently applying their own tax laws and rules, instead creating arbitrary carve-outs via individual negotiations with select companies. That can create an anti-competitive environment where one company have an unfair and substantial monetary advantage over another simply because Ireland's tax agents are willing to extend the supposed legal cover of Government approval for it.
Other companies with operations in other countries can (and do) ask Ireland's tax authorities for advance opinions which clarify what is allowed under Ireland's tax laws and policies, to include how profit can be allocated between various branches of Irish corporations. That is what we are talking about.
Had you taken the time to read the link I offered you to the initial EU determination of illegal state aid from a couple years ago you would know that is exactly NOT what we're talking about. The EU paper discusses the legal opinions profered by various countries tax agencies in response to taxpayer inquiries. I'll quote it for you so you don't have to follow the link if you'd rather not:
"Tax rulings as such are perfectly legal. They are comfort letters issued by tax authorities to give a company clarity on how its corporate tax will be calculated or on the use of special tax provisions. However, the two tax rulings (Fiat and Starbucks) under investigation endorsed artificial and complex methods to establish taxable profits for the companies. They do not reflect economic reality. This is done, in particular, by setting prices for goods and services sold between companies of the Fiat and Starbucks groups (so-called "transfer prices") that do not correspond to market conditions. As a result, most of the profits of Starbucks' coffee roasting company are shifted abroad, where they are also not taxed, and Fiat's financing company only paid taxes on underestimated profits.
This is illegal under EU state aid rules: Tax rulings cannot use methodologies, no matter how complex, to establish transfer prices with no economic justification and which unduly shift profits to reduce the taxes paid by the company. It would give that company an unfair competitive advantage over other companies (typically SMEs) that are taxed on their actual profits because they pay market prices for the goods and services they use." http://europa.eu/rapid/press-release_IP-15-5880_en.htm
I did read that link (i.e. that press release) and even went to the other two decisions themselves (i.e. those for Luxembourg / Fiat and Netherlands / Starbucks) and glanced through them.
How does what you've quoted demonstrate that, when it comes to the Ireland / Apple matter, it isn't tax rulings issued by Ireland (which Ireland refers to as advance opinions) which are the issue? Those advance opinions very much are what we're talking about. It is those advance opinions which the Commission claims represent illegal state aid given to Apple.
As I suggested, parties (e.g. Apple) can ask Ireland how certain things would work with regard to their tax situations - e.g., can they do this or that. Ireland issues advance opinions telling them how those things would work.
I really do believe you know better. You're a really smart guy. Just as the EU letter acknowledges advance opinions, aka "comfort letters", are perfectly proper. That's not the issue and never was.
Know better than what? (Thanks for the compliment, by the way.)
What is at issue in the Ireland / Apple matter are two advance opinions issued by Ireland to Apple. The question is whether those advance opinions constitute state aid in violation the TFEU. Do you dispute that?
Comments
.... It's the foundation of all great right-wing "thinkers": spin and lies...
But, your question: "WTF is Apple paying the price". They aren't. The case is against Ireland.
Further, you ask/state: "going after entities that acted in good faith years ago for Ireland's screw up"
I am not at all sure that Apple was all that innocent. Ireland has been known for many years as a tax haven nation similar to off-shore islands like the Caymen's... While I don't blame Apple for taking advantage of legal loopholes, I do think that these havens from taxes and the rule of law need to be shut down.
It also might be tricky legally for Ireland to try to use government authority to compel Apple to remit the funds, as what it's being told (by the European Commission) to do runs counter to its own laws. Its own laws and tax policies (as they existed during the relevant time period) don't dictate that Apple owes this money.
None of that is meant to suggest that Ireland really wants to collect these funds.
Have you read the European Commission's full decision (of August 30th, 2016) in this matter? It superficially (and repeatedly) asserts that Ireland gave Apple a selective advantage. But while it goes on at length ostensibly supporting that assertion, it never substantively does. It substantively supports a different assertion, i.e. that Ireland's tax policies were (in combination and because of their effects in some situations) improper. But it acknowledges that Ireland is free to choose such tax policies.
