“The European Union, locked in a tax battle with the likes of Apple Inc. and McDonald’s Corp., laid down the law in its bid to rein in governments that woo multinationals with special fiscal deals allowing them to reduce their fiscal liability by booking profits abroad,” Gaspard Sebag reports for Bloomberg. “The European Commission, which can ban unfair tax advantages conferred to companies, outlined measures cutting member states’ ability to make rulings that lower the tax burden of foreign businesses.”
“Thursday’s publication, which sets out how the regulator will police state aid, sends a warning shot to corporations shifting profits, insisting that such transactions between subsidiaries should be based on market prices,” Sebag reports. “The regulator on Thursday laid out the powers at its disposal to limit the type of deals it’s probing in Ireland concerning Apple.”
Sebag reports, “All the companies and countries targeted by the EU have denied they broke any rules, raising the prospect of protracted legal challenges.”
Read more in the full article here.
MacDailyNews Take: Apple followed the law when paying their taxes:
There was no special deal that we cut with Ireland. We simply followed the laws in the country over the 35 years that we have been in Ireland. If the question is, was there ever a ‘quid pro quo’ that we were trying to strike with the Irish government – that was never the case. We’ve always been very transparent with the Irish government that we wanted to be a good corporate citizen… If countries change the tax laws, we will abide by the new laws and we will pay taxes according to those laws. – Apple CFO Luca Maestri
SEE ALSO:
Apple cash move will not end EU tax probe – April 11, 2016
Analyst: Apple investors unconcerned about potential EU tax bill – April 5, 2016
EU’s Vestager says will not complete tax inquiries of Apple, others in second quarter – May 5, 2015
U.S. demands EU reconsider tax probes of its companies – February 12, 2016
U.S. Treasury official to meet EU antitrust team over Apple tax deals – January 29, 2016
Apple and Google stand by Europe tax deals; Rupert Murdoch weighs in – January 27, 2016
Apple could trigger global tax war, potential breakdown of the international tax system – January 27, 2016
Apple CEO Cook lobbies EU antitrust chief over Irish back taxes – January 21, 2016
Think Ireland’s corporate tax is unfair? Wave goodbye to Apple and thousands of jobs if it’s changed – November 14, 2015
Apple announces 1,000 new jobs in Ireland as EU tax ruling nears – November 11, 2015
Apple tax probe won’t hurt Ireland, Finance Minister Noonan says – October 5, 2015
EU’s Vestager says will not complete tax inquiries of Apple, others in second quarter – May 5, 2015
Apple warns of potential ‘material’ financial damage from European tax probe – April 29, 2015
Apple may have to pay Ireland 10 years of back taxes – April 30, 2015
EU’s plans to tackle corporate tax avoidance hits first roadblocks — February 12, 2015
Ireland’s Prime Minister: Apple has nothing to fear from end of ‘Double Irish’ tax avoidance strategy – November 4, 2014
When Great Britain regrows their spine and gets the hell out of the EU, this will no longer be a problem for Apple’s dealings in Ireland.
That is, until Brussels decides it needs to interfere in the autonomous business arrangements of mainland EU members.
Bastards are worse than leeches… or locusts. Take, take, take.
Ireland is not part of GB.
Next you’ll be telling me that British North America might rebel against King George!
“such transactions between subsidiaries should be based on market prices”
I’m pretty sure it’s already required that companies use fair transfer pricing between subs, which is what this is about. On the other hand, Apple’s international stores are only a small fraction of their EU sales. Most are from 3rd parties, so transfer pricing is not an issue. Apple Ireland is the european distribution point for their EU ops, so that’s where the profit resides. It’s the EU’s own reciprocity rules that create an incentive for foreign companies to setup business in lower tax jurisdictions like Ireland.
One of the issues in this situation is that the market has not necessarily established a fair price for some of the intangible factors involved in these corporate financial arrangements. It will be interesting to see how this EU effort works out. It is very difficult to legislate “fairness.” First, people have a wide range of opinions on what constitutes a fair arrangement. Second, as soon as you legislate one area to an acceptable state of fairness, the affected corporations will find another area to exploit. In the end, this EU action may have short term and long term consequences that will impact the entire world. Yet I suspect that relatively few people are even aware of it.
Unfortunately, most governments have an insatiable desire for more revenue so they can hand out more free stuff to the voters and lobbyists.
Until tax rates are 100%, governments will always try to get more.
It was criminal what the UK did to successful musician’s like the Beatles & Rolling Stones taxing them to death in the 90-98% range back in the 60’s causing many of them to flee elsewhere.
Let me tell you how it will be.
There’s one for you, nineteen for me.
Cos I’m the taxman, yeah, I’m the taxman.
By George I think he’s got it!
There is a clear counterexample to your assertion that “governments will always try to get more.” Ireland is fighting the EU on this, even though an EU win would result in a windfall of billions of dollars in taxes to the Republic of Ireland. They have made the judgment that promoting economic development is more valuable to their country in the long run. The EU position is based on the view that every member state should be on the same page about maximizing short-term revenues, so that none can gain a competitive advantage over another.
