It’s just over a week since Commissioner Vestager announced the state-aid ruling on the tax treatment of Apple in Ireland. We only have the press release and the Commissioner’s statement to go by so it’s still too early to be definitive on what the Commission are actually doing. It could be months before the full ruling is available here but that doesn’t mean we can’t have a stab at what might be going on.
There has been a lot of reaction to what the ruling means for Ireland’s Corporation Tax regime. While there has been massive reputational damage (possibly irreparably so) the ruling does not have any implications for Ireland’s Corporation Tax rate or even for any of the rules that Ireland applies to Corporation Tax.
Unlike previous instances the Commission is not looking for any change in Ireland’s Corporation Tax regime. In this instance looking for changes would likely have been overreach but that is not what the Commission is seeking. Nor is the Commission seeking to retrospectively impose alternative transfer pricing standards which was a central focus of the recent White Paper from the US Treasury. If the Commission’s case required a change of rules or the application of new standards it would have had little hope of standing up to an appeal.
However, the Commission’s case is one it can win. It comes down to the correct interpretation and implementation of Ireland’s Corporation Tax legislation. The Revenue Commissioners have applied one interpretation; the European Commission have come down in favour of a different interpretation. There is nothing retrospective about the Commission’s ruling. They are looking for Irish legislation as it applied at the time to be implemented as was intended. This is something we should all be looking for.
At the heart of the ruling is Apple Sales International (ASI). This company accounts for 99.6 per cent of the headline €13 billion figure. The publicly available information on ASI is assessed here.
[Aside: For an appeal it might actually be helpful to ignore the other company, Apple Operations Europe (AOE), altogether. It represents only a small amount of the recovery amount and its inclusion would just add another layer to an already complex issue. AOE was actually the more important company when the 1991 ruling was put in place and was the subject of a large part of the discussions, and subsequent meeting notes, at that time. In the period since, ASI became the much more significant entity and really is where all the action is.]
Apple Sales International is a non-resident company that has an Irish branch. The disputed opinions concern the allocation of profits to the Irish branch.
The Revenue Commissioners looked only at the branch and accepted that the risks, functions and assets in the branch warranted a taxable income equal to 12.5 per cent of the costs incurred by the branch. This is the view that the Irish branch is not central to the profitability of the company and that as the Irish branch carries out more of the functions under its remit then its taxable income would increase in line with its size and expenditure.
On the other hand the European Commission focused on the only other element of the company – the non-resident head office. The EC argue that as the head office has no substance it cannot be responsible for the profits earned by ASI and therefore the profits of the company can only be attributed to the Irish branch (bar some minor passive income such as interest receipts).
And that is it really. Who is right? Without seeing the full basis for the Commission’s ruling it is hard to know. But Irish law on this is pretty straightforward: if a non-resident company has an Irish branch the branch is subject to Irish Corporation Tax on all of its profits, wherever earned. And that gives us our key question: what are the profits of the Irish branch?
From the press release the Commission do not seem to be arguing that the risks, functions and assets that generate ASI’s profits are located in the Irish branch. And there is no evidence that they are located in Ireland:
- We know that the R&D does not take place in Ireland and the intellectual property or economic rights derived from that was not located in Ireland for the period under investigation.
- All of the key management decisions, such as the cost-sharing agreements with Apple Inc., the manufacturing contract with Chinese producers and the price the products sold at, were made outside of Ireland.
- The sales were not booked in Ireland [or at least no evidence has been provided that the sales were booked in the Irish branch].
When the Revenue Commissioners looked at the Irish branch they saw none of these risks, functions and assets and set the taxable income based on the activities in the branch. So where did the activities that generated the profits take place?
We know it was the United States (for the first two points above at any rate). And if the sales are booked in the United States, which seems likely, how is it that the tax due on the profits from those sales was not levied and collected by the United States? The answer is somewhere in here!
But the US has a problem which results from the desire to have its cake and eat it. The US has no issue with the taxes being deferred (as that is what their system allows/encourages) but it does have an issue if someone else tries to collect the taxes instead. The problem is that the ‘stateless’ nature of ASI means that the Ireland-US tax treaty does not apply. The taxing authority that is responsible for losing billions of tax revenue for its country is not the Revenue Commissioners; it is the IRS.
