EU tax probe spotlights Ireland’s allure for multinationals

“An EU probe into a tax deal between Ireland and Apple is raising pressure for a tightening of a controversial corporate tax system helping the country accelerate away from crisis,” Conor Barrins reports for AFP. “The attention will be on any changes in Ireland’s draft budget to be presented next week.”

“In the face of strong criticism that Ireland’s tax policy is unduly favourable and distorts investment decisions, Ireland and Apple insist that the arrangements for the US company’s European headquarters do not amount to illegal state aid as defined by EU competition rules,” Barrins reports. “‘The government must tread a balance between appeasing the international community and retaining an attractive offering to entice multinational investment,’ Ian Kehoe, the editor of the Sunday Business Post, said in an editorial this past week. ‘Change is coming in the budget,’ Kehoe said.”

Barrins reports, “That change is highly unlikely to affect the 12.5-percent corporation tax rate, a cornerstone of policy which is backed by all political parties.”

Read more in the full article here.

Related articles:
EU watchdog to give reasons for inquiry into Ireland’s tax treatment of Apple – September 29, 2014
European Commission accuses Apple of prospering from illegal Irish tax deals – September 28, 2014
EU threatens expanded probe into Ireland’s tax practices regarding Apple, Googles, other companies – June 20, 2014
EU’s investigation of Apple’s taxes isn’t going to cause the company any problems – June 13, 2014
EU launches tax avoidance investigations on Apple, Starbucks, Fiat – June 11, 2014
Not in Taxes anymore: On site at Apple’s famous Irish ‘headquarters’ – November 2, 2013
Regan: U.S. tax code spurs loveless foreign corporate ‘marriages’ – May 13, 2014
Ireland to close Apple’s tax loophole, but leave bigger one open – October 15, 2013
G20 think tank OECD proposes blueprint for global crackdown on tax avoidance – July 19, 2013
Thomas Sowell on Apple, corporate taxes, and ‘the road to serfdom’ – May 28, 2013
Taxing Apple just taxes you – May 24, 2013
Don’t tax Apple, tax its shareholders – May 24, 2013
If Apple paid more tax, we might pay less or something – May 22, 2013
Apple CEO Tim Cook pounds another nail into the Keynesian coffin – May 22, 2013
Apple CEO Cook makes no apology for company’s tax strategy – May 22, 2013


  1. The problem is not Ireland having a low corporate tax rate to attract businesses to set up and employ people on Ireland. The problem is countries using transfer pricing to shift profits from one country to another. Just pay the dam tax in the country where you made the profit already.

    1. I thought the EU specifically allowed tax on goods sold anywhere within the EU to be paid in any one EU country a company chooses. I also thought this was done to encourage competition on tax rates because the EU wanted to reduce such taxes which the EU feels is bad for business and therefore the community as a whole.

      And if the EU doesn’t like it, just change the law.

      When did you last volunteer to pay higher taxes than required?

    2. “Just pay the dam tax in the country where you made the profit already.”

      Nice and simple in theory, buzz. In practice, however, it is much more difficult than that for a multinational company to assign costs, revenues, and profits. As a result, companies game the system to assign costs to high-tax regions and profits to low-tax regions.

      If everyone adopted a similar tax code (say Ireland’s 12.5% tax), then this would not be as much of an issue.

    You tell me if that is just not paying more tax than the law requires or starting to get pretty close to avoidance. It is not just Apple, lots of companies run this system. Don’t even get me started on oil companies transfer pricing. I am an apple share holder and I would rather see them pay more tax. I doubt it would make any difference to the stock price which seems to be more related to wild rumors than after tax profits. It won’t change the dividend either as that is paid out of US cash and earnings. So really as s shareholder I think the result to me would be either no different or such a small difference I wouldn’t notice.

