€13 billion. Wow! Nothing to do with transfer pricing. All do with the relationship between the parent companies and their Irish branches. The EC position is that as the ‘stateless’ companies have no substance ALL of the profit is allocated to the Irish branches. We really are at the races now.
The press release is here.
Following on from an earlier post, below are more details about the Dublin Economics Workshop’s Annual Conference (formerly known as “Kenmare”). The theme for this year’s conference is Policymaking for an Uncertain Future and the conference takes place on September 23rd and 24th in White’s of Wexford. Tickets can be bought from the DEW’s website, with a special package of €250 covering two nights at the hotel, both breakfasts and dinners, and the conference fee itself.
The current draft programme is below, with more details to be added as they are confirmed. Hopefully, we will see many of you down there, to enjoy the conference’s unique interaction of public, private and academic economists, discussing a range of important policy issues.
Friday, 23rd of September
Saturday, 24th of September
The Apple state-aid journey rumbles on. The scene was enlivened somewhat last week with the publication of a white paper by the US Treasury criticising the approach of the European Commission. The paper dishes out a good kicking and provides a useful template for a company or country considering an appeal to an adverse ruling.
We know most of the key points the US are making. They are concerned that the US taxpayer could end up footing the bill (as Robert Stack repeats here) but if the tax payments are legitimately due elsewhere then this doesn’t amount to much. But the risks, functions and assets that generated Apple’s profits were in the US so, under the current system, the tax on those customers is due in the US. Of course, a company may decide to move those assets but that is an issue that the country of departure has oversight of. For the period under investigation in the Apple case it is clear that the main drivers of its profitability were controlled and located in the US.
The US Treasury paper looks at the substance of the EC position – that some transfer pricing arrangements put in place (for mainly US MNCs) were “wrong”. For the EC is this is a competence they do not have nor one that they should be seeking. If you are intent on saying that something is “wrong” you must be able to state what is “right” – but in transfer pricing there are ranges not precise outcomes.
I have a post on this subject at VoxEU, available here.
Vox EU carry an interview with Patrick here. You should be able to listen to it by clicking the bar below.