If Irish Revenue had held the position that the European Commission now says should have applied, then there is no way Apple would have put the structure in place such that 60 per cent of Apple’s profit would be subject to 12.5 per cent tax in Ireland. If the Revenue had given this opinion then Apple would have gone away for a couple of days and come back with an alternative structure that would have resulted in almost the same tax outcome as did occur. Ireland would levy tax on the activities of the Irish branch and Apple would enjoy a deferral of the US taxes due on its profits. Thinking that Apple would have paid €13 billion in tax to Ireland in the absence of the disputed Revenue opinion is viewing the world through a very static lens.
Of course, if Apple decides to locate the risks, functions and assets that generate its profits in Ireland they should be taxed here at the appropriate rates. The press release tells us that the rulings in question ended in 2014 due to a restructuring within the company at the start of 2015. If this resulted in intangible assets being located in Ireland then the appropriate profits associated with holding those assets should be taxed in Ireland. And if these assets are worth a couple of hundred billion it is up to US laws to ensure that the appropriate capital gains taxes are paid on the transfer. [They didn’t.] But those assets weren’t in Ireland for the period under investigation.
The Commission’s argument appears to be that the head office of ASI is a non-entity and that virtually all of the company’s profits should be attributed to the Irish branch as that is the only substance in the company. The profits are the company’s but the Commission want to turn the Irish branch into the residual claimant of ASI’s profits. The press release tells us:
The “head office” did not have any employees or own premises. The only activities that can be associated with the “head offices” are limited decisions taken by its directors (many of which were at the same time working full-time as executives for Apple Inc.) on the distribution of dividends, administrative arrangements and cash management. These activities generated profits in terms of interest that, based on the Commission’s assessment, are the only profits which can be attributed to the “head offices”.
If the head office does not do anything it cannot exercise management and control (which is the key provision of the applicable residency rules). This is not the first time we have heard this argument. The position was also put forward by former senator Carl Levin at the US Senate hearing into Apple’s tax affairs in 2013. Here is Levin talking about AOI but at the conclusion he says similar arguments apply to ASI:
The evidence shows that AOI is active in just two countries, Ireland and the United States. Since Apple has determined that AOI is not managed or controlled in Ireland, functionally that leaves only the United States as the locus of its management and control. In addition, its management decisions and financial activities appear to be performed almost exclusively by Apple Inc. employees located in the United States for the benefit of Apple Inc. Under those circumstances, an IRS analysis would be appropriate to determine whether AOI functions as an instrumentality of its parent and whether its income should be attributed to that U.S. parent, Apple Inc.
Vestager and Levin are making the same point but use it to reach different conclusions. Levin argues that because ASI is controlled by Apple Inc. it should be deemed an “instrumentality of the parent”. Vestager argues that because ASI is controlled by Apple Inc. the only management and control within ASI can be exercised by the Irish branch. Levin wants the profits taxed in the US; Vestager wants the profits taxed in Ireland.
Neither Levin or Vestager argue that the management decisions that make ASI profitable are made in Ireland. This is the position taken by the Revenue Commissioners who only assessed the taxable income of the functions within the Irish branch. And we can find support for this view. For example:
All strategic decisions taken by ASI, including in relation to IP, are taken outside of Ireland. As with AOE, ASI is a party to the R&D cost sharing agreement with other Apple Inc. subsidiaries under which the total costs of the group’s worldwide R&D are pooled. ASI’s Irish branch has no authority to make decisions relating to Apple IP or the cost sharing agreement. No rights in relation to the Apple IP concerned are attributed to the Irish branch.
Who said this? The European Commission did! By the principles of taxation the Revenue position is correct – they have collected the tax based on the risks, functions and assets in Ireland. However, it is not the principles of taxation that matter; it is the letter of the law that matters.
But on principles let’s say that the board of ASI had decided to outsource the activities of the Irish branch to a third-party service supplier in Cork – just as they have done with the manufacturing activities in China. Would anyone be making the argument that this service supplier should have made €100 billion or more of profit over the past decade? What would be different about what ASI’s head office and board of directors is doing in this scenario?
