Apple must pay 13B euros in back taxes, EU's top court rules | Hacker News Reader

Apple must pay 13B euros in back taxes, EU's top court rules

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612 pointskklisura687 comments

For non-EU readers, note that taxation is explicitly not a competency of the EU (i.e. Ireland can set its tax levels to whatever it wants). The only thing in question here is whether it was applying the same taxation rules to all companies, as granting special exceptions to certain companies could be viewed as state aid (which is not allowed). Ireland claimed it wasn't, the current (over-)ruling says otherwise. This case is also specific to tax rules from many years back. AFAIK the rules have subsequently been tightened and the exemption no longer exists.

What’s interesting is that it’s common for governments to give tax incentives to companies that will result in driving more economic value for their region.

Eg Ireland might give a tax incentive if a large Fortune 500 company hires X people in Ireland.

Question: does this ruling prohibit that common practice?

No, it just requires for the rule to exist and be used coherently.

Yes, that is exactly the kind of thing that Ireland did and is not allowed in the EU rules.

You are allowed to make rules, but you can't offer deals.

Kind of. It's already prohibited, depending on what you mean. It would be legal to say all companies can have a tax break if they hire X people in Ireland. It's not legal to give the tax break to one company and deny it to another.

It does feel a little weird then that Apple is being fined here then? It seems like Ireland did the thing that's against the rules by offering the deal, not Apple? Obviously they worked on it together, but it feels odd that Ireland has now essentially gotten all the benefits of offering this illegal deal by having Apple do business there and now also gets all the back taxes that Apple probably wouldn't have paid to Ireland if they hadn't gotten the deal.

That seems like a bit of a perverse incentive for countries to offer deals they may know will get overturned later because they'll get the money eventually.

That's exactly why I asked.

If the government approached Apple, to offer them a special (specific to Apple) tax deal in exchange for X ... why is Apple now being held accountable for Ireland doings.

Because in this area, EU has rule of law, not Ireland.

I don’t think that rule of law means what you think it does.

More helpfully, you probably mean EU law supersedes Irish law in this area.

Because accepting a corruption bargain is as illegal as offering it.

"Corruption" is a strong word here.

Tax Abatements are a long, well understood practice that's been leveraged by city/state/federal governments for decades to incentivize desired outcomes.

Look at Electric Vehicles (EV's)

Both California and Federal government were giving tax incentives for individuals who purchase an EV.

This tax abatement was used to incentivize the adoption of EV's.

Is that "corruption?

Absolutely not.

... Isn't it?

Apple and Ireland maintain that is no record of "a deal", yet Apple paid 1% of what the law says they owed. The only beneficiary of that favourable situation is Apple.

Let's be honest, if this happened in any "less reputable" jurisdiction, Apple would definitely be under FCPA scrutiny.

> Tax Abatements are a long, well understood practice

Yeah, the kind of "tax abatement" that is available only to a select few.

> it feels odd that Ireland has now essentially gotten all the benefits of offering this illegal deal by having Apple do business there and now also gets all the back taxes that Apple probably wouldn't have paid to Ireland if they hadn't gotten the deal.

Yes, there's a widespread view in Ireland that this was the best possible outcome: be seen to fight tooth and nail to prevent collecting the taxes, but get them anyway.

> That seems like a bit of a perverse incentive for countries to offer deals they may know will get overturned later because they'll get the money eventually.

I'm not so sure of this, though. The companies aren't fools and have better paid lawyers than the countries, so they won't enter these deals unless they rate their chances of getting away with it.

Sure, I'm not saying this is going to be a likely fraud, but there's much more subtly illegal ways to offer stuff that may be worth the risk for a company and then the government then lobbies via backchannels for the EU to find it illegal.

An interest free loan for years for 13 billion isn’t too bad!

I haven't read this specific case but normally "back taxes" refers to the taxes, interest, and fees that are owed.

I would guess that Apple's ability to get a return on its cash are likely to exceed the total of taxes, interest, and fees.

Sure, Ireland did wrong by insinuating to Apple that they could have special treatment when in fact EU law prohibits it, but Apple failed to pay the prevailing tax rates which can be demanded long after the fact. Ireland has sovereign immunity from tort in this case. They could legislate to waive their immunity for tax assurances which would create an interesting constitutional issue in the EU.

EU law supercedes national law. Ireland can legislate as much as they want, but if they ignore ECJ judgements stating that their laws are incompatible with EU legislation, they will be fined.

Yes, potentially, but my understanding by following this case and others is that the EU has no legislation on taxes other than non-discrimination. So there is no EU law to supercede Irish law.

It's simple, EU law says Apple had to pay taxes at that time. Apple's ignorance of EU law is not an excuse, this doesn't work for individuals, why should it work for big multinational companies? Ireland doesn't have the power alone to overturn these kinds of laws, unless, of course, they decide to leave EU.

Apple's decision to put their trust completely in Ireland officials and sidestep the EU is their own mistake. Reminds me of when Trump tried to arrange a trade deal with Germany without EU, which was impossible.

> Apple's ignorance of EU law is not an excuse

> Ireland doesn't have the power alone to overturn these kinds of laws

How was apple to know what ireland could and could not do? Why should they have to? Irish government said to apple that the rules are as such. The precedent this sets is that companies should not trust governments' words, instead each company should somehow interpret the laws themselves, each (surely) in their own way. Are we sure we want to set this precedent?

Presumably these laws are published publicly, and apple has more an enough resources to hire enough lawyers to ensure they are in compliance.

Ignorance of the law is not an excuse.

five accountants will produce six results from the same input based on the same laws, all of which the IRS will accept. Laws are not code. They are not unambiguous and noncontradictory.

And forget apple! This means that any company in existence now needs a lawyer who understands the Treaty of Lisbon! Just in case some EU country tells them to do X, they now need to know if said country can actually say so!

I think you underestimate the damage of "we cannot trust the actual government to tell us what we can and cannot do"

> I think you underestimate the damage of "we cannot trust the actual government to tell us what we can and cannot do"

I wonder how these companies manage not to run afoul of US FCPA.

Dude, seriously? You’re acting like Apple was clueless here. This entire controversy is about Ireland and Apple colluding for over a decade to avoid paying corporate taxes anywhere else in the EU. Nobody involved was ignorant of the potential illegality, rather that was deliberately the point.

> any company in existence now needs a lawyer who understands the Treaty of Lisbon!

Hyperbole makes you look hysteric. The reality is that every other company is doing just fine, paying the tax they owe. The only companies who have to worry are shady ones like Apple (abusing tax-havens since the '80s, with Braeburn etc): it's now established that secret agreements with cosy governments will not be tolerated in the EU, as it should be.

Do you really believe Apple-Ireland is the only cosy tax-based incentive that any EU member state has offered to any international company to invest and operate locally in the past 30 years?

What's next? All the member states that offered attractive VAT rates when the regime was different years ago and doing so was advantageous retrospectively get reset to some baseline rate around the bloc's average and every company that ever paid VAT at lower rates in those member states gets a bill?

It's also literally not the only one that got in trouble today. Google's deal with Ireland also got smacked down.

> Do you really believe Apple-Ireland is the only cosy tax-based incentive that any EU member state has offered to any international company

Cases are prosecuted if someone (either competitors or the Commission) thinks they're worth the trouble. Apple and Google were clearly worth it, simply because of the massive amounts of money involved - nobody cares if an ice-cream stall is foregone 100 euros. If you know of other worthy cases, feel free to take them up with the courts.

You're mischaracterizing the issue, by the way. The problem is the way one specific company was treated, which was not in line with the practices the Irish had cleared with the EU. Other companies were not treated like that and were just fine.

> retrospectively get reset to some baseline rate around the bloc's average and every company that ever paid VAT at lower rates in those member states gets a bill

That would be an extremely popular measure, politically, but there is currently no indication that the Commission or the ECJ will ever ask for that, and it has nothing to do with this judgement.

I don't see what you think is mischaracterised here. Lots of companies have received individual favourable tax treatments within the EU in ways that would not fly today. Several member states have historically established competitive tax environments at the likely expense of their fellow members too. As I said before it is unrealistic to argue as if Apple and Ireland is the only such case.

And I doubt that retrospective VAT change would still be very popular after trading with the EU became completely toxic - which is not an unrealistic outcome from such a hostile act. Businesses already avoid EU customers because of the existing environment. Retrospective demands for more money would be much worse.

Except this agreement was 30 years old and hasn't been effect for over a decade. Even if you think doing everything else right, how do you know some EU court next year won't find that something you did decades ago where you asked the local regulators for approval and they gave it won't be found to be illegal.

If you think Apple and Google are the only two "shady companies" who work with the governments of the countries they operate in to optimize their taxes, I'm not sure what to tell you.

Laws are also often intentionally written in such a way to be both hard to understand and ambiguous. Such rarely exercised laws are really only made manifest once tested by a court of law.

It's basically impossible to protect yourself via the word of law. Because when the rubber hits the road the judge can interpret whatever they want. Unless there is precedent even the best lawyers are just guessing.

