Apple and Irish Government suffer major setback in €13B EU case(irishtimes.com)
irishtimes.com
Apple and Irish Government suffer major setback in €13B EU case
https://www.irishtimes.com/business/2023/11/09/apple-and-irish-government-suffer-major-setback-in-13bn-eu-tax-case/
81 comments
It's absurd that Ireland needs to be forced to accept money that the richest company in the world owe it.
Why? Sure, Ireland would get a one-off tax boost, but then all the firms that had structured their business this way would no longer have a reason to invest in Ireland at all.
I'm Irish and the ruling relates to the double-irish tax break specifically, it's about marketing for this tax evasion tactic. It's a hot topic in Ireland; Ireland looks like one of the richest countries on Earth (by GDP) but most Irish aren't feeling this. It's the huge amounts of money flowing through this double-irish loophole that creates the false GDP number. The loophole should end and paying the tax means closing the loophole.
- https://en.wikipedia.org/wiki/Double_Irish_arrangement
- https://en.wikipedia.org/wiki/Double_Irish_arrangement
I'm also Irish and you need to think of this more than just the GDP number. Tens of thousands of Irish people are working in the tech and pharma sector which is directly related to the tax status that companies have here. It's convenient for a company to have its "tax HQ" as well as a large physical presence in the country. It is allowing us to build our own sovereign wealth fund.
The Ireland of today is hugely better off than it was in the 80s and early 90s, and a good deal of that progress has been smart "marketing", as you call it, bringing in investment. Without this, the economy of Ireland would be closer to Greece or Portugal today.
The Ireland of today is hugely better off than it was in the 80s and early 90s, and a good deal of that progress has been smart "marketing", as you call it, bringing in investment. Without this, the economy of Ireland would be closer to Greece or Portugal today.
I would also add that Ireland's corporation tax receipts, particularly from MNCs, are very significant, so the benefits aren't imaginary in any sense. The government has largely squandered those benefits but that's a different matter.
Fair points, and I agree. However, I believe that the double-irish loophole is more of a 'value add' for the big companies already here, to lessen their tax load in other countries via 'convenient' accounting. The EU ruling is more about this tax evasive nature/use of the loophole than the investment in Ireland and it's economy & jobs.
Edit: The EU ruling actually targets a specific use of this loophole by Apple, which alleges amounts to state aid, hence the anti-trust comments. (Gotta love the HN community for delving into the details)
Edit: The EU ruling actually targets a specific use of this loophole by Apple, which alleges amounts to state aid, hence the anti-trust comments. (Gotta love the HN community for delving into the details)
Ireland funds it's pension scheme via the taxes it collects from Apple et al.
If those corporations leave then Ireland loses a lot of tax revenue.
Instead Ireland should tax property speculators.
If those corporations leave then Ireland loses a lot of tax revenue.
Instead Ireland should tax property speculators.
This is an antitrust case, not a tax case. The whole point is that other firms did not benefit from the same rules.
The governments stance is that any company could have applied the same tax rules if they wished, so it was not state aid. As a side note, the "irish double sandwich" rules have changed since this
Sure, and in that case no issue. But that is the government stance, not the EU stance.
There is no "EU" stance.
The disagreement is between the European Commission and the Irish government. The deciding authority here will be the European Court of Justice, after appeal from the decision of the General Court - which favored Ireland.
The disagreement is between the European Commission and the Irish government. The deciding authority here will be the European Court of Justice, after appeal from the decision of the General Court - which favored Ireland.
Honestly at this point, they're probably not going to up sticks. Well-educated Anglophone workforce, lots of existing employees and infrastructure, excellent rule-of-law, lots of extant US-Irish good will, unlikely to elect popularist strongmen any time soon ... where else to go?
There is no investment.
Have you seen Dublin property prices?
Apple et al have 'made' billions of euros for the citizens of dublin in property value increases alone.
Apple et al have 'made' billions of euros for the citizens of dublin in property value increases alone.
As a Dubliner, I can tell you that very few are feeling positive effects of these ‘billions of euros.’ The EU ruling is more about a tax evasion loop hole that sees vast billions of euros passing through it, then investment of billions in any part of the economy.
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It is part of the "deal" for companies in Ireland to get access to the rest of the EU. This access is the reason why Apple etc shuffle their profits through Ireland in the first place.
