European Commission takes Ireland to court for failing to collect taxes from Apple

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  • Reply 61 of 63
    gatorguygatorguy Posts: 24,294member
    carnegie said:
    gatorguy said:
    carnegie said:
    gatorguy said:
    carnegie said:
    gatorguy said:
    carnegie said:
    gatorguy said:
    carnegie said:
    gatorguy said:
    carnegie said:

    gatorguy said:
    JWSC said:
    bradipao said:
    JWSC said:

    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.
    gatorguy said:

    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?


    Carnegie it's not that Ireland gave tax answers to Apple. That's perfectly fine, and they would be remiss in not doing so. It's the answer that resulted in a special AGREEMENT Ireland made with Apple. Surely you cannot be missing that. No one is claiming Apple did anything illegal.  Well at least not anyone who's bothered to read beyond a headline. 
    edited October 2017
  • Reply 62 of 63
    carnegiecarnegie Posts: 1,078member
    gatorguy said:
    carnegie said:
    gatorguy said:
    carnegie said:
    gatorguy said:
    carnegie said:
    gatorguy said:
    carnegie said:
    gatorguy said:
    carnegie said:
    gatorguy said:
    carnegie said:

    gatorguy said:
    JWSC said:
    bradipao said:
    JWSC said:

    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.
    gatorguy said:

    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?


    Carnegie it's not that Ireland gave tax answers to Apple. That's perfectly fine, and they would be remiss in not doing so. It's the answer that resulted in a special AGREEMENT Ireland made with Apple. Surely you cannot be missing that. No one is claiming Apple did anything illegal.  Well at least not anyone who's bothered to read beyond a headline. 
    Of course it's not the mere reality that Ireland gave an advance opinion to Apple which is, as claimed by the Commission, the problem. I didn't claim that was the case. Indeed, in that same post which you responded to I indicated that there was nothing wrong with such tax rulings and that they were a necessary part of enforcing tax policies.

    In response to your earlier comments about other companies being able to do what Apple did, I referred to their ability to ask Ireland for advance opinions. I said, that is what we are talking about - i.e., what is at issue are advance opinions issued to Apple. I don't really understand why, but you then suggested that I hadn't read the link you provided earlier (which I had) and that if I had I would know that is not what we're talking about.

    It isn't clear to me what from that link, or from the passage you quoted, demonstrates that what I said was incorrect. In the Ireland / Apple matter, what is at issue are advance opinions issued to Apple. The Commission indicated as much in its decision. It found that those tax rulings constituted aid given to Apple which violated the TFEU. Why it claims they did is another matter which I've already gone a bit into. But it is those rulings - those advance opinions - that are the issue.

    The passage which you quoted from the press release you linked to didn't conflict with what I had myself said. It indicated, among other things, that there's nothing wrong - in and of itself - with issuing tax rulings. I had already indicated that myself.
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