Ignorance of the law is not an excuse.

That argument is quite a stretch when the EU tends to pass relatively ambiguous legislation and leave interpretation relatively open compared to for example the legal framework in the US, when it was not some random law firm but literally the relevant national government that gave Apple the OK, and when that situation was widely known and apparently accepted for about 30 years before the EU intervened.

I think the EU will pay a high price for actions like this. It is retrospectively moving the goalposts decades after the fact and trying to shift billions in funds when ironically neither the company paying the taxes nor the member state government apparently compelled now to collect them want that situation. You can't play games like that and remain a credible environment for investment and growth.

This particular action is specific to Ireland but by the nature of the EU its willingness and ability to take such an action in one member state taints all other member states as well. And without constitutional change to the EU itself there will never now be anything that any member state can ever do to remove that stain. Businesses now can't trust that any incentives they are offered to invest and grow in any EU member state won't get reversed further down the line no matter what any government of any member state says. It's hard to overstate how devastating that reality could become to member states trying to attract investment and grow their economies.

The other thing that worries me here is the EU's seeming willingness to both not intervene quickly and not provide ways for companies to know for sure that they're on the right side of EU laws until they do or don't get sued.

Creating an ambiguous business environment is unfortunately a recurring pattern with the EU.

A few years ago we had some fierce debates on HN about EU measures like the GDPR. Some claimed the regulations were excellent and compliance was easy if you weren't doing anything wrong. Some were more cautious and thought the length and frequent ambiguity of the regulations meant it couldn't be that simple. The strident defenders of the GDPR as lightweight regulation that should cause no significant costs or problems for honest businesses might like to read Mario Draghi's assessment of it from his report this week.

And much the same with Apple and the DMA most recently. Do I think Apple is being a bad actor re: the DMA? Yes. But it does also seem like the EU is doing a lot of "Well, just release your product and we'll tell you after you ship it if we're going to fine you for billions of dollars". You see this with things like the upcoming iPhone Display Mirroring features that aren't coming to the EU where Apple has said they're not shipping them in the EU because they think it would violate the DMA, and the regulators have just blasted Apple for withholding features but explicitly not said whether the feature is compliant.

Having companies afraid of massive penalties if they mess up is fine and good, but only works if the conduct you're trying to disincentivize is one you're ok with them not doing at all.

See also certain popular and state of the art models in AI, which are not available in the EU because of similar fears. Sometimes it's like the EU and its defenders think the EU is too big for businesses to walk away no matter how hostile the environment becomes. This is unrealistic.

> That argument is quite a stretch when the EU tends to pass relatively ambiguous legislation and leave interpretation relatively open compared to for example the legal framework in the US, when it was not some random law firm but literally the relevant national government that gave Apple the OK, and when that situation was widely known and apparently accepted for about 30 years before the EU intervened.

That is because the EU is not responsible for the member-states’ national laws, so they leave some room for different implementations. It’s on purpose.

In the case of Apple’s situation, it’s completely different. What is relevant is Irish law, which is clear and unambiguous. What was misleading was the behaviour of the Irish government.

> I think the EU will pay a high price for actions like this. It is retrospectively moving the goalposts decades after the fact and trying to shift billions in funds when ironically neither the company paying the taxes nor the member state government apparently compelled now to collect them want that situation.

They are not moving the goalposts. It’s more analogous to the IRS saying that there was an error in someone’s tax filings some years ago and that they need to pay the back taxes. Again, there is no fine here. The amount Apple has to pay is what they should have paid according to Irish law at the time.

That is because the EU is not responsible for the member-states’ national laws, so they leave some room for different implementations. It’s on purpose.

That's not quite how it works. The EU makes binding legislation in three different forms. Regulations - such as the GDPR - apply directly in all member states. Directives are the indirect ones that establish a principle but require member states to implement their own laws to give direct effect to that principle. Finally there are decisions, which are binding on a specific party such as a company or member state.

You can read more about the different types of EU legislation at https://european-union.europa.eu/institutions-law-budget/law....

But the decision in this particular case wasn't (directly) any of those things. It was a ruling by the ECJ in a case brought by the Commission.

What is relevant is Irish law, which is clear and unambiguous. What was misleading was the behaviour of the Irish government.

But this is the problem. Tax systems are always complicated and open to interpretation in numerous ways. Large businesses are always required to make judgements about what they need to do to be in compliance with all of the relevant rules and always take advice from experts on these matters. What this action by the EU means is that businesses - including properly run businesses that have no intent to cheat anyone of anything - can no longer trust that following advice even from what should be the most authoritative sources they can ask will be sufficient.

They are not moving the goalposts.

The arrangements this legal saga has been about ran from the early 1990s for more than 20 years.

The EU started the legal action in 2016 when those arrangements had already ceased anyway and has spent about 8 years chasing it through the various courts and processes to reach this point.

If the IRS went after someone's tax filings from a year or two ago because they hadn't paid the correct tax that would be one thing. This is more like the IRS going after someone's tax filings from 30 years ago after allowing the arrangements to continue unchallenged with its full knowledge for a further 20 years and knowing that the the individual had already paid tax to another tax authority during that period instead because they weren't paying it to the IRS.

Except it's not really like that either because in this case it looks like it was the equivalent of the IRS that gave its blessing to the arrangements in the first place. So it's more analogous to some hypothetical higher authority coming along over 20 years after the fact and declaring that there was an error in someone's taxes that had been reported according to an agreement with the federal government and accepted by the IRS.

The IRS isn't comparable to this case because there's 2 entities at play, the Irish tax authority and the EU's.

I'm not too familiar with how exactly it works in the US so excuse the probably poor example, but this is more like Texas deciding that they want to attract businesses by saying they'd lower taxes a bunch. They say to the IRS "Hey, we're going to be lowering all corporate taxes to 15% across the board, is this good with you?". The IRS says sure, not knowing that what Texas is actually doing is making sweetheart deals with companies like Apple to have them pay a tax rate that is basically 0 (0.005% as is the case with Apple in Ireland).

This tax-free opportunity is only provided to a single company. The lying here is relevant, because Texas explicitly told the IRS they'd be charging every business at 15%, only to then make a special deal with Apple that's unfair to all other businesses and Apple's competitors.

A decade later (more like 2 in this case), the IRS investigates and sees there's been a discrepancy between what Texas said they'd be doing (taxing them at 15% like they said they'd charge every business) and what they're actually doing. So, the IRS says that's not allowed, and that Apple now owes Texas that unpaid tax income whether Texas wants to take it or not.

Texas doesn't want it because it makes them look like they're double dipping. Apple doesn't want it for obvious reasons.

In the case of conflicting laws, who prevails? If the Irish pass a law that Apple can not pay certain taxes, does that not override EU law? Usually in cascading situations, the more local entity wins, n

If there is a legal conflict, EU law trumps all, the same way federal law trumps local law in US. The highest court is always an EU institution. EU countries give up part of their sovereignty in specific legal areas, like market competition regulations. They can always leave if they want.

This depends, though. The EU does not have laws covering everything that national or local law might cover in its member states. In many cases the EU court of law is more like the US Supreme Court in that it is more about establishing whether a given legal decision is compatible with the basic law (e.g. human rights). It's more about setting the boundaries within which member states can make their own laws. So national law might say "X is illegal" and EU law might say "nations can say X is illegal" (or that they can't).

Ireland cannot do that. That’s literally the whole point of the EU (or specifically a single market)

Effectively - your hypothetical proposed ‘apple law’ would, at some point in the Irish law passing process, be found to be incompatible with their commitments to being in the EU, and I assume it would be then an unconstitutional law. The price of admittance to the EU is basically having this process and constitution.

Now - they could go ahead and do it anyway in which case the enforcement from the EU could range from anything to an angry letter to some large monetary penalty - as is the case with Hungary currently being withheld some funds.

I mean, isn't that exactly the case here though? Ireland's law said they could do this. The EU says that's wrong, and Ireland is seemingly getting a reward for doing something illegal that the EU didn't decide was illegal for almost 30 years?

Again, not disputing that this is legally accurate to how things work, but that definitely strikes me as an environment that a lot of businesses would find hard to work with. Other smaller startups I've worked with had Irish branches because it was a good way to hire devs and governments gave us some incentives. Finding out, potentially decades later, that the Irish government had screwed us over would be a lot more catastrophic than this fine will be to Apple.

Absolutely agree - it's messy.

Does it make the EU/Ireland a little less attractive to foreign investment? Maybe. Was it worth the gamble in the end for Apple and Ireland - probably.

> Ireland is seemingly getting a reward

They're not really getting a reward, because this makes them much less attractive for investment. Meaning less tax revenue in the wider and longer perspective.

I guess, but given this precedent, I doubt anywhere else in the EU is going to give a better deal, so all the companies where Ireland gave them illegal deals probably won't have any reason to move to Germany or Spain or Belgium. Ireland probably gets to keep their business and tax revenue going forward, as well as getting back taxes.

No, not generally in federative states like the US or specifically for Union competencies in the particularly weird confederal entity that is today the European Union.