The "it" in this case is that every company should be treated the same. So basically no sweetheart deals allowed. And now there is a fight in the courts if there is/was a special deal in place for Apple or not.
The "it" in this case is that every company should be treated the same. So basically no sweetheart deals allowed. And now there is a fight in the courts if there is/was a special deal in place for Apple or not.
It's weirder that they are not able to decide for themselves what goes on in Ireland.
It's not weird, Ireland is part of the single market, that allows Apple to operate in the single market area from Ireland but the counter part is that there are a set of rules to avoid a race to the bottom in term of taxation. That's what this is about.
> there are a set of rules to avoid a race to the bottom in term of taxation
No there aren't, or at least there weren't prior to the 15% that was recently agreed. Taxation generally is not an EU competence.
No there aren't, or at least there weren't prior to the 15% that was recently agreed. Taxation generally is not an EU competence.
How much taxes will be paid in the EU when the giants leave? Ireland is making a judgement here, one where they understand that they have more to gain this way. That is: unless you are trying to make the claim that they have been bribed by Apple.
I don't think many megacorps are going to willingly abandon a fifth of the world's GDP and an even larger portion of the world's disposable income. They aren't going to leave that much money on the table.
Of course not. They would move countries to the currently best option.
Taxing multinational companies is a prisoner's dilemma, and taxation agreements between countries are a rational strategy to get a better outcome for all.
> taxation agreements between countries are a rational strategy to get a better outcome for all
That may be the theory, but the reality is that they are bully pulpits whereby the largest nations (in this case Germany and France) force the others into having to act against their own interest.
That may be the theory, but the reality is that they are bully pulpits whereby the largest nations (in this case Germany and France) force the others into having to act against their own interest.
What may be beneficial for Ireland, is certainly not beneficial for the other nations in the EU. I don't see why it's bulllying, when Germany or France try to enforce the treaties they have with Ireland (as an EU member).
Not any weirder than Montana having to abide by SCOTUS decisions.
Montana is not a sovereign state. Ireland is.
First of all, Montana enjoys 10th Amendment dual-sovereignty, just like every other US state.
But second, you seem to be asserting that the other involved sovereigns have no right to hold Ireland to the commitments it agreed to when it signed treaties. How is that supposed to work? Are treaties now just lies of convenience?
But second, you seem to be asserting that the other involved sovereigns have no right to hold Ireland to the commitments it agreed to when it signed treaties. How is that supposed to work? Are treaties now just lies of convenience?
> the other involved sovereigns
The European Union isn’t sovereign. It likes to pretend it is, but it isn’t.
> Are treaties now just lies of convenience?
They’ve just about always been just lies of convenience. Think Molotv-Ribbentrop pact. Or the START treaty. Or the Iranian nuclear deal. Or the Treaty on Conventional Armed Forces in Europe, which is dead as of yesterday, because NATO suspended it too.
The European Union isn’t sovereign. It likes to pretend it is, but it isn’t.
> Are treaties now just lies of convenience?
They’ve just about always been just lies of convenience. Think Molotv-Ribbentrop pact. Or the START treaty. Or the Iranian nuclear deal. Or the Treaty on Conventional Armed Forces in Europe, which is dead as of yesterday, because NATO suspended it too.
> The European Union isn’t sovereign. It likes to pretend it is, but it isn’t.
I'm going to assume you're misinterpreting rather than trying to be disingenuous, but I was obviously referencing the nations Ireland signed the series of treaties starting with the Treaty of Lisbon (which Ireland signed in 2009).
France, Germany, etc. are perfectly within their rights to hold Ireland to the agreements it made.
> They’ve just about always been just lies of convenience.
Your examples are proving the opposite of what you appear to think they do. The US would be a much better example of what you mean, but that just demonstrates that nobody currently wants to take the US on.
In any case, Ireland is perfectly free to exit the treaty normally if it chooses. England showed them how.
I'm going to assume you're misinterpreting rather than trying to be disingenuous, but I was obviously referencing the nations Ireland signed the series of treaties starting with the Treaty of Lisbon (which Ireland signed in 2009).
France, Germany, etc. are perfectly within their rights to hold Ireland to the agreements it made.
> They’ve just about always been just lies of convenience.