The European Commission lacks authority to take the actions it did against Ireland based on Ireland's tax policies not having been what the European Commission (and others) would consider proper. So it pretends that it demonstrated a selective advantage even though it didn't really try to do so. The European Commission's substantive arguments focused on supporting the idea that Ireland's tax policies were improper, not on supporting the idea that Apple got a selective advantage.
In order to do A, the Commission needed to demonstrate X. So it asserted X, demonstrated Y, claimed to have demonstrated X, and did A.
I've asked others this question, and never gotten a substantive answer: If Ireland allowed Apple to do something that it didn't allow other similarly situated parties (who desired to do that something) to do, what specifically is that something?
Use transfer pricing not based on the application of an arm's length principle? Not be considered tax resident in Ireland, under certain circumstances, even though they were incorporated in Ireland and weren't considered tax resident anywhere else? Use transfer pricing between Irish and non-Irish branches of Irish corporations? Something else? Some combination? I'd like for someone to tell what specifically it is that they believe Apple was allowed to do which other similarly situated parties would not have been allowed to do.
FWIW now that the "non-taxable in any state" tax-avoidance scheme has been widely exposed the Irish have closed that little known and impossible for most companies to use loophole and sunsetting Apple using it for tax avoidance as of last year, but I'd have to look to confirm. The other better-known and oft-used "Double-Irish" scheme has it's sunset coming up in 2021, again if I've read correctly. Why so long? IMHO to give multinational corporations operating in Ireland time to craft new Irish tax avoidance schemes that get Irish government approval but avoid EU sanctions.
Sell their products in successful fully developed countries with high tax rates -- but record the sale in lower income countries (like Ireland or the Caymen Islands) where they get enormous tax breaks and lax oversight.
It is why corporations (like Apple) have tens of billions of profits sitting in overseas bank accounts.
It's not an Apple problem and its not an Ireland problem or an EU problem. It's an international problem.
Second, Apple wasn't given a lowered tax rate. A lower effective tax rate was the result of what Apple was allowed to do - which is what Ireland says was allowed under its existing tax laws and policies. Apple having paid a lower effective tax rate (based on the assumption that the proper taxable income of the Irish branches should have been higher than it was) doesn't represent something that Apple was allowed to do that others wouldn't have been allowed to do. The issue would be whether the accounting used to determine how much taxable income those Irish branches had was allowed under Ireland's tax laws and policies. The actual rate applied to that taxable income wasn't some lowered rate granted to Apple.
Third, in determining how much taxable income the Irish branches had, what was Apple allowed to do that others wouldn't have been allowed to do? That's the issue. Apple asked Ireland if, in accordance with Ireland's tax laws and policies, it could determine that taxable income in certain ways. That's what parties do in order to get clarity (and create reliance interests) on how tax laws and policies would apply in particular circumstances. It's something that happens quite often. Ireland told Apple that its tax laws and policies allowed Apple to determine that taxable income in certain ways.
That those ways seem improper to some doesn't demonstrate a selective advantage. The issue is, were others - or would others have been - not allowed to determine taxable income for Irish branches (of non-tax-resident Irish companies) in the same way? For instance, would Ireland have required others to apply an arm's length principle in determining the transfer pricing which dictated how much taxable income their Irish branches had? If someone can make that case, then a selective advantage might be demonstrated.
Apple calculating the taxable income of Irish branches based on, e.g., applying a percentage to the expenses of those branches wouldn't demonstrate a selective advantage. Again, Ireland is allowed to choose its tax policies. Those policies can include, e.g., not requiring the application of an arm's length principle in allocating profits as between Irish and non-Irish branches. Those claiming selective advantage need to demonstrate that others wouldn't have been allowed to use the same kinds of profit allocation methods that Apple used.
The European Commission didn't do that. Instead, it essentially argued that - although Ireland wasn't required to require the application of an arm's length principle - what Ireland allowed Apple to do didn't yield results consistent with the application of an arm's length principle, so it must have differed from what Ireland's general tax policies allow. Surely Ireland means, in general and through its tax policies, to yield results which are consistent with the application of an arm's length principle, so the reality that that didn't happen in Apple's case means that Ireland allowed something in Apple's case that it wouldn't allow in other cases. Never mind the reality that Ireland insists that it doesn't mean to require the application of an arm's length principle in such contexts.