The Union competency in question had been established by treaty - the establishment and protection of the Single Market, and as I understand it, specifically the provisions restricting state aid - where by being members of the Union, countries have delegated regulatory and judicial primacy to organs of the Union.

> Apple's ignorance of EU law is not an excuse, this doesn't work for individuals, why should it work for big multinational companies?

It’s worse than that. What was being ignored was Irish law. The EU just said that this law should be applied equally without the Irish government cutting special deals.

> Apple's decision to put their trust completely in Ireland officials and sidestep the EU is their own mistake.

Indeed. But it is not a terrible mistake: you should be able to take a tax administration at their word, even though you should also know what you have to pay in taxes. They are not really being punished, they just need to pay what they owe, which I think is fair.

If the government "offers" you a deal that you don't deserve, and you take it, that's a crime.

It's pretty much everywhere. The government isn't a person that can make decisions autonomously.

> It seems like Ireland did the thing that's against the rules by offering the deal, not Apple?

Well, Apple accepted the illegal deal, didn't they?

> That seems like a bit of a perverse incentive for countries to offer deals they may know will get overturned later because they'll get the money eventually.

There's also a perverse incentive for companies to defer paying taxes for 20 years. Apple isn't getting fined, they're just paying what they owe 20 years late.

edit: apparently the years were 1991 to 1997, so that's about 30 years actually.

I read through the first part of the ruling to get a better idea of what happened. Apparently, Apple wrote to the Irish tax authorities, and said "this is how we plan to calculate our taxes" and the Irish tax authority said "okay, no problem, that works for us" and the EU commission investigated some years later, and said "wait, was that method of calculating taxes available to all Irish companies? We don't think so, so now Ireland has to collect taxes from all the way back many years." Ireland said "no bro, we're all good, they don't owe us anything", and Apple said "wait, we just did what we were told to do, and we already paid taxes on that income in the US instead of the EU, you can't retroactively change the rules" and the EU top court just said "Sorry, those tax rules go against EU law, and yes we can"

> you can't retroactively change rules ... yes we can

Hence, fewer US companies will have significant production in the EU in general, and possibly Ireland in particular. Let's hope it will help native European industries flourish %)

They didn't retroactively change the rules. They retroactively found a contract invalid. I'd file this under "play stupid games, win stupid prizes" as it sounds like Apple tried to talk Ireland into giving it special treatment that wasn't actually legally possible under EU law and the EU found out and told them they can't actually do that after Ireland agreed.

If I get a tax agency worker to sign me a piece of paper that says I don't ever have to pay any taxes, I can insist that they said so all I want but I'll still owe the back taxes when someone finds out because that person had no authority to say I don't.

Also capital flight doesn't actually work like that no matter how often people parrot it. Ireland is the European HQ for US tech companies because they need a European HQ to access the extremely lucrative market and Ireland is willing to go to great lengths (clearly including "agreeing to conditions they can't legally agree to) to attract them to go there in particular. If Ireland becomes less attractive that means they will be more likely to go elsewhere but their European HQ will still be in the EU/EEA because that's what it's for. This wasn't a case of Ireland competing for Europe where Ireland losing is a loss to all of the EU, it was Ireland competing against other EU countries.

Seems like Ireland should have to pay the EU

The EU isn't going to get the taxes (certainly not the vast majority of them). They just ruled that it isn't OK for Apple to have been given this tax break via specific accounting rules. It's Ireland that gets the windfall, whether it wants it or not.

I kind of agree, but I'm not an EU citizen and don't have any say in EU laws, so whatever :) If I were Apple, I would be a little miffed at this situation, though. It certainly makes me question whether or not I want to ever expand into the EU. But tax laws are too damn complicated in most other countries too. so maybe just budget for government incompetence?

> It certainly makes me question whether or not I want to ever expand into the EU.

Well, you are free to ignore one of the biggest markets on the planet. I'm sure your European competitors will enjoy filling your niche.

No, it's Ireland's money to collect and keep. The taxes don't go to the EU budget.

Other countries in the EU, however, can sue ireland for taxes they missed out on. Which is probably what will happen. The money will be divided up over many countries.

On what basis exactly? Income is taxed where the company (Apple subsidiary) is headquartered, so they would have to prove Apple would have chosen a different country, which is not going to happen.

There is a general prohibition on EU member states granting state aid to companies, but there are exceptions to this where the aid is justified in order to promote economically underdeveloped regions. There are a lot of rules and court cases about when state aid will fall on one side or the other of that line. See eg https://competition-policy.ec.europa.eu/state-aid/legislatio...

You Seen knowledeble on this topic. What do you think of the numerous Deutsche Bank and Lufthansa aids?

I don’t think Deutsche Bank has ever received direct state aid, they’re quite proud of that fact. Though they have benefitted indirectly when institutions that owed Deutsche Bank money received state aid.

Lufthansa did receive state aid during the pandemic. This is currently under investigation as the EU’s approval was annulled by an EU court: https://ec.europa.eu/commission/presscorner/detail/en/ip_24_...

To be clear: Germany also heavily subsidized a lot of other large companies, especially in the automotive industry during the pandemic but the politicians involved were mostly smart enough to hide this behind grants with tailor-made requirements that only incidentally happened to perfectly match those companies and few else.

At least VW and BMW have certainly received state aid in the past, mostly around opening new factories, but I can’t find anything where they got specific aid during Covid. Of course they were able to use support that’s open to all companies, e.g. Kurzarbeit, but that’s not considered state aid in the EU context.

The Dutch government is spending billions to keep ASML in The Netherlands. To circumvent these prohibitions, the money doesn't go directly to ASML but is invested in better infrastructure, housing and education in the local area. More trains and busses to bring people to the company, better energy grid to power all the ASML offices, more money towards STEM studies of the local universities so they are creating the new ASML workforce, building extra homes so the company can hire more people.

Plus tax cuts for the employees of ASML, which is fully legal under EU legislation and prohibitions.

This seems like a pretty fair way to do it - the government invests in being a place worth staying in, rather than just subsidizing or lining the profits of the target business. If ASML left, it might blow up the economic model of tax + investment, but the constructed infrastructure and social assets would remain.

It is kind of funny in way. :-)

"Oh no, education and better infrastructure such as mass transit and a power grid, the horror!"

Not complaining! It's wonderful that we are finally getting investments in a better environment. And ASML provides a big boost to the economy as well.

But a bus line that goes from the train station directly to one company, together with housing that will be filled with the expats from ASML is obviously an (indirect) company subsidy.

    > Plus tax cuts for the employees of ASML

I had to research this claim. It looks true for some. <<This allows certain workers recruited abroad to keep 30 percent of their income without paying tax on it for a period of five years as compensation for relocating.>> Ref: https://nltimes.nl/2024/03/25/cabinet-close-eu14-billion-pla...

The 30% ruling isn't specific to ASML, it's a general tax credit you get if you're a non-EU national that moves to the Netherlands (plus a bunch of other conditions) on a sponsored work visa.

https://business.gov.nl/running-your-business/staff/terms-of...

Whether ASML and their employees get extra benefits on top of the 30% ruling I'm not sure, I wouldn't be surprised if they do though.

> There is a general prohibition on EU member states granting state aid to companies

The EU hands out billions in direct aid to companies every year. Many times together with the country governments. So there's no such prohibition in practice. In the EU regions I am familiar with, at least 70% of companies live on getting subsidies from the EU mainly and income from actual customers as a secondary concern. And I'm not talking about agriculture, but every industry.

Few businesses will even start any economic activity before they've received at least a hundred thousand in subsidies and investment grants. Not loans, which is a different matter.

Just one example: https://commission.europa.eu/business-economy-euro/economic-...

The EU does that, yes. He’s saying countries can’t do that to their own industries, however, which I am led to believe is correct.

I think it applies only to aids for specific companies? e.g. if all companies that satisfies some requirements (e.g. N number of employees/new jobs , specific geographic area, industry etc.) cam receive the aid it's legal.

Correct.

This said, if the incentives are tailored a bit too much (i.e. there is clearly only one company that satisfies the prerequisites), it could be challenged as state aid. You still need someone to start the challenge though - either a competing company or a Commissioner.

> Eg Ireland might give a tax incentive if a large Fortune 500 company hires X people in Ireland.

If Ireland is willing to give the same tax incentive to any company hiring X people in Ireland, it's fine.

If Ireland only grants the rebate to Fortune 500 companies in a bid to lure specific US investment, it's the state creating a competitive distortion i.e. state aid.

Unless the threshold is set high enough that only a few corporations could even possibly do it. Especially if they limited it further per industry.

Ireland was a poor country. They recognized low taxes would attract business. It worked. They then became a “tiger”

I think you make it seem like EU doesn't care at all about what member states do in regards to taxation but there's many limitations to what can be done by any member state in order to harmonize and prevent corruption etc. This in practice makes the EU have a lot of say in regards to taxation. Moreover the EU has special rules to limit moving funds to jurisdictions that have taxes that are deemed too low (read tax havens) - this directly implies no member state has agency to lower their own taxes as much.