Of course, ASI did not outsource the activities. They were carried out by the Irish branch and the Commission want to attribute €100 billion of profit to it. The Commission does not dispute the presence of a non-resident head office – but they only associate “limited decisions” to it. Nor does the Commission appear to be taking issue with the stateless nature of the head office. There is nothing preferential about that as lots of companies can achieve it. For example, if a relevant company is registered in Ireland and managed and controlled in Bermuda where is it tax resident? What is preferential about Apple achieving a deferral of the US taxes due on its foreign earnings in Cupertino, California compared to Google achieving the same result in Hamilton, Bermuda?
What the Commission are disputing is the allocation of profits within ASI. Were the Revenue Commissioners correct that the key decisions that make ASI profitable do not take place in Ireland? Yes. Even the European Commission agree with that. But are the European Commission correct that the key decisions that make ASI profitable do not take place in ASI? Yes.
We know from the US Senate that “Apple’s offshore affiliates operate as one worldwide enterprise, following a coordinated global business plan directed by Apple Inc.” Is that enough to mean we can discount the actions of ASI’s US-based board of directors who implement the business plan and enter agreements on ASI’s behalf? A co-ordinated business plan is something we would expect in a large company but Apple Inc. and ASI are separate legal entities. The US Senate reports also tells us:
In fact, the last two versions of Apple’s cost-sharing agreement were signed by Apple Inc. U.S.-based employees, each of whom worked for multiple Apple entities, including Apple Inc., ASI, and AOE.
and on the agreement with the manufacturer in China:
The individual who signed the relevant agreements for Apple Sales International was a U.S.-based Apple Inc. employee who signed the agreement in his capacity as Director of Apple Sales International.
These obviously didn’t happen in Ireland which supports the position of the Revenue Commissioners. But they were carried out under a coordinated plan directed by Apple Inc. so to the extent that ASI did actually exercise management and control where was that carried out? The European Commission are arguing this was only in Ireland such that ASI did not have a non-resident component to which profits should have been allocated.
The courts will decide who is right and both sides will feel they have a chance. Before that we’ll get the full ruling which will show whether any of this is right.
34 replies on “The Apple Ruling: What do we know?”
Thank you for this non-moralistic analysis of the issues. I’m going to print it off to read in more detail. No wonder traditional media are in trouble. I read comments on the Apple decision last week under articles in the FT and The Economist and a common complaint was how poor their journalism was.
It appears from the above that Ireland is caught in the middle between the IRS and the EC.
Just one question: are the legal issues raised above unique to the Apple case in Ireland or are they also reflected in the other high-profile cases such as Starbucks and Amazon?
Old media like the IT are hopelessly lost when the groupthink fails as per this Apple decision. Brian Lucey threw up a super property pin link that wiped the floor with the IT coverage.
Where is the breach of State aid rules? Is it that Apple received preferential treatment (i.e. if other companies were allowed to have the same set up there would not be an issue) or is it intrinsic to the tax structure employed? I am unclear on this and judging by a lot of the coverage there is confusion on this.
Maybe the EU Commission has seen a letter/opinion/ruling from The Irish Revenue saying something like ” the normal treatment for this situation is that………………… but as an exception we will accept that Apple………………… ?
In any case it is impossible to reach a conclusion without seeing the full report from the EU Commission.
I think the state-aid element of the Commission’s case is pretty much open and shut.
Irish legislation says an Irish branch is to be taxed on all of its profits. If the Revenue interpretation means that all of the profits were taxed then there is no state aid. However, if the Commission’s view prevails then there is state aid. Irish legislation says “do X” while the Revenue did something else. So the state aid element follows from whether the ruling is upheld or not.
It doesn’t really matter if other companies were treated similarly or not. If the legislation says “do this” while the Revenue does something else then this is selective as companies who only read the legislation are disadvantaged by not knowing that an outcome different to what the legislation sets out is possible.
if this is the case (and your analysis seems valid to my eyes), then presumably the ECJ will have to send the question “was the Apple tax ruling valid in accordance with Irish law as it applied at the time?” back to the Irish courts to determine?
The courts will decide but not on the basis of any of the points advanced in this contribution because they are not relevant to the central legal point at issue i.e. did Apple get treatment which was selective?
From the press release.
“Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules. The Commission’s investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014.”