Your examples are proving the opposite of what you appear to think they do. The US would be a much better example of what you mean, but that just demonstrates that nobody currently wants to take the US on.
In any case, Ireland is perfectly free to exit the treaty normally if it chooses. England showed them how.
It's a sovereign state in a common market union, so it has to follow the common market rules.
Sovereignty isn't binary, at least in practice. Think about tribal governments in US. Are they truly sovereign?
No, they haven’t and they aren’t.
That’s the kind of thing Britain thought they were being smart about with Brexit and look where that’s gotten them
Performing better than the other two major European economies, France and Germany?
Britain doesn’t seem to be an outlier considering a backdrop of an ailing European economy suffering the after effects of the energy crisis - though clearly it could be doing far better in the global context.
https://www.reuters.com/world/uk/uk-economy-grows-02-q2-2023...
Britain doesn’t seem to be an outlier considering a backdrop of an ailing European economy suffering the after effects of the energy crisis - though clearly it could be doing far better in the global context.
https://www.reuters.com/world/uk/uk-economy-grows-02-q2-2023...
How would you go about implementing a common market without a court to handle disputes?
Ireland is being forced to tear up its own taxation rules, by countries who have an interest in making the Irish economy less competitive.
No. This isn't a tax case, and EU has no authority on direct tax matters. The point is not that Ireland should change its tax rules.
This is an antitrust case. The point is that Ireland gave Apple preferential terms compared to its own tax rules.
This is an antitrust case. The point is that Ireland gave Apple preferential terms compared to its own tax rules.
The original ruling was that Ireland did not give state aid to Apple, that any multinational could have applied the same rules. This was not accepted by the Commission, they asked for a higher court to rule.
After several years it has now been suggested that the higher court puts aside its judgement and that it goes back to the lower court, because apparently (according to the Advocate General) the lower court did not take into account several factors and had errors in its judgement (relating to Intellectual property rights, where tax should be paid e.g. in the country of sales or in the country of registration). Which seems to make it once again an issue on tax and not on sweetheart deals.
After several years it has now been suggested that the higher court puts aside its judgement and that it goes back to the lower court, because apparently (according to the Advocate General) the lower court did not take into account several factors and had errors in its judgement (relating to Intellectual property rights, where tax should be paid e.g. in the country of sales or in the country of registration). Which seems to make it once again an issue on tax and not on sweetheart deals.
I'm not well versed on EU rules relating to the case; do you know if it's possible that this could 'ping pong' between the two courts or is there a mechanism for a final decision on the matter?
That is the allegation, which Ireland disputes and the General Court dismissed.
I'm well aware that the EU has no authority on direct tax matters, which is exactly why Ireland feels aggrieved, as the Commission is effectively using state aid law as a vehicle to circumvent the limitations on the EU's powers.
I'm well aware that the EU has no authority on direct tax matters, which is exactly why Ireland feels aggrieved, as the Commission is effectively using state aid law as a vehicle to circumvent the limitations on the EU's powers.
> I'm well aware that the EU has no authority on direct tax matters, which is exactly why Ireland feels aggrieved, as the Commission is effectively using state aid law as a vehicle to circumvent the limitations on the EU's powers.
as someone who generally dislikes the EU... this one seems fair?
giving Apple a custom tax rate to encourage Apple to set up in Ireland seems exactly what state aid rules were designed to stop
as someone who generally dislikes the EU... this one seems fair?
giving Apple a custom tax rate to encourage Apple to set up in Ireland seems exactly what state aid rules were designed to stop
I live in Ireland, and work in the Tech sector.
What you are saying is bullshit.
This affects only Apple, and not any other company.
What you are saying is bullshit.
This affects only Apple, and not any other company.
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It's striking to see the newspaper of record in Ireland presents this as a "major setback" to the Irish Government. That government is wilfully and blatantly failing to enforce EU law, that it is treaty bound to enforce, for its own gain. It's tantamount to observing that the Irish Government and Apple are openly conspiring against the EU.
If this case were actually as open-and-shut as you seem to think, would it really have dragged on for seven years? What was issued today isn't even a ruling. It's just an opinion that will now be carried forward into further arbitration.
TL;DR Wealthiest company in the world may be able to hustle a nation state into preferential tax treatment. But even hustling at that level has limits, at least in the EU.
"Sorry about that discount I promised you. My manager says you must pay me in full. Hurts me as much as you..."