Here's some example limitations: https://eur-lex.europa.eu/EN/legal-content/summary/tackling-...

I focused on direct taxation, but in indirect taxation I think there's even more examples.

Maybe they should do it like Roth IRAs. You can move the money to a tax haven only after you’ve paid taxes on it.

So if you’re building hotels or factories in the haven that’s fine. If you’re hiding money we demand our pound of flesh.

It's more difficult to determine where the value in software is being created. Still, big tech has a lot of R&D offices in Ireland.

That is definitely a difficult paper trail. If you make valves in Ireland they at least have to be shipped. Code just moves on the network. As do commands.

But wouldn’t Ireland see their taxes as “working” if Irish coders are being hired to do the work?

There’s absolutely no employment requirement outside of any PR deals that IE may impose on Apple to satisfy their citizens. The tax evasion scheme they used does not necessitate any real humans in any jurisdictions - it’s almost literally just documentation.

I’m not sure that’s the case. I worked for Irish subsidiary of a financial software company. Management openly said the main reason we were there was for the tax benefit. We cut standard code for the product, then once a year had to fill out a form describing the ‘R&D’ component of what we had done. As I understood it, that was required for the tax treatment we received.

AFAIU it’s a soft requirement so that IE can claim that losing taxes is offset by employing (a few) people. The actual tax structuring discussed in this case and similar for other FAANG, is all about where the company is registered vs making revenue vs paying taxes, and how none of it is intuitively what you’d expect.

You get a 33% tax rebate via a research credit. You probably filled out a form for PWC to attest to that. There's 10s of 1000s of Engineers directly employed in R&D in Ireland, spanning automotive, telecoms, fintech, SaaS etc.. with a large number of companies receiving the credit.

We have a HUGE network effect now via the Silicon Docks and the other tech hubs around Ireland - Cork, Galway and Dublin are absolute inundated with groups of companies in certain industries. Seven of the ten of the world's top pharmaceutical companies including Janssen, AbbVie, Eli Lilly, Pfizer, Merck/MSD, Novartis, and Thermo Fisher Scientific are based within 50km of each other in Cork.

That's not what really Apple did in Europe to pay little taxes.

The scheme was essentially like this:

- Apple Ireland bought iphones for 200$ or so (talking about pre X numbers, now they're likely slightly higher)

- Apple Ireland sold iPhones to Apple Italy for 599€s

- Apple Italy sold iPhones for 599€s + vat (thus avoiding to pay any corporate taxes in Italy while making billions)

- Apple Ireland had a special agreement with Irish tax so they paid like sub 1% corporate taxes on the 400€s of profit

This way not only Apple wasn't paying any tax in the countries they were doing business with, but also paying extremely low taxes in Ireland.

On top of that, which isn't illegal per se, it happened allegedly on top of preferential treatments (but I'm not much informed on the details here).

That sounds like something Hollywood does when they want to cut out profit sharing with the cast.

One of their affiliate companies makes an absolute killing on services rendered and the studio itself takes a bath on the movie.

> avoiding to pay any corporate taxes in Italy

This us a fairly common strategy not limited to tech.

For instance, Starbucks in the UK:

> Starbucks Coffee Company (UK) made a £149m “gross profit” in the year to October 2023, up from £129m the year before. But after “administrative expenses” of £127m, its pre-tax profits were reduced to £16.9m, on which it paid £7.2m tax...

In 2012, it was revealed that Starbucks had paid just £8.6m in taxes on £3bn in UK sales since 1998,

https://www.theguardian.com/business/2024/apr/05/starbucks-p...

you're ignoring the 20% VAT on those 3bn sales, which provided 600m tax revenue. Why is it so important that they paid 7m in corporate tax instead of any other amount? Their business apparently has high cost of sales (like stores, personnel etc.), where by the way also taxes occur, e.g. for wages...

So I suggest to think twice if you want to paint the picture that Starbucks does not contribute it's fair share to taxes in the UK.

My understanding is that the VAT exists independently of Starbucks paying UK income tax or using various strategies to avoid doing so.

The object here is to avoid recognizing income in nations with a higher tax rate as much as possible.

VAT is paid by the consumer, not the business. The business merely collects it in behalf of the tax office. Starbucks contributes 0 taxes by collecting VAT. Look up the definition of consumption taxes as opposed to corporate income taxes.

If you want to give other examples of ways companies contribute you can mention property taxes on owned properties, or jobs created which usually also have some part of pension etc contributed by the business, vehicles paying excise tax and fuel taxes, but I don't think VAT is a correct one to use.

Corporate tax is also paid by the consumer. They raise prices by exactly the amount of their corporate tax.

Or not. If their competition doesn't raise prices, maybe they won't either.

Their competition also needs to pay these taxes. There's no free money - adding to corporate taxes just makes things more expensive for the consumer.

If the tax raises all of their costs and it's a competitive market then they'll all have to raise prices, because competitive market = competitive pricing and it has to come from somewhere.

The most common case where it doesn't raise prices is when they don't have any competition and are already charging the monopoly price, so the money has to come from the company because if there was any more to extract from the customer, the monopolist would have done it to begin with. But we don't really like those markets or want to promote their continued existence.

What this doesn't depend on much is the form of the tax. If it's a competitive market then VAT and corporate income tax are both getting passed on to the customer. If it's a monopolist then either one will typically come out of the monopoly rent, because charging the customers more would bankrupt them or cause them to extend the life of used goods instead of buying new ones etc.

However, corporate income tax is generally easier for multinational corporations to avoid than VAT, so they have a pecuniary interest in making people think that VAT is worse than income tax.

There's a third option: they're competitors are small business that don't have the means to do the clever tax optimization/evasions, so they were already paying full tax. So now Starbucks if it were to pay full taxes, would have to either raise their prices (but then competitors could stay at the same price, because they've already been paying those tax rates), or they can lower their margin.

It's true that these taxes make things more expensive for local businesses, but also for all businesses, as they have to employ very expensive tax lawyers to figure out the best places to put their businesses. What a waste of mental effort that could've gone into more productive careers. But that's corporation tax for you.

> VAT is paid by the consumer, not the business

This doesn't matter.

It's like saying "the employee doesn't pay employee tax; the business does". The cost is still there for the business, who could otherwise be paying you it. Or using it to employ more people. Tax is tax.

In this case, the business could charge the same amount but keep what is currently the VAT portion. It's still tax revenue generated by a business doing work, paid by a consumer who does taxed work elsewhere to get the money, and all the government does is collect the money. Doesn't really matter which tax it is.

It obviously matters.

Because VAT is only applied on consumers.

If business A buys from business B which buys from business C...Only the end customer pays VAT on the final transaction, none of the entities before do.

does the UK have an income tax?

Any sane country would rather have the economic boost from the jobs and then take their cut as income tax from that. than tax the company directly, Not to say they will not tax the company, but corporate law is often intentionally designed to let a company pay little tax if it is dumping the money it makes into the economy. why kill the goose that lays the golden eggs?

> Any sane country would rather have the economic boost from the jobs and then take their cut as income tax from that. than tax the company directly

What jobs does Starbucks create, exactly? There were no coffee shops in UK before them? They outcompete local shops because they don’t have to pay taxes, and still sell a croissant for $5.

Alternatively, highly skilled population and innovative people are the goose that lays the golden eggs

And where was this against the law?

A good argument for GST. With a 10% GST the Italians would have at least seen 10% of the 599.

I apologize if this is a stupid question but aren't GST and VAT (basically) the same thing? It is just an "advanced" sales tax, no? It still does not fix the problem of income tax...

The big problem from what I remember from earlier is some companies like grocery stores operate on razor thin margins -- like they buy tomatoes for USD 0.90 per kilogram and sell for USD 1.00 or whatever so if we charge income tax on the whole USD 1.00, the rate would have to be RIDICULOUSLY low or the grocery store simply won't survive.

Problem I want to see fixed with some kind of sales tax upgrade (VAT/GST/whatever) is if a company / conglomerate "sells" goods and services to itself, it should have to pay this tax on the pre-discount rate. For example, if Google web search has an advertisement for Google Chrome, Google should have to pay this tax on the market value of the ad placed, not on the actual money amount that changed hands (which is likely zero dollars). Same thing with Apple Music on iPhone. There are MAJOR ads placed when you first set up an iPhone and later continuing ads that show up saying "hey, how about now? do you want to pay for Apple Music EXTREME THUNDER edition now?" These are ads that have a lot of value and Apple should have to pay (upgraded) sales tax for displaying these ads.

Value added tax is a tax on the difference between the purchase price of the inputs and the sale price of the outputs; that is, it's a tax on the value that company specifically adds.

The way it works in practice is VAT is added to the the sale price, but the VAT actually sent by the business to the government is reduced by any VAT that was paid for inputs. This way, you don't end up with increasing amounts of tax just because a supply chain has lots of middlemen.

This setup creates an incentive to report VAT at each level of the supply chain, reducing fraud. Because the tax doesn't compound with multiple steps, it's fairer.

