Ireland prepares for a fight with EU over Apple tax clawback

“Ireland vowed to fight any adverse decision on its tax dealings with Apple Inc. as the European Union prepares to reveal the size of any potential bill facing the world’s richest company,” Dara Doyle reports for Bloomberg.

“Irish authorities are bracing for a decision as soon as this week that the state provided the iPhone maker with illegal aid through a sweetheart deal in return for creating jobs in the nation,” Doyle reports. “‘We don’t believe we gave any state aid to Apple,’ Eoghan Murphy, junior finance minister, told broadcaster RTE. ‘It’s in the national interest that we defend our international reputation in this regard.'”

Doyle reports, “In preliminary findings in 2014, European competition authorities said Apple’s tax arrangements were improperly designed to give the company a financial boost in exchange for employment in Ireland. Apple has firmly denied using any tax gimmicks, while Ireland is determined to fight any adverse findings as it seeks to defend the corporate tax code.”

Read more in the full article here.

MacDailyNews Take: If the quasi-governmental political confederation — that’s already been hit with one very significant defection and has the existential threat of widespread desertions hanging over its collective head — demands so-called “back taxes” from Apple, it’ll be based invisible legal grounds since the company simply 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

As we wrote back in April: Apple has repeatedly and confidently stated that they didn’t do anything that was against the law. Therefore, unless the EC tries to change the law retroactively, if that’s even possible, or tries to collect taxes retroactively in some other fashion, Apple is in the clear.

SEE ALSO:
U.S. government warns EU: Do not hit Apple with a massive back tax bill – or else – August 25, 2016
European Commission denies anti-U.S. bias after U.S. Treasury intervention over Apple, Amazon tax probes – August 25, 2016

29 Comments

    1. This looks like a distraction manufactured by Apple at least to me it does!

      How many billions did Apple promise to pay the Irish politicians for the politicians to take sides with them?

      It seems like Apple has a huge and more pressing problem to take care of (see link below).

      https://a.msn.com/r/2/AAid4XW?m=en-us

      Apple, you need to solve this issue before it bites your rear end.

      1. NO, it was aliens from the planet moron that faked the whole thing. Trump told me so himself. He said “All aliens are bad, unless they are keeping him happy in bed”..

        Now, Martians love the surface. They use it for a sun hat against the bright Mars days. Trump told me about that one too. Its all one big conspiracy. /s

        Trust me…. er …. Trump.

    2. Think: I advise you do what you claim to do.

      If Apple negotiates a special tax rate of 2.5% from Ireland (one fifth of what other Irish companies pay) from Apple’s entire EU sales, which at the time was clearly against EU law of unfair tax rates, what do you call that? Corruption on the part of Irish officials. You cannot legally distort the marketplace by giving your buddies a massive tax break while sticking other companies with a huge bill. Just because this form of corruption in the USA is becoming more and more commonplace does not make it acceptable. A fair marketplace is necessary for the long term benefit of everyone. Hurrah for the EU for enforcing the law.

      Does that mean I support high tax rates? Of course not. That is a separate issue which diverse unions like the USA and the EU have always struggled to achieve.

      By the way, if taxes are too insanely high in the USA, then why do so many Fortune 500 companies headquarter themselves in the most expensive cities they can find? Could it be that those high taxes pay for superior infrastructure that is necessary to run a better business? Ireland doesn’t offer superior location, infrastructure, efficiency or anything tangible to running Apple’s business. Ireland has long been just a tax scam and you know it. It is well documented how Ireland cheats the EU. And no, Apple does NOT collect all the taxes where its sales are made. That’s all part of the double Irish tax cheat, which is a loophole now being closed:

      https://en.wikipedia.org/wiki/Double_Irish_arrangement

      1. Mike, I think its great that you are so much of an insider on these issues. You know everything going on behind the scenes.

        You are so right about Ireland being just a tax scam. Why else would Apple work out of a country 20,000 miles from Europe unless it was a tax scam. ER……. wait…… actually Ireland is right next to Europe is right next door. speaks english (mostly), is friendly with the US and has a pretty solid government.

        Just saying.

  1. To repeat what has been repeated many times before (and mind you, I do not think that Apple owes the taxes):

    1. Greed has nothing to do with this. If Apple has to pay these alleged back taxes, it will be paying them to Ireland, which does not want the money. They would rather have the advantages that they bargained for when they adopted their domestic tax policies. All the EU has to gain is a uniform Eurozone-wide tax policy that does not steer businesses out of one EU country and into another based solely on the local tax regime.

    2. No matter how many times everyone keeps repeating that Apple and Ireland followed the law, that is yet to be determined by a court of competent jurisdiction. The allegation is that the Irish tax rules were invalid because they conflicted with Irish treaty obligations. Ireland does not get to determine unilaterally what it is obliged to do under its international treaties. If compliance with treaties were purely voluntary, nobody would bother with them.