The Commission admits that it doesn't get to decide what Ireland's tax policies are (or what they mean to achieve), yet insists that Ireland wouldn't have chosen tax policies which are different (or meant to achieve something different) than what the Commission thinks they should have been (or meant to achieve). The Commission presumes to know what Ireland meant to achieve, despite Ireland's assertions to the contrary. So since Ireland's application of tax policies to Apple didn't achieve that, that application to Apple must have been contrary to what Ireland means to achieve in general and thus represents a selective advantage. Ireland, rightfully, calls BS - the Commission is wrong with regard to what our tax policies are meant to achieve.
How is the Irish situation different than the similar illegal state aid tax claims made against the country of Luxembourg and the privately negotiated and not publically announced special tax exceptions they crafted for select companies, or the Dutch who also made the same non-public tax exceptions for only a few select companies. All three countries have been accused of fostering an uncompetitive business environment by offering specially crafted and private state aid agreements enabling only specific large and already wealthy companies to avoid the taxes other competitors (perhaps much smaller) are required by law to pay. All three countries have been found liable for recovering the taxes they should have collecting all along and restoring competitive balance at least as far as taxation is concerned.
The initial EU Commission ruling on the special tax arrangements offered by certain countries might be easier grasp for the reasoning behind it. That one did not involve Apple and does seem to explain things more simply that the ruling you've been relying on in the Apple specific one.
http://europa.eu/rapid/press-release_IP-15-5880_en.htm
FWIW Amazon is now the latest multinational dinged for taxes due to special tax agreements ruled to be illegal.
The issue is whether similarly situated parties are treated differently, with a particular party being given an advantage that others don't (or wouldn't) have. The comparison is between parties "who, in light of the objectives intrinsic to the system, are in a comparable factual and legal situation." As I suggested before, this is an area where the Commission just begged the question.
If it were the case that all Irish corporations had to be treated the same (in all regards) for tax purposes, it would have been very easy to demonstrate that they weren't. Ireland's laws treated certain Irish corporations as non tax resident if they met certain conditions, and that clearly allowed for different tax treatment. I don't think anyone (at least not many) would dispute that.
But then, that's why we have laws. To make sure that everybody plays by the same rules and to prevent things from getting too far out of control. For instance: special considerations were at the heart of the 2008 crash: the banksters used off-shore accounts in states with lax regulations to transform bad loans into AAA investments that were then sold to unsuspecting investors. Or, Panama is still being used to launder IDs and money.
The EU is simply telling Ireland that, if they want to enjoy the privileges and advantages of being in the EU, then they have to play by the rules.
So here's what it comes down to: Consistency. That's the key. If all other companies with operations in other countries were invited to meet privately with Irish government representatives to declare what they be willing to pay in taxes each year for the next several years then there is consistency. Companies of that organizational type are always allowed to set their own tax basis and declare how much revenue they will make available for taxation. But they aren't. The EU is claiming that Ireland is NOT consistently applying their own tax laws and rules, instead creating arbitrary carve-outs arranged by individual negotiations with select companies. That can create an anti-competitive environment where one company has an unfair and substantial monetary advantage over another simply because Ireland's tax agents are willing to extend the supposed legal cover of Government approval for it.
I've had a consistent respect for the knowledge and detailed explanation of certain issues you bring to the forum. You're one of a few who generally avoids commenting at all unless you have a pertinent contribution to make, and always doing so politely and with respect to members you might be replying to. In this particular case it's beginning to feel as tho you have a vested personal interest in how the Irish and/or Apple tax issues are perceived and their outcome, and trying to craft the story that gets you there. Just my perception of course and I could well be mistaken.
I've no idea what the outcome will be once all the drama has run it's course, but I can certainly understand and appreciate the arguments on both sides. that you refuse to acknowledge the veracity of any of the claims made by the EU Commission is telling IMO. FWIW I do personally believe that "the rich get richer" is not particularly beneficial to the economy as a whole. Benefiting the few at the cost to the many eventually leads to anger rearing it's head. Throughout history when the purposefully disadvantaged finally have their fill of an entitled and controlling minority disconnected from the tribulations of everyday life it usually ends ugly.