Sorry, I don't know anything about VAT, but in Australia, consumers pay 10% on all products except food, financial services, and a few other things.

When Apple sells an phone to a consumer in Australia, 10% of the sale price is collected by the retailer, and paid directly to the government, rather giving the full sale price to Apple, then allowing Apple to work out later what was profit and what was not.

There are mixed feelings about it, but I've always liked it. If you consume a lot of stuff, you pay a lot of tax. Sounds fair to me.

    > If you consume a lot of stuff, you pay a lot of tax. Sounds fair to me.

Most economists view VAT/GST as a regressive tax. I don't know why so many highly advanced, liberal democracies are so dependent upon VAT/GST for tax revenues.

> I don't know why so many highly advanced, liberal democracies are so dependent upon VAT/GST for tax revenues.

See above discussion, when wealthy people are responsible for declaring their own income, it tends to be low.

GST is "regressive". You have to charge everybody the same 10%. You can't ask wealthy people to pay 40% like you can with income tax.

I actually have no idea what percentage of tax revenue is GST vs Personal Income Tax vs Company Tax. I'm interested now, I'll go do some research.

This is what I found https://www.abs.gov.au/articles/insights-government-finance-...

Aren't they already getting 22% of it?

No, VAT is a tax on consumers, which is why I left it out of the calculation.

To recap: Apple Ireland made 400€s of profit by getting iPhones at 200€s and selling them at 600€s to Apple Italy.

The 400€s profit went virtually untaxed due to Apple having privileged corporate tax.

Thus, in conclusion, Apple paid little to no taxes on EU sales for ages.

What the EU contested wasn't that the whole thing was illegal, after all it's Irish business how much do they want to tax corporate profits (albeit as you can imagine the whole schema was to push for more trading, not corporate loopholes), but that Apple (and some other companies) got a special treatment compared to other businesses in Ireland.

Isn't sales tax (and/or GST also a tax) on consumers? GST is just in theory much simpler and cheaper to administer.

> The 400€s profit went virtually untaxed due to Apple having privileged corporate tax. > Thus, in conclusion, Apple paid little to no taxes on EU sales for ages.

Sure but how would GST help?

The standard VAT rate in Italy in 22%, so Google tells me. The real problem: Apple runs stores in Italy (and hence a business in Italy), but doesn't pay any corporate income tax in Italy. So, Italy is missing out on tax revenues.

> Apple Italy sold iPhones for 599€s + vat (thus avoiding to pay any corporate taxes in Italy while making billions)

Isn't that the whole point of the European Economic Area? That you can freely sell your goods to other countries within the EEA without having to pay corporate taxes to each individual country?

Sure, but I think it's the sort of "self-dealing" that's the problem.

Suppose it were possible for a wholesaler in Ireland to purchase a product in bulk at around 1/3 of MSRP. Market equilibrium would drive the price of that product down, right? If any other company could do that, price competition would prevail and eventually the delta between the import cost (in Ireland) and the export price (to an Italian phone shop) would shrink. Likewise, the retailers that wholesaler sells to would want to have some margin as well. This would put pressure on the wholesaler - likely competing with other wholesalers - to have a small margin as their "value added" is insubstantial.

But, crucially, this is not a case of three independent entities: a manufacturer, a wholesaler, and a retail business. This is one entity, with three subsidiaries and setting prices between them to minimize tax burden, and setting prices in ways that are simply nonsensical, like selling products from one subsidiary to another at or below cost, and then to another at full retail price. If they were three separate companies, the manufacturer and the retailer would go under. In this scheme, the wholesaler is somehow adding all of the value to the product, despite doing nothing more than acting as a shipping hub.

If proving this weren’t the issue the whole thing could have been wrapped up in a day. Good summary though.

Yes, there's nothing wrong with that.

The issue arises from Apple allegedly getting a preferential treatment in Irish taxes on top of that, thus paying extremely low taxes overall for their entire European business.

The other weird part is that I beleive the situation had been resolved before any investigation.

.. thus removing a significant portion of income from these so-called tax havens, which generally tend to be poorer countries. No one has accused Germany of being a tax haven, for instance.

This list disagrees with "poorer countries": https://worldpopulationreview.com/country-rankings/tax-haven...

   1 British Virgin Islands
   2 Cayman Islands
   3 Bermuda
   4 Netherlands
   5 Switzerland
   6 Luxembourg
   7 Hong Kong
   8 Jersey
   9 Singapore
  10 United Arab Emirates

> so-called tax havens, which generally tend to be poorer countries

Smaller, not poorer.

Unless you think that current or historical "tax havens" like Ireland, Luxembourg, Netherlands, Switzerland etc. were/are poorer than Germany.

If you have less than a handful of million people even getting a few percent + several thousands of jobs from corporations like Apple is a huge deal. It would be a drop in the bucket for Germany so they have no incentives to make such deals.

Specifically in Ireland, corporate taxes were being lowered from late 1980s until 2003, in a series of agreements with the EU regulators. It's not like Ireland lowered the taxes in a sneaky scheme, or grandfathered-in an abnormally low rate.

At the same time it's clear that Ireland has been "gaming the system" here, and the proof is the huge delta between the effective tax rates between member nations we're seeing in the judgement. I don't know that there's much of a moral or principled argument to be made here, every system gets gamed, and the European Commission is another such system. And Ireland absolutely agreed to be bound in that game as a price of joining the EU in the first place.

Basically, from the other side of the ocean I don't see much to care about here beyond the microtactics of business development decisions. Let Europe sort out its business on its own.

Punishing Ireland for gaming the system by paying Ireland 13 billion hardly makes it seem like the EU is super concerned about Ireland's transgressions.

Apple having to pay those 13 B means that companies won't be as eager to have a headquarter in Ireland as they have been in the past. They could move somewhere else in the EU. That's a damage for Ireland and that's why Ireland sided with Apple for all this litigation.

Correct, Ireland fought very hard against getting that 13B.

Sure but the taxes are only part of the equation. Native english speakers familiar to US tech giants common law system. Large number of skilled workers. Flexible immigration system.

So - at this point is Apple and other companies going to move out of Ireland? I mean they have invested a lot and got there, probably they did alright in the situation, Ireland is a relatively nice place to move your company, it just isn't as nice as it was before - that is to say I'm not sure how bad it really is for Ireland.

Apple has been in Ireland since 1980. In the past 5 years it has invested €250 million into its Cork campus alone, and has just announced an expansion to bump its 6,000 strong workforce to 9,300.

https://www.irishtimes.com/business/technology/apple-to-expa...

They are going absolutely nowhere.

If I were an Irish citizen paying taxes I'd be incredibly pissed that my own government is fighting against 13 billion from the richest company on the planet. I'm subsidizing fucking Apple of all things!? Absolute buffoonery, whoever made this deal in the first place should be in prison.

Our Corporate tax receipts for last year alone were almost double that.

We have almost every American Tech Company of note with their EMEA HQ and often their EMEA R&D wings based in Ireland. Making a case on behalf of our commercial tenants to protect long-term interests was exactly the right decision. Currently, one in every €7 collected by the Irish state comes from just 10 firms.

For context, Ireland has one of the highest gross public debt levels in the world, at just over €42,000 per person, due to the IMF/EU collusion that forced us to bail out unsecured bondholders in German banks, and to effectively nationalise our banks to prevent a contagion effect.

They're not subsidising Apple.

Apple is providing thousands of jobs - they pay taxes on those people, and those people pay income tax / VAT / fuel tax / death tax / etc and they consume from other companies that pay lots of taxes as well, and import tariffs as well. It's taxes and tariffs all the way down.

No one is paying Apple money. It's not a subsidy.

There are Irish customers buying Apple products. Some of that money goes into the salaries of Irish Apple employees, which pay their taxes in Ireland. Some of that money goes into other expenses in Ireland. What's left goes to the USA where Apple pays taxes on the part of them that turns to be a profit. The idea is that part of that money (the tax) should not go to the USA but stay in Ireland. In that way the money of Irish customers would stay in Ireland, which is probably good for Ireland but it's a matter of opinions.

There is also a 15% corporate minimum tax of big corporations, in effect since the beginning of this year [1] I think that there are many ways to keep circumventing even this attempt at keeping EU money inside the EU, but we will see.

[1] https://taxation-customs.ec.europa.eu/taxation/business-taxa...

Is this the case, though? How much profit is generated by Irish Apple customers compared to the giant amount of tax paid in the country due to Apple being there?

Not so giant. You can check https://en.wikipedia.org/wiki/Apple%27s_EU_tax_dispute which is updated with the latest ruling. The dispute was about taxes from 2004 to 2014. I wonder how much they'll owe to Ireland for the next ten years.

> Apple only paid an effective corporate tax rate that declined from 1% in 2003 to 0.005% in 2014.

Again though, you're only counting corporation tax. Apple has generated far more tax revenue than that.

As others are pointing out, Ireland was offering that discount to great impact, essentially taking over the UK's traditional spot as the core exchange for US companies in the EU. They absolutely would prefer not to be charging that tax.