    3. This has noting to do with anti-Americanism. The whole point is that companies from America—and all other nations—should be treated exactly the same as companies from inside the EU, no better and no worse. This dispute would be exactly the same if Apple were Polish rather than American.

    4. It is not changing the rules after the fact. The EU treaties were already in place when Apple entered into its arrangements with Ireland. If they are invalid now, they were invalid then.

    1. Lie #1: “Greed has nothing to do with this.”
      Lie #2: “No matter how many times everyone keeps repeating that Apple and Ireland followed the law..”
      Lie #3: “This has noting to do with anti-Americanism.”
      Lie #4: “It is not changing the rules after the fact.”

      Four for four, congratulations, you are now eligible to be a speechwriter for Hillary Merkel.

      1. Again, Botty, I’m not saying that Apple is wrong, just that it isn’t right because of any of those four reasons. If you think I am factually incorrect, provide some evidence instead of calling names.

    2. Uh, no. Per your number point #4. It is indeed changing the rules after the fact. Apple established its Irish subsidiary in 1980. Those tax laws for corporations were already in place at that time, designed to attract businesses to Ireland. The European Union was formed in 1983. Sorry, your conclusions are just wrong.

      1. Ireland joined the European Economic Community in 1973. The 1983 event was essentially a name change. So, yes, the Irish rules that Apple operated under after 1980 were subject to Ireland’s treaty obligations at all times.

        Again, I’m not saying that the Irish rules are actually void under those treaties, only that the treaties are not being applied retroactively. Whether the rules comply with the treaties is for the proper courts to decide, which is why Ireland plans to join Apple in appealing any adverse finding by the European Commission.

  2. “Apple didn’t do anything against the law”.

    That’s like saying buying stolen goods is honorable. It isn’t. Ireland broke the law by giving unfair tax advantages to select companies, including Apple, Google, Microsoft, etc. Small companies bore the burden so Cook et al could pile up huge overseas cash reserves that are essentially sitting unused. Now that the Irish malfeasance is finally being prosecuted, Ireland will have a very large bills to pay. Who do you think would be a better source to pay the back taxes, Ma and Pa’s chip shop or Apple? You can’ get blood from a stone.

    https://9to5mac.com/2016/03/09/opinion-apple-tax-europe/comment-page-1/

    1. Good article on the link, thanks.

      Isn’t unfair taxation why Americans revolted in the first place? It looks like Ireland has been as unscrupulous as China in rewarding its select friends while penalizing small businesses and individuals with huge local taxes and fees.

    2. Which “Small companies bore the burden so Cook et al could pile up huge overseas cash reserves that are essentially sitting unused”?

      To whom will Ireland have “very large bills to pay”?

      And as the 9to5 opinion states, “consider the politics”, if all of this was so “against the law”, why hasn’t Ireland or the EU done anything about it for decades? Yep, “consider the politics”.

      1. According to the OECD, Ireland taxes personal income at 27.5% for average wages and up to 38.8% for high income earners. The standard Book corporate tax rate is 12.5%.

        VAT (a sales tax) in Ireland is 23% with special reduced rates for elderly and farmers.

        Obviously the total tax burden in Ireland is much more skewed to the individual than to the corporation, even more so than it is in the USA.

        http://www.oecd.org

        1. So, in Ireland, where Apple has been paying 2.5% on billions of foreign income, where Apple has long had about 3000 employees, during the period in question, you’re saying somehow 2.5% taxes on billions in income is not enough for a company that only had a few thousand employees in the country? I’m sure Apple’s taxes paid, per employee were the highest in all of Ireland. How did “small companies bore the burden”?

  3. From Apple’s perspective, its almost a wash. Every dollar they pay Ireland is a dollar they don’t pay the IRS. However, they do lose the opportunity cot on they money they have to pay while awaiting repatriation of funds to US. However, the appeals will defer they payments to anyone for a while.

  4. I think it’s funny that Ireland negotiating a deal with a company that would increase job opportunities for its citizens is somehow considered a bad thing. I’m thinking that’s a win-win for the parties. Apple gets a good financial deal and Ireland gets the additional jobs and tax revenue from citizens working those jobs.

    1. Obviously it is a win-win for Apple and Ireland. Nobody thinks otherwise, just as nobody thinks that Apple has violated any valid Irish law or regulation.

      The potential losers are the other 20+ EU countries who lost out on the advantages of having Apple’s headquarters solely because they complied with their treaty obligations when Ireland arguably did not.

      The reason for the rules is so that the EU member states will not try to build their economies by using local government policies to steal business from one another. The treaties limit tax benefits, direct subsidies, and other forms of preferential treatment. The creation of a level playing field is the major rationale for the EU project.

      The nature of any treaty is that both sides give up something in order to get something. Ireland has benefitted enormously from EU membership, but the price for receiving those benefits is that it must meet its obligations.

      Again, I’m not saying that they didn’t since that is to be determined judicially.

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