End of social commentary.
If you agree that Ireland can have tax policies which treat different kinds of entities differently, then why did you disagree with what I had said in the previous post? I said:
It is the case that the issue isn't whether certain tax policies apply to all Irish corporations. If that were the case, it would mean that Ireland couldn't have tax policies which treat different kinds of corporations differently. The best I can tell, you're now agreeing on that point. If not, you can let me know.
Other companies with operations in other countries can (and do) ask Ireland's tax authorities for advance opinions which clarify what is allowed under Ireland's tax laws and policies, to include how profit can be allocated between various branches of Irish corporations. That is what we are talking about. Apple asked questions, and Ireland provided answers, relating to Apple's tax situation. Ireland refers to such things as advance opinions. We have something similar in the United States which are referred to as private letter rulings.
There is nothing wrong with issuing such tax rulings - private letter rulings, advance opinions, whatever they are referred to as. They are a necessary part of the enforcement of tax policies. The issue is, were other similarly situated entities not allowed to do what Apple was allowed to do? Not allowed, e.g., to allocate profit between branches in the same way(s) Apple was? Is there something in Irish law that prohibits companies in such situations from allocating profits in such ways? Some principle underlying its other tax policy rulings? Ireland says no, that its tax rulings for Apple weren't inconsistent with its tax policies as those policies apply to similar circumstances. The question is, can someone point to something, e.g. in Irish law, that demonstrates otherwise? Can they point to tax rulings given to other companies which say those companies can't do meaningfully the same things in similar circumstances? Again, if other parties have questions about what they can and can't do in accordance with Irish tax policies, they can ask Ireland for clarity (or certainty) just as Apple did. That's a normal function of tax authorities.
I'm aware of what the Commission has claimed. My point is that it has only superficially made that claim. It has not supported that claim. Rather, it went on at length supporting a different claim - a claim that doesn't matter when it comes to invoking the authority it invoked in this matter. That other claim, the one which it actually supported, matters in the court of public opinion I suspect. But it doesn't justify the Commission's actions.
What it comes down to is this: Can anyone identify something in Irish law, or in other advance opinions which Ireland has issued, which - under comparable circumstances - prohibits the methods of inter-branch profit allocation which Apple was allowed to us?
If the answer is yes, then the claim that Ireland gave Apple a selective advantage might be supportable.
"Tax rulings as such are perfectly legal. They are comfort letters issued by tax authorities to give a company clarity on how its corporate tax will be calculated or on the use of special tax provisions. However, the two tax rulings (Fiat and Starbucks) under investigation endorsed artificial and complex methods to establish taxable profits for the companies. They do not reflect economic reality. This is done, in particular, by setting prices for goods and services sold between companies of the Fiat and Starbucks groups (so-called "transfer prices") that do not correspond to market conditions. As a result, most of the profits of Starbucks' coffee roasting company are shifted abroad, where they are also not taxed, and Fiat's financing company only paid taxes on underestimated profits. This is illegal under EU state aid rules: Tax rulings cannot use methodologies, no matter how complex, to establish transfer prices with no economic justification and which unduly shift profits to reduce the taxes paid by the company. It would give that company an unfair competitive advantage over other companies (typically SMEs) that are taxed on their actual profits because they pay market prices for the goods and services they use."
http://europa.eu/rapid/press-release_IP-15-5880_en.htm
How does what you've quoted demonstrate that, when it comes to the Ireland / Apple matter, it isn't tax rulings issued by Ireland (which Ireland refers to as advance opinions) which are the issue? Those advance opinions very much are what we're talking about. It is those advance opinions which the Commission claims represent illegal state aid given to Apple.
As I suggested, parties (e.g. Apple) can ask Ireland how certain things would work with regard to their tax situations - e.g., can they do this or that. Ireland issues advance opinions telling them how those things would work.
What is at issue in the Ireland / Apple matter are two advance opinions issued by Ireland to Apple. The question is whether those advance opinions constitute state aid in violation the TFEU. Do you dispute that?