"Sorry about that discount I promised you. My manager says you must pay me in full. Hurts me as much as you..."
Headline: In a race to the bottom, EU puts trampoline under Ireland
>TL;DR
I think you mean "random editorialization and anti-Apple screed".
A TL;DR would be more like "latest developments in the long-running debate on whether Ireland's tax regime constituted illegal state aid to Apple".
I think you mean "random editorialization and anti-Apple screed".
A TL;DR would be more like "latest developments in the long-running debate on whether Ireland's tax regime constituted illegal state aid to Apple".
They didn't need to hustle too much, giving giant companies preferential tax treatment in exchange for pretend jobs is essentially the Irish economy.
While people are free to contest my governments strategy regarding attracting companies with a low corporation tax rate. Claiming that we are producing "pretend jobs" doesn't ring true. Do you have any examples of this?
The effective tax rate (as opposed to the by the book tax rate) in Ireland isn't that out of kilter with the rest of Europe [0]. It still is the lowest but it does bookend the other countries quite tightly.
[0] https://stats.oecd.org/index.aspx?DataSetCode=CTS_ETR
The effective tax rate (as opposed to the by the book tax rate) in Ireland isn't that out of kilter with the rest of Europe [0]. It still is the lowest but it does bookend the other countries quite tightly.
[0] https://stats.oecd.org/index.aspx?DataSetCode=CTS_ETR
What’s Apple’s effective tax rate?
As are Cyprus, Netherlands, Luxembourg and another handful EU countries. Don't get me wrong, I'm all for EU crackdown on tax rulings; especially given the general lack of progress in tax harmonization between EU countries.
What’s ‘pretend’ about the jobs?
They don’t actually exist. Same way a building full of PO Boxes doesn’t really create local jobs in the US.
Google would therefore employ the same number of people in Ireland with or without favorable tax treatment +/- the butterfly effect from any significant policy change.
Edit: Alphabet has workers in Ireland, but they also have workers in UK, Portugal, Spain, France, Belgium, Netherlands, Denmark, Switzerland, Italy, Austria, Czech Republic, Poland, Norway, and Sweden. Ireland is mostly attractive for it’s educated workforce that speaks English fluently and is willing to work for cheap compared to CV wages, while also being inside the EU.
Google would therefore employ the same number of people in Ireland with or without favorable tax treatment +/- the butterfly effect from any significant policy change.
Edit: Alphabet has workers in Ireland, but they also have workers in UK, Portugal, Spain, France, Belgium, Netherlands, Denmark, Switzerland, Italy, Austria, Czech Republic, Poland, Norway, and Sweden. Ireland is mostly attractive for it’s educated workforce that speaks English fluently and is willing to work for cheap compared to CV wages, while also being inside the EU.
Interesting.
So do you mean that as some part of the agreement, to be treated as a "genuine Irish company" (from a tax perspective) Apple was forced/strongly nudged open R&D, assembly or commerce centers in addition to the mailbox/lawyer shell offices?
While I'm sure the grunt of Apple's actual molecule movement business is in China (or elsewhere; not Ireland), these Cork job listings (for instance) seem real, no? https://jobs.apple.com/en-ie/search?location=ireland-IRL
So do you mean that as some part of the agreement, to be treated as a "genuine Irish company" (from a tax perspective) Apple was forced/strongly nudged open R&D, assembly or commerce centers in addition to the mailbox/lawyer shell offices?
While I'm sure the grunt of Apple's actual molecule movement business is in China (or elsewhere; not Ireland), these Cork job listings (for instance) seem real, no? https://jobs.apple.com/en-ie/search?location=ireland-IRL
I believe it bears pointing out here that Apple's first factory outside of the US was set up in Ireland in 1979. All of the Apple IIs sold in Europe were built in it. The manufacturing jobs eventually moved on to China, but other roles replaced them. The fact is that Apple has had a sizeable workforce in Ireland for nearly forty-five years.
They don’t need a genuine Irish company, the Alphabet >>shell corp<< doesn’t have any workers in Ireland. Edit: to be clear Alphabet itself does, but that’s not part of the tax doge.
Also, they have offices in every significant country in Western Europe. UK, Portugal, Spain, France, Belgium, Netherlands, Denmark, Switzerland, Italy, Austria, Czech Republic, Poland, Norway, Sweden, and yes Ireland.
https://about.google/intl/ALL_us/locations/?region=north-ame...