That is hogwash, of course. The policies of the EU, IMF, World Bank, etc. are designed to force poor countries to play on the same field under the same rules as rich countries. That is about as fair as forcing a junior-high football team to play the Dallas Cowboys as if they were equal. Equality is not the same as fairness. As a wise man once said, “The law in its majestic impartiality decrees forbids rich men as well as poor from sleeping under bridges and stealing bread to survive.” Germany does not need to offer tax breaks to promote growth. Ireland, Greece, and Spain do.
Don’t condemn Ireland for demanding extra revenue that it clearly is not demanding and does not want.
What makes you think that governments won’t try to get more even when the rates are at 100%? Governments are not bound by logic.
There is no “warning shot” to be had as they try to overstate the case. If laws change corporations react accordingly as they have done until now, legally. It’s not as though they’ve been caught with their hands in the subsidized cookie jar. It was done with the complicity of the government.
Of course this might mean the loss of business and NO income consequently to some countries if companies leave as a result, shooting themselves in the foot with laid off employees then having to go on the government dole. D’OH!
I love the sense of false drama and histrionics these idiotic writers attempt to create in order to web bait and sensationalize.
OF COURSE EU POLITICIANS NEED MORE TAXES !!!!
here’s how they SPEND IT:
dailymail:
“European chiefs have landed taxpayers with a ‘grotesque’ expenses bill running into millions of pounds that highlights once again the culture of excess in Brussels.
Private jets, luxury hotels, cocktail parties and even Tiffany jewellery were among the items claimed. MPs last night called for an inquiry following the release of astonishing details of commissioners’ lavish lifestyles.
In one case Jose Manuel Barroso, the European Commission president, ran up a £24,600 hotel bill during a luxury four-day stay in New York.
The figures reveal that the EU’s 27 commissioners clocked up a £6.6million bill for hiring private jets in the four years to 2010.
In 2009 alone, the Commission billed taxpayers £265,000 for cocktail parties.
The Commission also ran up a £66,000 bill for a ‘night filled with wonder like no other… state-of-the-art technology, challenging art, combined with trendy cocktails, surprising performances and top DJs’.
Further figures reveal it spent £17,741 over three years on luxury jewellery for VIPs who agreed to appear at EU events. Figures included spending at the renowned jewellers Tiffany.
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MY 2 CENTS:
if politicians were responsible (i.e they don’t give ‘bridges to nowhere contracts’ to their friends and cousins, don’t spend $500 on toilet seats — 30+ billion of the 50 b Russian Olympics was embezzled by Putin’s cronies etc) I THINK TAXES WOULD BE LESS THAN HALF IT IS NOW FOR EVERYONE WITH A HIGHER STANDARD OF SERVICES.
btw I did some subcontracting for the govt. How they spend money is QUITE different from how corporations spend money….
Well, when it’s other people’s money, who cares how you spend it… 🤑
To repeat, if the EU wins, the taxes in question here would be paid to the Republic of Ireland… which does not want the money. The only direct financial benefit the European Commission could enjoy would be penalties for conscious tax evasion, which are highly unlikely when the taxpayer relied on the representations of the taxing entity.
This is about the big boys in the EU—Germany, France, and to some extent the UK—throwing their weight around so that the smaller economies like Ireland cannot incentivize local investment to promote growth. The big boys figure this is a zero-sum game where growth in the smaller countries must be coming at the expense of the existing great powers.
I’m not contradicting what you’re saying in general, but I don’t think you fully understand my post:
what I am saying:
Politicians all around waste Taxpayers money while using it on a lavish spending on themselves and stupidity wasteful public spending.
“The only direct financial benefit the European Commission could enjoy would be penalties”
Not really true. The EU Countries including Ireland pay to support the European Commission and all their civil servants (including their cocktail parties) . These countries get their income from taxes.
What I’m saying is the EU (just like politicians all round the world) want more taxes (often blaming corporations like Apple etc ) for their misuse of funds as blaming corporations is a good P.R move and removes scrutiny from themselves. Ireland just happens to be Apple’s thing but the EU commission is looking beyond that and to set precendents and adjust the laws to get more taxes in GENERAL. if Corporations can be bled more EU politicians will benefit as EU contributing countries getting more taxes will be more willing to support their lavish lifestyle.
I agree that it’s a lot of background politics from the big countries etc but the BOTTOM LINE is that politicians in general want more tax money and I’m arguing they always want more tax is that they often waste it. (ireland likes it’s Apple deal over the last so many years as it derives monetary benefit from it).
Poor Apple. I guess the left leaning progressives in Cupertino are finally learning the reality of socialism really sucks. What a bunch of deluded morons.
Time for an anal probe for you. We call it a brain scan.
At somepoint every governing entity needs to get revenue to provide for the very basis of what we call civilization.
At that point tax cheats will disappear.
Pay your fair share and quit draining the world economy in the name of capitalism.