The issues of advantage and selectivity are mired in legal controversy, usefully epitomised by the recent opinion of an Advocate-General of the ECJ in a related case being appealed by the Commission. (His view does not provide much comfort to the Irish case).
This link is informative.
It seems impossible to get this point across in the general kerfuffle of the domestic debate.
Even when the actual Commission decision is made public, there can only be speculation as to the outcome of the legal actions being taken by Ireland and Apple. Nothing else! What is most likely to sway the outcome is (i) the absurdity of endeavouring to levy such an enormous sum on such a shaky legal ground and (ii) the clear political positions being taken by the two commissioners principally involved; and the credence this lends to the public positions taken not just by Apple but the US and Irish governments.
As to “reputational damage”, if one knew what this meant, it might be possible to come to a view. One measure might be the view taken by Apple shareholders. The share price has scarcely budged.
If we are talking about “reputational damage”, what of damage to the EU if it is seen to be appropriating large sums of money in principle seen to be belonging to the US?
Seamus looks at this issue from a legalistic viewpoint while I see tax avoidance by powerful and highly profitable companies as a cancer on the fragile democracies of the West. Growth has slowed over 20 years; profits have taken a greater slice of income and worker incomes have stagnated.
What is tax avoidance for big companies is typically evasion for smaller fish.
Technical issues are important but there are also factors in judgments that consider the motivations of parties.
My position isn’t ideological as I worked as a financial manger in US and European multinational for many years.
1. It appears that Apple broke Irish law when it conveniently decided that its Irish shell companies were not tax resident anywhere.
We do have separate standards here: terming loans as deposits is false accounting and merits jail but a fake invoice for $10bn from a virtual company in Bermuda c/o the offices of lawyers, to transfer funds tax-free, is not false accounting while Irish authorities have ignored the illegality of the so-called stateless claim!
The Irish Revenue was also negligent in 2007 when it issued a new advance tax opinion in respect of the shell companies and branch operations within them, without apparently checking as per the Finance Act of 1999, if Apple had complied with tax residency rules.
2. Wonder why were there were branches covering actual activities in Ireland within the shell companies? In the EC’s preliminary opinion of 2014 it suggests that the Irish branch of the sales company was handling procurement and supply issues for the rest of the shell operation — which would of course show that the distinction between the two was a sham.
3 In 2007 the Revenue refused a proposal that dividend payments from Ireland within a group be free of withholding tax. Why was Apple able to transfer funds directly to the US while for example Microsoft and Google had to use Irish companies in Bermuda to get funds tax-free via the Netherlands? The answer isn’t because Apple’s principal overseas subsidiary based in Cork was a shell company and Microsoft and Google preferred onshore companies in Ireland.
What prevented say Facebook from using the same structure as Apple? Apple had better advisers in Dublin or the Revenue after it approved the Apple structure, decided that it looked too dodgy for all MNCs to use it?
4. Seamus likes to highlight that most of Apple’s profits are generated in the US but a judge of the ECJ is likely to ask, isn’t the designation of 65% of your annual earnings as foreign a fraud?
5. Ireland has facilitated Apple’s tax strategies through the shell companies that the Irish authorities agree profit allocations between an Irish branch and transactions to avoid US tax. Ireland does not regulate these companies.
In the fantasy world the Irish shell companies hold cash of about $215bn and Apple has designated about $100bn as “permanently invested” overseas.
How will Ireland prove that Apple is not a special case? Disclose other companies that also avail of special deals?
Whether it’s the cases involving the Netherlands, Ireland or Luxembourg, the ECJ judges know that typical companies do not have special tax arrangements like Starbucks, Apple, Google etc. that give them low single digit tax rates.
This is what Apple said in its 2015 SEC filing: “The Company’s effective tax rates for 2015, 2014 and 2013 differ from the statutory federal income tax rate of 35% due primarily to certain undistributed foreign earnings, a substantial portion of which was generated by subsidiaries organized in Ireland, for which no US taxes are provided when such earnings are intended to be indefinitely reinvested outside the U.S.”
Tim Cook and Seamus tells us that the foreign earnings are a fraud/ sham but both expect the ECJ to confirm the fraud that the cash allocated to Irish companies should not be taxed anywhere!! (or until the US Congress declares an amnesty).
