Comment by runesoerensen | Hacker News Reader

Comment by runesoerensen | Hacker News Reader

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> using a legal route the EU should not have the right to walk on in any fashion.

By all means, do explain why the EU does not have this right.

> The exact way it was done is irrelevant, it is the result that is the issue.

I hate to repeat myself, but please do explain -- it would most certainly seem that the EU has an interest in tax and competition affairs such as these. Moreover, individual EU member states as well as every company competing against Apple have interests in this. It's pretty silly to say that "the exact way it's done is irrelevant" -- in complex international tax/competition affairs the "exact way" things are done means all the difference.

I'm not familiar with all the tax regulations of the EU, but I have to say that statements such as yours need to be substantiated with sources that support your arguments (and I'd genuinely be interested in seeing those). Otherwise this should just be considered a political statement and/or your opinion on the matter - if that's the case, please clarify that.

The EU does not have this right, as per the treaties creating the EU the EU has no say in a countries tax affairs - at all.

Everyone agreed to that, to stop the EU stiffling competition between states.

There's not much to say, the EU simply does not have the right to interfere with tax affairs, at the treaty level. It's all well and good they have an interest in it, but no actual say.

Can you please substantiate your statements with sources (so as to avoid a situation where this turns into a purely political debate)?

You seem very confident that the EU has no right to do what it's doing. I hope you have reason to be so confident based on actual treaties, law and agreements.

If you do, it should be easy to prove. If you don't, you should be ignored.

Treaty of Lisbon (Relevant webpage: http://ec.europa.eu/taxation_customs/general-information-tax...)

Basically for tax matters, unanimous approval is required. Except when it involves getting rid of double taxation.

The EU believes the issue in question is a problem of State Aid[0] which originates in the Treaty of Rome and that the state aid is provided through company-specific tax breaks does not make it tax policy rather than state aid.

Basically, according to the commission Ireland's special deal gives Apple unfair advantage over other Common Market businesses, other companies in the same domain don't get to take advantage of a sub-unit corporate tax rate and keep an extra >10% off the top.

In that view, that this is provided through special-purpose tax breaks rather than direct subsidies or whatnot is immaterial and irrelevant.

[0] http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:120...

It's worth noting that this decision was made by the European Commission, and that this is not merely a tax matter -- the tax discounts seems to just have been the way Ireland has illegally provided state aid.

Commissioner Margrethe Vestager, in charge of competition policy, said: "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."

http://europa.eu/rapid/press-release_IP-16-2923_en.htm

If Apple paid $400 million in tax in Ireland, and this was an effective tax rate of 0.005%, then that implies that Apple's profit was 8 trillion dollars.

Something doesn't add up.

> Something doesn't add up.

It'd be great if people could be less vague about their opinions, and a lot more specific if they believe the EC is making a mistake - the EU isn't perfect, but please don't discount it on a superficial hunch (which unfortunately seems to happen a lot these days).

From the press release I referenced:

Therefore, only a small percentage of Apple Sales International's profits were taxed in Ireland, and the rest was taxed nowhere. In 2011, for example (according to figures released at US Senate public hearings), Apple Sales International recorded profits of US$ 22 billion (c.a. €16 billion[1]) but under the terms of the tax ruling only around €50 million were considered taxable in Ireland, leaving €15.95 billion of profits untaxed. As a result, Apple Sales International paid less than €10 million of corporate tax in Ireland in 2011 – an effective tax rate of about 0.05% on its overall annual profits. In subsequent years, Apple Sales International's recorded profits continued to increase but the profits considered taxable in Ireland under the terms of the tax ruling did not. Thus this effective tax rate decreased further to only 0.005% in 2014.

So Tim Cook was lying when he said Apple paid $400 million?

He said he did that in 2014, not 2011. Apple might well have paid $400 million in 2014, and that might well be 12.5% of the profit that Ireland says corporation tax is owed on.

But, there are billions of Euros of profit that, according to Ireland, no tax needs to be paid on. Being able to choose not to pay corporation tax on 99%+ of your profits isn't an option available to most companies operating in Ireland.

Thing is, tax loopholes are usually due to a confluence of interacting incentives.

For example, governments often want to encourage innovation. That can mean giving tax breaks to income from IP. It can also mean creating a loophole if you structure the company such that profits get directed towards a holder of the IP.

IMO it's ok for governments to use tax policy to encourage some things and discourage others. Not all companies will be able to take advantage of such policies, by their very nature; some companies do less of the desireable things, others more. So I don't see this as a black and white issue.

One thing for sure, it's definitely an encroachment on Ireland's sovereignty with respect to tax. I don't expect the judgement to stand as is on appeal. If it does, the EU will risk further fracture. If the biggest countries in the EU use EU policy to attack smaller countries' tax policies, the club will start looking less appealing by the day.

(Disclaimers: I am Irish, living in London, not a fan of Brexit, etc.)

I think the EC is making a strategic mistake, a policy mistake, and it's a threat to the continued existence of the EU. I don't expect the decision to stay as is on appeal.

It is a common rule in EU however that you can not favor one company over another. This is what is the issue here, not the specific tax rate. The EU isn't saying what tax rate Ireland may tax at simply that they have to treat every company the same.

How do you think the single market would work if say Irish owned companies paid half the tax of spanish owned companies in Ireland?

What about the part where a member state is not legally allowed to provide taxation benefits to only specific parties, that undercut other member states and the member state's other companies? That is what is happening in this case; other countries that do not provide the loophole that Ireland has provided are effectively losing the opportunity to realistically compete. The loophole itself is not obvious and practically exists only to draw big business, leaving smaller companies in a worse situation.

I couldn't find anything specific but this overview [1] does give some background and suggests that the EU is trying to harmonise taxes.

1. https://ec.europa.eu/taxation_customs/business/company-tax/o...

This is exactly what Ireland and a bulk part of the EU constituent countries don't want. We're scared of tax harmonisation. Where will the boundary of what makes a uniform trading environment be drawn?

It is worrying that the case will prove that the EU can actually do this, using the EU court to do it (EU law have primacy except with the sections stated such as taxation - using competition to bypass this is disturbing).

No one but Germany wants this political union, the EU was supposed to be a union based on trade, not this.

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