    1. “You tell me if that is just not paying more tax than the law requires or starting to get pretty close to avoidance.”
      Tax avoidance is the norm. Very likely even you, buzz, do it. You might even buy online paying no sales tax while you could pay the same price for the item in a local brick and mortar store but then have to pay sales tax.
      Besides, if Apple’s senior management did not avoid taxes as much as possible you can be damn well assured that a group of stockholders would band together and do a class action suit against Apples senior management and board demanding changes in operations and cash to the class members for overpayment in taxes.
      Tax avoidance is normal. Tax dodging (what I believe you were trying to reference) is not. Tax dodging (in it’s most benign form) is intentionally reading the laws in a twisted way and not paying all the taxes that are normally due. This is *NOT* what Apple is doing. Apple is in 100% agreement with the various EU countries involved as to how the rules apply, and Apple is paying the taxes accordingly.

      “I am an apple share holder and I would rather see them pay more tax.”
      Then you are a member of a tiny minority of AAPL stockholders.

      “It won’t change the dividend either as that is paid out of US cash and earnings.”
      Actually, a significant fraction of the dividends and stock buy backs are being done out of loans taken out by Apple. The reason is that a huge fraction of Apple’s cash and short term assets are tied up in non U.S. countries. This is one of the given justifications for a special tax holiday for large U.S. companies to bring into the U.S. their non U.S. cash. If Apple could do this at a significantly reduced tax rate, it would not have to borrow money to buy stock and pay stockholders.

      “So really as s shareholder I think the result to me would be either no different or such a small difference I wouldn’t notice.”
      Then you don’t know how the system works. If all the tax rules that seem to give Apple an “unfair” tax advantage were to suddenly disappear you can absolutely guarantee that those financial nuts on Wall Street would be instantaneously be yelling “Sell” on Apple’s stock. Even with the current tax laws many analysts are claiming Apple’s net profits are not sustainable. If the tax system were to suddenly change all of those analysts would suddenly yell, “I told you so.”, others would climb onto that bandwagon, and the feeding frenzy would be on. You could guarantee a 10% hit on the price of AAPL and likely a hit of 25% or more.

      1. I don’t think it is an apple problem it is an international tax code problem. The problem seems to be that large multi national companies tax guys are better than the policy makers. Many of your pints may be correct but I think they are boating the letter of the law not the spirit of the law. I can see why they do it but I for one disagree that it is ok. We are all entitled to our opinions. I am not suggesting they are doing anything illegal. But I do think it is unethical.

        1. Following up on Shadowself’s post:

          Buzz, do you voluntarily pay the state sales taxes when you make an internet purchases on which no taxes were charged? If not, then you are violating both the letter and the spirit of the law.

          1. I live in New Zealand not the US. Most online purchases I make are from New Zealand bases sites with the exception of Apple. Sales tax is only payable in New Zealand on imported goods worth more than $400. My point is if some one lived in the U.S. and made the occasional out of state online purchase and inadvertently avoided some sales tax that is quite different to rearranging much of their life so that they make almost all purchases online for the main purpose of avoiding sales tax.

  3. Change the law so the richest companies pay a fair share of taxes? No way! That would “hurt the economy”.

    Instead, let’s keep slashing spending for schools, police, firefighters, road maintenance, and those who’ve earned retirement – ya’know, so we can balance the budget “without hurting the economy”.

    Spending is clearly the real reason why the economy is broken – it has absolutely nothing to do with those giant corporations that stopped paying taxes a few years ago under those wacky tax laws they paid their lobbyists to write and “our representatives” in Washington passed.

    1. how are Google and Amazon “Ponzi” schemes?

      Ponzi scheme |ˈpänzē|
      a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.
      ORIGIN named after Charles Ponzi (died 1949), who carried out such a fraud (1919–20).

      1. Both apparently pay out far more than they take in. And in the case of Google, profit reporting just doesn’t stand up to scrutiny. They get a pittance for crappy web ads that magically turns into supposed ‘billions’ $ per quarter.

        I smell a rat.

            1. …my understanding of the above definition is to create a fraud using a company that does not exist and was never planned to exist. Perhaps I am not understanding the popular sense of the word?

            2. Ah yes, I see. Your definition is marginally off. The company exists, but uses newer investors to pay off older ones. Also known as a pyramid scam or multi-level-marketing.

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