Obviously they don’t have anyone in Vatican City.
Also, they have offices in every significant country in Western Europe. UK, Portugal, Spain, France, Belgium, Netherlands, Denmark, Switzerland, Italy, Austria, Czech Republic, Poland, Norway, Sweden, and yes Ireland.
https://about.google/intl/ALL_us/locations/?region=north-ame...
Obviously they don’t have anyone in Vatican City.
Alphabet has a massive workforce of X000s in Ireland, spanning full time, part time, and contractor/vendors. They operate multiple massive buildings around Grand Canal, across product areas.
Not sure where you saw that they have no workers in IE?
Not sure where you saw that they have no workers in IE?
> and yes Ireland.
I think you missed that bit so I edited it for clarity.
I am not saying they have no workers in Ireland, I am saying Ireland’s tax policy doesn’t increase the number of workers.
As the Alphabet shell corp has no workers. Alphabet itself does. It’s a 190,000 worker behemoth attracted by a cheap English speaking workforce in a reasonably close time zone.
I think you missed that bit so I edited it for clarity.
I am not saying they have no workers in Ireland, I am saying Ireland’s tax policy doesn’t increase the number of workers.
As the Alphabet shell corp has no workers. Alphabet itself does. It’s a 190,000 worker behemoth attracted by a cheap English speaking workforce in a reasonably close time zone.
Fair enough, to be clear, I completely agree that Alphabet is massively dodging taxes. Just that, they have a significant workforce unlike Apple.
Apple does a a significant workforce in Ireland ~6,000 people out of 22,000 in Europe. It’s their shell company that’s empty.
https://www.apple.com/ie/job-creation/
UK has ~6,500 so together over half their European employees are in English speaking countries which makes sense.
https://www.apple.com/ie/job-creation/
UK has ~6,500 so together over half their European employees are in English speaking countries which makes sense.
The Apple subsidiary which supposedly makes all the money and conveniently isn't taxed on it doesn't even have employees in Ireland anyway.
It's entirely a paperwork confection to justify not paying taxes. If you did this in a country with a properly funded tax collector, you'd get told to pay and then they'd just seize the money or throw you in jail.
But when Apple do it Ireland celebrate because hey, instead of Apple choosing some other random place to fiddle their taxes, they're doing it in Ireland...
If you're American or (like me) British you shouldn't feel smug because your country enables much the same thing, just not in this specific case. Both the US and UK have strong rule of law (which means crooks feel sure when they collect the locals don't just shoot them and take it all) but weak transparency (which allows crooks to operate). The same formula which attracted Apple to Ireland.
Transparency improved in both US and UK in last forty years, but mostly so as to weed out small players. If you need to hide $400k from a bank job, neither country wants to help you any more. But if you have $400M from corrupt arms deals in the Middle East, they're very happy to have you as a valued customer and will be sure to slow walk any pesky "investigations" which threaten to reveal that you're a crook in time for you to stroll off with your money before anybody shows up with hand cuffs, especially because it's embarrassing for them to admit their "transparency" is still shit.
In the UK we instituted "beneficial ownership" rules requiring that companies must say which human individuals control them. But, while some dubious firms actually obeyed these rules, plenty more just filled out bogus data knowing the government doesn't want to look under any rocks as it knows it won't like what it sees. Companies House (the regulator) claimed it had zero funds to investigate even the most obviously bogus paperwork.
A campaigner had filed paperwork claiming their firm was owned by Tory politicians even though it wasn't - and IIRC suddenly Companies House found enough cash to prosecute exactly one bogus filing, the one embarrassing their political masters. Transparency? Transparent bullshit.
It's entirely a paperwork confection to justify not paying taxes. If you did this in a country with a properly funded tax collector, you'd get told to pay and then they'd just seize the money or throw you in jail.
But when Apple do it Ireland celebrate because hey, instead of Apple choosing some other random place to fiddle their taxes, they're doing it in Ireland...
If you're American or (like me) British you shouldn't feel smug because your country enables much the same thing, just not in this specific case. Both the US and UK have strong rule of law (which means crooks feel sure when they collect the locals don't just shoot them and take it all) but weak transparency (which allows crooks to operate). The same formula which attracted Apple to Ireland.