If that were the case, they wouldn’t have had such a low tax rate to begin with.

Just to be clear - I don't think many people have (much) of a problem with ireland's "headline" 12.5% CT rate.

The problem is the selective tax rates that Ireland gave to many multinationals, often as low as 0.005% (effectively in return for ensuring x amount of jobs were created in Ireland). I think these are really very much sneaky schemes.

Corruption with a twist: the government is the one who got the kickback.

The opposite, no? The government accepted _much_ less money than is required in exchange for jobs for their constituents.

This is an example of a government prioritizing benefits for some of their constituents (emphasis on some) over the collection of tax dollars (direct benefit to the "government") or monetary reward for themselves (corruption).

Apple settled on Ireland precisely because of that tax scheme. Had Ireland levied taxes at a normal rate, they wouldn't have gotten any dollars. The choice for Ireland was between jobs and nothing.

Apple (& al) played countries out against each other and had Ireland not done it another one would've. It's a tragedy of the commons, and as always, that can only be solved through collective action (cue TFA).

Competition is a good thing. We all lose when powerful players band together and form a cartel.

If companies did that - it's illegal. If government politicians do it - their populism brings them votes.

Correct: a market where sellers compete is good for buyers.

Unfortunately in this market the buyers are corporations and the sellers are democratic governments (us).

That’s why this is not good for people.

We aren't democratic governments. We are subjects to governments, who we must pay taxes to, and customers of corporations, who we pay if they can produce stuff we like for cheap enough.

This moves the conversation to questioning the notion of representation of a people by its government. It is true that the entire conversation about whether or not it's good if Apple can play governments out against each other in order not to pay any taxes, rests in part on that assumption. That's a fine conversation to have. But in TFA and in here so far, it is assumed.

Note btw that even in your narrower definition of what government is to us, you still mention taxes, and that is precisely what is in question here, so even according to your formulation everything holds and it is still good for us if corporations can't play out governments against each other to lower their tax bill, because that's directly us footing that bill. You'd have to find some kind of definition of government that doesn't cover that, or argue that if Apple doesn't pay taxes, all those gains are passed on to us, the people, in a better way than if they do. Through a stronger tech market leading to better tech products, or something?

Anyway I think the original assumption is fair and the discussion holds. "Cheating on your taxes = stealing from the people" is a such a well established fundamental axiom that challenging it basically changes the conversation entirely.

> "Cheating on your taxes = stealing from the people" is a such a well established fundamental axiom

Excuse me?! Cheating on your taxes is illegal. Minimizing your taxes is what everyone of us does - it is perfectly normal and justified behavior.

And the discussion was not about that - companies are paying their taxes just fine. The discussion was about governments colluding to form a cartel to uniformly raise taxes. That is not OK.

Even if the stated purpose is somehow justifiable, government collusion is not good for the people. By definition governments are natural monopolies, they don't have internal competition. The only competition keeping them in check is external. And it comes in two forms: destructive (wars) and constructive (free trade). Without competition democracy alone cannot keep governments in check - just witness the decay towards populism and autocracy together with the raise of left and right extremism of the Western governments during the last few years. We need alternatives. We, the people, need to be able to pack our bags and go to a place with values and laws better aligned to ours. Otherwise we will end up prisoners behind barbed wire on the borders like the Eastern Europe the Cold War or facing fines and exit taxes like certain countries already impose on their citizens today.

In a world of bigger and bigger governments, with larger and larger budgets and deficits but smaller and crappier results, inter-national competition is the only recourse we have left. For example, the EU would be supremely satisfied with itself right now if USA's economic performance didn't point out that the Emperor is naked.

> argue that if Apple doesn't pay taxes, all those gains are passed on to us

Yes, smaller costs for Apple directly translate in cheaper products for us or larger profits for its shareholders - which is also us. On the other hand, that money going to the tax man will fund millions of fat bureaucrat jobs and countless wasteful government programs out of which an extremely tiny part will actually benefit us.

> democratic governments (us)

Even if you think democratic governments represent us (a debatable idea at best, then logically you should want competition for them. Because like us, without competition, they go lazy, wasteful and abusive.

The problem with all of this is that it's all sneaky schemes.

You probably have something in mind for how a government is supposed to spend tax revenues. Assistance for the poor or something like that. But as a sovereign state they get to decide for themselves.

Except that as soon as you admit this there is no point in having any kind of minimum rate etc., because there are a thousand ways for the state to return the money to corporations if they intend to. Subsidize energy costs so they have the lowest electricity prices and tech companies build data centers there. Provide something like the earned income tax credit but with no phase out, subsidizing employers who hire workers there. Just offer generous tax credits and deductions in general, leaving the nominal rate high while lowering the effective rate.

There is no real way to prevent this kind of thing. Is a country that offers public healthcare subsidizing employers who then don't have to pay for employee health insurance? What if you create a 100% tax credit for constructing non-fossil power plants up to the amount of the buyer's total taxes? Apple would commission $13B in solar farms and nuclear reactors, take the credit and then turn around and sell them to get all the cash back. Can you even say that would be a bad policy? It might have a desirable result. But it would also zero out their taxes.

> But as a sovereign state they get to decide for themselves.

Not really no. The results of the court case prove that.

> There is no real way to prevent this kind of thing

Well. No way, except for through the result of an EU court case that just ruled that the tax scheme wasn't allowed.

> Apple would

Woulda coulda shoulda. The real question is "did they"? And the answer is no.

They didn't do these other schemes, and they lost the court case.

You seem to be assuming that this isn't an iterative process. The process continues until the scheme is convoluted enough to satisfy the court while still being effective in attracting companies through de facto lower taxes.

Meanwhile Ireland now has $13B to throw at Apple somehow to convince them to stay.

> The process continues until the scheme is convoluted enough to satisfy the court

That works both ways. The courts can act as well by simply punishing even more convoluted schemes with larger and larger fines.

> > But as a sovereign state they get to decide for themselves.

> Not really no. The results of the court case prove that.

To be fair, none of the states that are part of the EU _are_ sovereign states, because there is a high authority over them. Admittedly, that's debatable, because they can choose to leave the EU (as was seen by Brexit), but unless they do, they're not in complete control.

> There is no real way to prevent this kind of thing

You do realise that US, EU and China regularly sue each-other in WTO over this? What counts as subsidies, etc. is a constant subject of dispute. That’s normal,

They regularly sue each other because it's intrinsically ambiguous. There is nothing for a government to spend tax revenue on that isn't a subsidy to somebody. If anything they should be demanding that the other governments have lower taxes so they can't use the money for subsidies to distort international trade in their favor.

"There is nothing for a government to spend tax revenue on that isn't a subsidy to somebody."

That's just nonsense; so if the USA spent $1 and got a nuclear powered aircraft carrier in return that is subsidising the builder? More like running them out of business.

Government spending is only a subsidy if the government spends over the market price for something. And if your next statement is that the government *always* pays over the odds, you'll need some good evidence. Because although it does happen it is not always.

> Government spending is only a subsidy if the government spends over the market price for something.

All they have to do is control who gets the contract, because the market price for something already includes a margin.

But more than that, the subsidy isn't just who gets the money, its who gets the benefit of what's bought. Who benefits from the US having aircraft carriers, other than the defense contractors? Multinational oil companies, for example, who don't want their tankers captured by pirates or blockaded by adversarial nations.

Who benefits when a government subsidizes higher education? The schools, of course, but also the companies who hire the graduates.

"Well that's the good kind of subsidy", you might say. And so says everyone else about everything else.

"because the market price for something already includes a margin."; that's called value add, and all customers pay it, so it doesn't matter whether the government buys it or directs someone else to pay it, the value add becomes the profit.

The government isn't some magical "outside the market" participant, as a purchaser it's a part of the market like all other participants. If they pay over the market price then they've been ripped off, just like if anyone else paid over the market price.

> "because the market price for something already includes a margin."; that's called value add, and all customers pay it, so it doesn't matter whether the government buys it or directs someone else to pay it, the value add becomes the profit.

And now the company has profit it wouldn't have had, as a result of the government, which can use control over that profit to attract businesses to the jurisdiction etc.

> If they pay over the market price then they've been ripped off, just like if anyone else paid over the market price.

Only if the thing they want is the thing they're nominally buying, instead of the thing they're actually getting for the money, e.g. convincing a corporation to employ local workers or move into the jurisdiction and declare international profits there.

> And now the company has profit it wouldn't have had, as a result of the government, which can use control over that profit to attract businesses to the jurisdiction etc.

That only works if the government buys something that no one else wants; in which case it is buying at a price, ipso facto, that no one else will pay (at that price which is above the market price).

But if the government buys something at the same price (or lower) that everyone else pays, then it isn't a subsidy.

Government purchasing isn't an automatic subsidy.

> That only works if the government buys something that no one else wants; in which case it is buying at a price, ipso facto, that no one else will pay (at that price which is above the market price).

Not at all.