1. No, they did not.
2. By definition a company that has a couple of hundred employees cannot be a shell company. The branch is just the piece of that company that is in Ireland.
3. The flows in Apple’s structure never passed through Ireland. The sales were not made in Ireland and do not appear in any statistics in Ireland. The Commission have not queried the basic structure but want the profit from the sales allocated to the functions carried out by the branch rather than the decisions made by the head office.
4. A company generating 65% of its income outside its domestic market is not the same as having the functions that generate those profits in those markets. I fail to see how this is a point that has to be continually made. Why does Apple have a 65% tax rate on its “domestic” profits? And, yes, I do think the foreign/domestic split of Apple’s earnings is artificial. Just because it is a split that arises under the US tax code doesn’t mean the rest of us have to accept it.
5. No where have I said that the profits should not be taxed anywhere. The profits should be taxed in the United States – after the right amount of tax has been collected in other source jurisdictions. If the US have provisions that mean this tax isn’t collected that’s their issue.
So let’s have an answer to the question in #4: If Apple has a 6% tax rate on its “foreign” earnings why does it have a 65% tax rate on its “domestic” earnings? And please no Ctrl-V !
As for the stuartmaclennan link, if the foreign earnings are 65% of the total and most foreign sales are online (which is ridiculous) then if not Ireland, maybe the permanent establishment is in China or maybe not, as a contract manufacturer ships the units to the Irish companies with consignments to various European locations. The PE is maybe in California but Apple denies that too.
MacLennan assumes that all Apple Store sales, besides VAT returns, are booked locally but where is the evidence for that?
The EC says sales from the UK to India are completed in Cork — in a shell company.
I wouldn’t be surprised if Apple settles this case before too much of its dubious transactions are aired in public — of course there are many issues involved but engineering a foreign tax rate of 1.9% or 6% on two-thirds of earnings, involves a lot of manipulation.
I am not defending Apple’s behaviour. As I pointed out on another thread, one can have highly critical views of ALL concerned without any logical contradiction if each element of the controversy is dealt with in its appropriate box. At this juncture, the issue boils down to the the outcome of the current legal tussle on the definition of advantage and selectivity. I am willing to bet that the word that will become most familiar in the months ahead is Santander. (It’s easier than Autogrill or whatever).
Apropos of nothing in particular, this link.
Denmark and France are in parallel situations. the major difference is that Denmark has the productive capacity to carry this level of involvement by government in the affairs of the nation. France does not. (You can easily pick the other countries in this situation). And Hollande, the previous employer of Moscovici, is standing for election next year.
We may be cabbage looking, as the phrase goes, we need not be green. The established political parties certainly are not. The jury is out on the commentariat.
@ Michael Hennigan
Could you remove the moralising and personal attacks from the above post as it would make it easier to read? You do appear to have some useful points on Irish tax law but it would be better on a blog such as this to set them out clearly. It just reads like a rage-filled rant above.
This verbatim reporting by the Indo may help focus the debate, although I doubt it.
It is also helpful to note the various comments on what certain countries may or may not do. What they actually do will be one of the most reliable guides to what their authorities actually think at a policy level of the grenade that has been thrown into the general international taxation discussion by the two commissioners.
“..the state-aid element of the Commission’s case is pretty much open and shut.” ?
The law, logic and economics seldom coincide.
The matter is now in the hands of the first mentioned, for better or worse.
We know that Apple avoided tax. We know it had a letter of comfort. We know the Government got hit by tail risk. We know corporate tax dodging has been part of the process that has led to deflation. It is embarrassing for the Government.
We know that American S&P companies are run as if they were bonds. The name of the game is cash for dividends and buybacks. The model is low to no tax, wage repression, ZIRP and Financial Engineering.
I was not an Econ major, but my general understanding of the main benefit to capitalism is that it efficiently allocates resources by allowing the market to weed out poor companies and let successful companies continue.
So I have to ask, is a $200 billion cash pile for a company a good idea?
That amount of sequestered, non-working assets seems like a way for Apple to avoid the consequences of market displeasure. If they produce products people don’t want Apple can fall back on their cash pile and survive. Meanwhile upstart competitors with better products might be squeezed out and they won’t have large cash piles to rely on.