Transparency improved in both US and UK in last forty years, but mostly so as to weed out small players. If you need to hide $400k from a bank job, neither country wants to help you any more. But if you have $400M from corrupt arms deals in the Middle East, they're very happy to have you as a valued customer and will be sure to slow walk any pesky "investigations" which threaten to reveal that you're a crook in time for you to stroll off with your money before anybody shows up with hand cuffs, especially because it's embarrassing for them to admit their "transparency" is still shit.
In the UK we instituted "beneficial ownership" rules requiring that companies must say which human individuals control them. But, while some dubious firms actually obeyed these rules, plenty more just filled out bogus data knowing the government doesn't want to look under any rocks as it knows it won't like what it sees. Companies House (the regulator) claimed it had zero funds to investigate even the most obviously bogus paperwork.
A campaigner had filed paperwork claiming their firm was owned by Tory politicians even though it wasn't - and IIRC suddenly Companies House found enough cash to prosecute exactly one bogus filing, the one embarrassing their political masters. Transparency? Transparent bullshit.
For context, the UK enables massive tax dodging and shady dealings through its network of crown dependencies and overseas territories, amounting to £152bn a year.
https://www.theguardian.com/business/2023/apr/30/king-charle...
https://www.theguardian.com/business/2023/apr/30/king-charle...
When I worked in engineering at Google they definitely put a lot of people in Dublin due to the tax agreement. It was very clear.
Where you directly involved in their decision making process, or is that just an assumption?
Dublin is a a very attractive place for tech companies outside of any tax policies. Workers speak English fluently, work for cheap compared to CV wages, and have a reasonably close time zone.
For comparison, Apple started manufacturing there all the way back in 1979 and has 6k employees in Ireland plus 6.5k in UK out of 22k in the rest of Europe. Language is a big part of that. https://www.apple.com/ie/job-creation/
Dublin is a a very attractive place for tech companies outside of any tax policies. Workers speak English fluently, work for cheap compared to CV wages, and have a reasonably close time zone.
For comparison, Apple started manufacturing there all the way back in 1979 and has 6k employees in Ireland plus 6.5k in UK out of 22k in the rest of Europe. Language is a big part of that. https://www.apple.com/ie/job-creation/
I suspect a plane full of US "officials" and adjacent personalities is already en-route to Brussels..
All that lobbying and campaign money has to produce results.
All that lobbying and campaign money has to produce results.
This case has been going on for 7 years already, if the plane hasn't got there yet it's not coming.
Historically Apple hasn't been nearly as active as its peers, although last year they significantly closed the gap.
https://www.cnbc.com/2023/01/23/apple-ramped-up-lobbying-spe...
https://www.cnbc.com/2023/01/23/apple-ramped-up-lobbying-spe...
They could, yes, and I'm sure it won't have much of an effect. When it comes to economic policy, the EU usually doesn't play games.
The EU is just pissed they didn't get a cut of the shady deal.
Great Hot take but it does go wider than this. Ireland profited at the expense of almost all other economies in the double irish-dutch sandwich nonsense, and so there is a bit more than just "shady deal we want in" here.
Tax exists for a reason. Avoiding tax exists for other reasons. Which side you are on depends on what you think about money, planning, and the economy at large.
I mainly worry that Ireland didn't spend the money very wisely. Not to say that the other people's economies that missed the taxes don't have some make-up to come.
Because rest assured, by allowing Apple to pay LESS tax to Irelant, what happened is other places where real trade took place missed out on VAT/GST income.
Tax exists for a reason. Avoiding tax exists for other reasons. Which side you are on depends on what you think about money, planning, and the economy at large.
I mainly worry that Ireland didn't spend the money very wisely. Not to say that the other people's economies that missed the taxes don't have some make-up to come.
Because rest assured, by allowing Apple to pay LESS tax to Irelant, what happened is other places where real trade took place missed out on VAT/GST income.
Patrick Boyle explaining how the Irish economy works with a focus on Apples operations in Ireland. While Ireland isn't as wealthy as it's GDP suggests, it has massively benefitted from US Multinationals. So neither is the Irish economy a house of cards nor is it the wealthiest in the world. It's isn't maliciously undermining the EU nor is it going to simply do what suits France and Germany.