Suppose the government funds research. Private entities fund research too. It's clearly worth something. But if the government funds it, the research happens in their jurisdiction. Even if the exact same private company paying the taxes that fund the research might have done the research themselves, they might have done it somewhere else, so the government is now creating a subsidy for doing research in their jurisdiction.

The value of the research could be fully identical regardless of where it happens, but the government subsidizes it because they want it to happen there.

> But if the government buys something at the same price (or lower) that everyone else pays, then it isn't a subsidy.

It could only not be a subsidy if the thing they're buying is identical in all respects to the thing the taxpayer would have bought had they been left to keep the money. Otherwise it's subsidizing the thing the money is being allocated to over the thing it would have been allocated to. That's what subsidies are -- the reallocation of resources through action of law. It's a synonym for spending tax money.

> The problem with all of this is that it's all sneaky schemes.

The problems start if one member selectively introduces practices that benefit them at a significant cost to the other members.

Universal subsidies of healthcare or electricity come at a net cost for the country, and so doesn't create a competitive advantage. (It will lead to higher taxes that offset the benefit of specific reduced costs).

Target subsidies are different. While countries can still get away with it if done on a small scale, large scale cases come with a risk of this kind of response.

> Universal subsidies of healthcare or electricity come at a net cost for the country, and so doesn't create a competitive advantage. (It will lead to higher taxes that offset the benefit of specific reduced costs).

But it doesn't lead to higher taxes, because the whole point is to use the minimum tax rate and then achieve a de facto below-minimum rate by somehow refunding the excess money.

They're not trying to attract only Apple, they're trying to attract businesses in general. Subsidies for things employers would otherwise have to provide apply to all employers and lower the de facto tax rate across the whole country, which is exactly the idea.

> Target subsidies are different. While countries can still get away with it if done on a small scale, large scale cases come with a risk of this kind of response.

"Targeted" is essentially undefinable. All allocation of tax money is targeted at something -- the untargeted thing would be to use the money to uniformly lower the tax rate.

> They're not trying to attract only Apple, they're trying to attract businesses in general.

Ok, so this is about circumventing the 15% minimum corporate tax?

Is this somehow related to the objectives of directive 2022/2523? It seems to me that 2022/2523 is in place mostly to prevent transfer of profits from one jurisdiction to another to minimize the tax on profits generated elsewhere.

Unless, let's say, a Germany corporation registered in Ireland would somehow be affected by electricity costs or healthcare costs covered by the Irish government, I'm not sure if the benefit is large enough to matter.

Obviously, for companies with most operations happening within Ireland, the total tax pressure has a larger effect. But I don't think that was the type of problem this directive was designed to solve.

> sovereign state

Well thats the rub, by being a part of the EU they are effectively semi-sovereign. Not to sound like a Brexiter

No, we entered a common trade market. We're not even part of Schengen. We're an odd fish in terms of EU membership overall given our geographical position, size, and CTA with the UK.

We are the only EU member state that are obliged to hold public referendums on Treaties. Ratification of the Treaty in all other member states is decided upon by the states' national parliaments.

Ireland, Netherlands, and Luxembourg also have veto powers when it comes to EU wide regulations.

In short, if we didn't have so many of our national parliament trying to appease the bureaucrats in the EU so they could land cushy numbers in the European Parliament for retirement, you'd see a lot more sabre rattling from Ireland regarding EU interference.

Atm however, we have a lot of issues with Asylum legislation that has to be dealt with as prioirty https://en.wikipedia.org/wiki/Dublin_Regulation

All tax havens are like that and they should be obliterated. 1% bs.

> I think you make it seem like EU doesn't care at all about what member states do in regards to taxation

Did GP change the original text? The closest match I can find to your assertion is where they said "or non-EU readers, note that taxation is explicitly not a competency of the EU"

The EU directly writes tax legislation for countries all over the world with the use of their black and grey lists, which restrict companies in those jurisdictions from trading with the EU, or trading with companies that trade with the EU, or from using any banking in the EU or banking that is especially connected to the EU.

> this directly implies no member state has agency to lower their own taxes as much.

Two words: Dutch Sandwitch

Because it’s one market, unless countries coordinate, you get massive tax loopholes with profits being shifted to tax heavens.

Practical implications override hypothetical concerns

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

Hence why a lot of European companies have incorporated in the NL in the last couple of decades.

Brilliant of Ireland. They get the Apple (and Google and Microsoft, etc.) business with low tax rates, thus bringing a lot of money into Ireland. Worst case scenario, a decade later some 3rd party they cannot be blamed for gets them billions more.

I agree with your recollection. AFAIK the rules were changed years ago.

It’s a final ruling. Not a current (over-)ruling as you paint it. This is a decision from the European Court of Justice. No appeal possible. The 13B€ are already in an escrow account and will now be released.

What? It overruled a previous ruling from a lower court (which I believe in turn overruled an initial rulin in the other direction!)

The person you're replying to used (over-)ruling as in it was overruling a previous decision of another court.

No, EU states cannot set their tax levels to whatever they want. The EU imposes minima to at least corporation tax and VAT.

Some important context that are in every European media, but apparently not the American ones [1].

Apple said in 2017 that it had an effective tax rate of 21 percent on foreign earnings. The Commission said its effective tax rate on European profits was 1 percent in 2003 and 0.005 percent in 2014.

[Edit] To be fair to CNBC they did cover the tax structure Apple set up some years ago [2].

[1] https://www.politico.eu/article/commission-scores-surprise-w...

[2] https://www.cnbc.com/2016/08/30/how-apples-irish-subsidiarie...

> Apple, however, said in a statement: "The European Commission is trying to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to taxes in the US."

My understanding is that the U.S.A. double-taxes both corporations operating abroad, as well as it's own expats. If this is true, then it's quite the remark to say _the country you're actually in_ is the one double-taxing you.

The fact that your "income was already subject to taxes in the US" isn't the fault of the hosting country.

Expats aren’t double taxed but you need to file tax returns to offset taxable income that’s already been taxed. There are specific agreements to avoid double taxation but it’s unclear/unlikely the IRS are just going to hand back money Apple already paid (it likely falls outside of what’s required in those international agreements).

Companies, and people, make decisions based on the tax laws of the day eg deciding to work in the UK, Ireland or the US. States shouldn’t be able to simply retroactively change the tax rules and take money already earned and already taxed.

If they can do it to Apple, why not to regular citizens?

Expats are absolutely double taxed, just less so (and to be clear - majority cases not at all) when a DTA is in effect.

In what cases are Americans abroad getting double taxed for the majority of the cases? Don't they have foreign income exclusion?

> Expats aren’t double taxed but you need to file tax returns to offset taxable income that’s already been taxed. There are specific agreements to avoid double taxation

Glad to hear it, because what Americans told me (that they get taxed for the same money they paid tax on in their host country) is bonkers.

EDIT: Seems there's some disagreement ;) The other commentor echoes what I've heard from Americans living in Europe. Absolute madness. I also heard it's very costly to try and give up your American citizenship, exactly to protect that juicy free tax America gets from it's expats.

> If they can do it to Apple, why not to regular citizens?

They already do. Knowledge worker migrants were promised eight years of tax breaks by the Dutch government, who later changed their minds after those people already moved to the Netherlands.

This isn't even that though, this is the EU saying the agreement made by Ireland with Apple wasn't legal. It's like how they get people who avoid tax by finding loopholes to pay back-taxes once the tax office catches them (yes, this happens too).

its complex..

The USA has FEIE, (no federal taxes the first $120k/yr), but not all states (like Cali) honor that and may still charge you state income tax.

and FEIE doesn't exempt you from self-employment taxes.

and doesn't exempt non-earned income (dividends, etc.).

Americans can come out ahead (if they earn less than $120k/yr and live in a 0% tax country). But a non-American (like Canadian) doing the samething, would have less restrictions.

> but not all states (like Cali) honor that and may still charge you state income tax

Whoa, so before moving to a low tax country you should move to a state that is not insane for a while and then move abroad? Crazy.

Yes, this is a real thing. There are a few States like South Dakota that have kind of made a business of helping expats launder their State citizenship.

Yes, but from reading it sounds like California is a bit of a poison pill and will go at length to try and say you still live there. I've read of cases where even living in another state for 6+ months, drivers license moved over, no property in California, wasn't enough.

Not sure how they get away with it really, small volume I guess.

This isn’t the full story though, because there is also the foreign tax credit. If your US taxes are lower than your foreign taxes (which they will be if eg you live in Europe) you won’t pay US tax: https://www.irs.gov/individuals/international-taxpayers/fore...

There are myriad cases where this is not true, the details of how these tax credits are structured can lead to significantly adverse outcomes. It is quite possible to pay more taxes in aggregate than either country separately.

It is certainly possible, but also implies a complex mix of different income types and very specific national pairing.

The usual case where there is a tax treaty is that the expat pays taxes at the rate of the country in which they work. It's really that simple for most people.

> If they can do it to Apple, why not to regular citizens?

because Apple is literally made from tens of hundreds of "regular citizens"

or to keep it simple: Apple is a citizen made out of thousands of 'regular' citizens.