Higher corporate tax rates on profits would discourage such cash piles. It would encourage companies to reinvest in their business or reduce prices for consumers in order to avoid such taxes.
Some credible explanations; courtesy the Web (i.e. American corporate inventiveness).
Of course, lawyers in the Competition DG could not be expected to be aware of such considerations.
the web wasnt an outcome of american corporate inventiveness. It was a military project (the state) birthed to the web by CERN (the state again).
To what country did the military belong and how did they go about the project?
Err. Let me google “early history of the internet” for you there….
Enter ARPANET! Success has many parents etc.
It’s not a recent development for tax offices to look behind sham/artificial structures in dissecting schemes to reduce tax. In recent years the abuse in the CT area has also focused on sham arrangements.
The House of Commons Public Accounts Committee in 2013 rejected Google’s argument that sales of corporate advertising were completed and thus invoiced in Dublin because Google UK staff only partially handled sales issues with clients — “an argument which we find deeply unconvincing on the basis of evidence”; “Google has also conceded that its engineers in the UK are contributing to product development and creating economic value in the UK”; “HMRC needs to be much more effective in challenging the artificial corporate structures created by multinationals with no other purpose than to avoid tax.”
Edward Kleinbard, professor of law and business at the University of Southern California, who is a former chief of staff of the US Congress’s Joint Committee on Taxation, and he testified at the US Senate hearings on Apple in May 2013. Prof Kleinbard wrote this week:
Kleinbard says Jack Lew, US Treasury secretary and Apple argue that only the Internal Revenue Service has a legitimate claim to Apple’s $230bn in largely untaxed offshore cash but they are wrong. “This is a misstatement of US law.”
Apple says the profits were generated overseas and thus tax offices other than the IRS are ahead in the taxing queue. It settled a tax fraud case last year with Italy and there are more to come.
Kleinbard says the United States aids and abets US multinationals in their stateless income tax gaming, whose object is to skim profits from countries where income actually is earned, and then to deposit those profits in a zero or near zero tax receptacle. That is the source of Apple’s offshore cash hoard totaling more than $200 billion.
The Irish shell companies were available to Apple for massive tax avoidance with reported sales in several countries artificially suppressed. The EC views the structure as a sham and it’s unlikely that it was commonly available to other companies in Ireland.
This saga, clearly originated by two of the current college of commissioners, gets more edifying by the minute.
@ Seamys C
Thanks for your great analysis. Can I ask, do you agree with Tony Connely, that the Santander case is an important harbinger for this case?
@ Michael H
Pasting loosely connected paragraphs as you do make your post seem as if they were written by an Internet bot rather than an actual real life person. Maybe it’s only me but your points would be more credible to me if they had some structure.
@ That’s Legal!? You should ignore my comments as yours is the latest nit-picking one rather than dealing with substantive issues.
It’s funny that you thank Seamus for his technical detail as “great analysis” but you appear bewildered by blockquoted pertinent points made by Prof Kleinbard.
This might be an appropriate juncture to raise another vital point, probably more significant in deciding the future course of events than the issue of the definition of advantage and selectivity. It is that of the “institutional balance”, as mentioned in paragraph 71 of the Advocate-General’s opinion in the case of Santander. Link repeated here for ease of reference.
And the text.
“Finally, the intervening parties all take the view that acceptance of the proposition that the selectivity condition is to be understood in the broad sense advocated by the Commission in its appeals would have the consequence of upsetting the existing institutional balance. For the Commission would then be able to review almost all measures relating to direct taxation under its powers in matters of State aid, even though direct taxation falls, in principle, within the legislative competence of the Member States.”
The reference to “institutional balance”, as the text makes clear, is to the powers of the various parties as they stand under the current treaties. In shorthand, some member countries, even a majority, may well be in favour of harmonizing corporate taxation, or at least the basis for its calculation, but still be very, very chary of this being done via ill-considered action by the Commission under the quasi-judicial powers given to it under the treaties and unpredictable decisions by the ECJ.
A bowdlerized version of this issue is current in the debate in Ireland under the slogan “hands off out 12.5%”, when there is zero threat to it, and howls about national “sovereignty”. The concentration should rather be on the question of to what extent Ireland’s concerns on the issue of the “institutional balance” are shared by other member countries whatever their views may be of Ireland’s behaviour in relation to corporate taxation.
A very interesting question indeed.
I generally do ignore your comments. Nothing personal, it’s just a matter of taste. The exception is when you get caught in a back and forth with some of the Commentators that I do read.
I can’t think of what nit picking you’re on about. The only thing I’ve called you out on is your claim that Ireland had the lowest population density it Europe, which of course it doesn’t, so if that’s nit picking, then I’m guilty.
As for your Prof. Kleinbard post, I hadn’t read it at before I commented. Though having gone back and read it, I can’t see how it changes Seamus Coffeys great analysis.
Apologies if I offended you, perhaps I shouldn’t have refrained from critiquing. I’m an engineer not a linguist, so am not really qualified to do so. I’m just after finishing a night shift and am having a bad day.
The Swiss newspaper 24 heures/tribune de Geneve sez tax authorities across Europe are going after Apple
No, it does not. The article refers to some ministers for finance (Spain and Austria). Anyone with any sense will have been reading what the German and French finance ministers had to say.
Pour M. Schäuble, «les attentes qui ont été partiellement créées sont un peu prématurées». «Il ne faut pas s’imaginer qu’il y a dès maintenant 13 milliards à se partager. La procédure devant la Cour de justice de l’UE va être extraordinairement compliquée et va durer», a-t-il souligné.
«Il s’agit là d’une procédure pour aide d’Etat illégitime et pas d’une procédure pour fraude fiscale. Du point de vue irlandais, c’est légal, mais du point de vue de la Commission, c’est un avantage indu donné légalement à une entreprise», a estimé le ministre français des Finances, Michel Sapin.
cf.my comment above on the institutional balance.
There is, in fact, another quotation from Schaeuble which is even more pertinent.
Le ministre allemand des Finances, Wolfgang Schäuble, s’est montré plus prudent: «mes experts disent que nous ne savons pas ce que la Commission européenne a voulu dire».
Amen to that!
Whatever the pros and cons of the possible legal arguments on the expected Apple tax case before the ECJ in coming years, the momentum for corporate tax reform in Europe is irreversible. Within five years the current skeptics will likely convince themselves that they always supported reform! — that is what generally happens.
The finance minister of the Netherlands, Europe’s biggest corporate tax haven, told big companies at the weekend that times are changing.
“My message to those companies is you are fighting the wrong battle. You have to move on. Times are changing,” the head of the eurogroup and Dutch finance minister Jeroen Dijsselbloem told reporters on arriving at a meeting of EU finance ministers in Bratislava.
“You need to pay your taxes in a fair way. Part of that would be in the US, part of that would be in Europe. So get ready to do that,” Dijsselbloem added.
Earlier in the week Dijsselbloem said fighting tax avoidance should be a cornerstone of a push by EU authorities for greater equality as they seek a response to a rise in populism across the continent.
Reform will take time: the Dutch have about 20,000 letter-box companies including U2’s and apart from tax, these shell companies are also used to game the labour market: http://bit.ly/29qOCaz
In July German authorities raided Ryanair bases, investigating the possible use of shell companies for contracting with Ryanair pilots: http://www.thelocal.de/20160706/ryainair-staff-rooms-raided-in-tax-labour
In last week’s Dáil debate, Micheál Martin said Ireland was one of the few countries that has an effective CT rate close to the headline rate. However, when American companies provide mandatory data on Irish affiliates to the Bureau of Economic Analysis, they include the profits diverted to Irish shell companies, which result in a low single digit rate.
Off topic, but essential reading.
Blaming the Germans for running trade surpluses cannot disguise the failure of France to get its economic house in order, a fact conceded by the author at one point.
As far as Hibernia is concerned, the mechanism likely to kick in, in the event of some of the wilder ideas circulating in economic circles gaining traction, is that which functioned in the case of Greece.
“Even Greece, the eurozone country that would undoubtedly have the least to lose from abandoning the euro, has stepped back from the brink of that temptation. And this has not been forced on the country by the Greek elites, but under massive pressure from the Greek public: the ones advising them to leap are not the ones who will pay, and the man in the streets of Athens prefer to have euros in his pocket over drachmas, whatever is said to him by Joseph Stiglitz, who need not worry about the strength of his dollars.”