> Expats aren’t double taxed but you need to file tax returns to offset taxable income that’s already been taxed.

This is not correct, it is only practically true in trivial cases. Excess taxation is a very real pain point for Americans living overseas, never mind the other indefensible things the US government does to its expats like FATCA.

Many types of income cannot be offset nor or they covered by tax treaties. Every time there is an impedance mismatch between US tax code and foreign tax code, including basic things like classification of income, deductions, and exemptions, you can end up with liabilities in both countries. It is not uncommon to pay more taxes in aggregate as an expat than you would pay in either country separately.

The way the US government, and some State governments, treat American expats is quite fucked.

what is even crazier, is its not just Americans impacted by this. If you have a green card, but not working in the USA, you're impacted by this mess too.

What's funny is America has some of the longest paths to a Green Card (for Indians and Chinese at least), but is very very happy to tax them as a resident the moment they spend a year in the country.

Indians effectively pay taxes as residents without any permanent residency benefits for decades

Are there any countries where people on a visa don't need to pay taxes like everyone else?

If I got a job in India, would I not need to pay taxes?

In most countries you’re technically supposed to pay taxes even if you’re working there illegally.

They chose to do it under the terms that have been laid out by the US - so obviously, it's _still_ benefitial for them to continue despite being taxed without representation.

I'm a non US citizen nor resident, never have been and probably never will be. Because of FATCA, I had to prove to my Eastern European bank (where I actually am a citizen) that I am not a "US person". That designation has no legal meaning, anywhere in my birth country, yet I had to sign a formal written declaration "I, NAME, declare under penalty of penal law, that I am not a US person", to be able to access my funds again.

USA always overreaches.

> I'm a non US citizen nor resident, never have been and probably never will be. Because of FATCA, I had to prove to my Eastern European bank (where I actually am a citizen) that I am not a "US person". That designation has no legal meaning, anywhere in my birth country, yet I had to sign a formal written declaration "I, NAME, declare under penalty of penal law, that I am not a US person", to be able to access my funds again.

Your bank was terrified of losing access to US markets, so your bank forced you to prove you're not a US person to be super safe about US tax compliance. Seems like your complaint is with your bank, not the US. You're welcome to bank with a bank that has different policies. I have had European bank accounts before and I've certainly never been asked to prove I am not a US person. (On the other hand, I was asked to sign an absurd amount of paperwork that had nothing to do with the US, because it's Europe, and you need thirty-four forms and a notary public to be allowed to even exist.)

> USA always overreaches.

The US doesn't care about you at all.

> The US doesn't care about you at all.

of course not - they're a nobody.

They don't mean the US cares about the individual - the post is about the general level of regulation that the US is able to force upon third parties.

But then again, this is what it means to be sovereign. And to be honest, the US's overreach is not as high as it could've been given how much clout they have. Imagine if it was china in the same powerful position - what would've been the overreach then?

> Your bank was terrified of losing access to US markets, so your bank forced you to prove you're not a US person to be super safe about US tax compliance

It's more that a lot of them got fines a decade ago because of that so now US citizens are just straight up banned from most European banks.

If you don't like then... uh... come back?

You're free to renounce American citizenship to escape future tax obligations.

Anyway it's not an issue for non-rich expats, you just have to file a tax return which shows you owe $0.

> You're free to renounce American citizenship to escape future tax obligations.

The hilarious thing about this statement is that it costs a few thousand dollars to renounce (as in a fee, paid to the embassy) and they reserve the right to come get you up to ten years later in tax cases.

And IIRC there is some law saying that if you renounce citizenship to avoid taxation, you might never be able to enter the US again.

EDIT: https://en.m.wikipedia.org/wiki/Reed_Amendment_(immigration) (Thanks, ChatGPT!)

You also have to be fully up-to-date with the IRS before you can renounce citizenship!

> You're free to renounce American citizenship to escape future tax obligations.

In theory, yes. I knew someone having a heck of a hard time doing so though. Here's the process:

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

It's pretty expensive and difficult.

> You're free to renounce American citizenship to escape future tax obligations.

actually you are not free to do that. renouncing citizenship requires a reason other than "to escape tax obligations"

You can spout off "my way or the highway" as long as you think US citizenship is valuable enough that people are going to put up with it. People not expatriating is obviously the desired outcome of those rules, and the alternative is people renouncing their US citizenship (which is becoming more reasonable as the US passport gets weaker, among other factors).

You're missing part of the point, though. Almost no other country in the world has rules like this. The US government provides among the lowest level of services for its citizens out of any first-world government, so there's no reason it needs to be that much more strict. You should be asking why it's necessary if only from a competitive standpoint-- why are other countries able to treat their expats so much more respectfully?

> The US government provides among the lowest level of services for its citizens out of any first-world government, so there's no reason it needs to be that much more strict.

they provide you the world's premier military! That costs a pretty penny.

That's a 'service' provided by the government only if you are an oil baron.

God I hate this argument. This is such an unhelpful, useless thing to say. It doesn't provide any useful or practical suggestions, it's just a way of shutting down conversation.

I'm glad it was brought up though, otherwise other people might think it's as simple as that.

It is not: https://en.wikipedia.org/wiki/Relinquishment_of_United_State...

Can you give more specifics?

Many types of income cannot be offset nor or they covered by tax treaties.

That's news to me and I've been doing international tax for 15 years. Please, tell me what types of income earned by a U.S. expat isn't covered by a tax treaty?

It is not uncommon to pay more taxes in aggregate as an expat than you would pay in either country separately.

This is objectively false. For an expat, income taxes paid to a resident country are a dollar-for-dollar credit against your U.S. income taxes, and that's on top of the inclusion threshold that doesn't subject the first $X of foreign income to any U.S. taxation at all.

> Please, tell me what types of income earned by a U.S. expat isn't covered by a tax treaty?

I am not a tax person, but selling a house can cause you to owe tax in the US even if you did not owe any tax in the country you are living in (and sold the house in).

Famously one of the reasons Boris Johnson tried to give up his US citizenship (https://www.bbc.com/news/uk-politics-30932891).

You are correct, but this only applies because:

> Unlike the UK, the US levies capital gains tax on proceeds from the sale of a main residence.

I understand why it can feel unfair but by definition this is not "double taxing". The gains on the house were not taxed by the UK which is why he had to pay US taxes.

> selling a house can cause you to owe tax in the US even if you did not owe any tax in the country you are living in

But you’re not being double taxed.

My understanding, despite the fact I'm definitely not an accountant, was that making over $100K abroad meant you would be double taxed on all of it over that amount. I believe I heard many wealthy Americans abandoning their citizenship just due to this fact.

You get credit for the taxes you paid in the foreign country for the amount over that threshold.

That is definitely wrong. You are subject to a single level of tax on your personal income (in the US). But you might have to split it up between multiple jurisdictions if some of that income is earned in another country.

There's US state taxes (for those states that have it), which does not get credited with foreign income tax.

There's a lot of VAT (value added tax, aka sales tax) that gets paid when buying goods. If this was higher than the US's in the expat's country, they don't get a credit (but conversely, if it was cheaper, then they also don't have to backpay...).

You clearly haven’t dealt with many of the edge cases then. If you make over $150k as an expat and have a non-American spouse (MFS, as many expats do) you’re looking at roughly $1-$5k in extra taxes that don’t qualify for the Foreign Tax Credit, and since they’re above FEIE, you effectively get double taxed.

You can then take that to the country you reside, IF they have a tax treaty with the US, and apply for a credit which may or may not be accepted.

On top of this, if you’ve worked hard in the US and saved in a Roth IRA (effectively part of the US pension system), any capital gains/dividends accrued are yearly subject to taxation in your country of residence since most tax treaties pre-date the Roth vehicle. Meanwhile, you’re also obligated to pay tax to the national pension system of your country of residence resulting in a double tax, simply because US pensions are mostly private non-governmental savings.

When Europeans move to the US, the IRS doesn’t say “let’s see how much gains you’ve accrued in your national pension fund and tax them yearly.”

If you make over $150k as an expat and have a non-American spouse (MFS, as many expats do) you’re looking at roughly $1-$5k in extra taxes that don’t qualify for the Foreign Tax Credit, and since they’re above FEIE, you effectively get double taxed.

Yes, if you have a bad accountant. If you're getting double-taxed on your global income as an American expat, your tax preparer is committing malpractice and you should immediately find a new one.

When Europeans move to the US, the IRS doesn’t say “let’s see how much gains you’ve accrued in your national pension fund and tax them yearly.”

Because we have tax treaties that address this with over 100 countries (including Protocols (updates to treaties) that address older treaties which were ambiguous on the issue of retirement income).

You can then take that to the country you reside, IF they have a tax treaty with the US, and apply for a credit which may or may not be accepted

This is false. If the treaty applies, you don't get a tax credit...because you aren't being taxed. Conversely, if you are taxed, you will get a tax credit regardless of whether there is a treaty because all major countries have a foreign tax credit regime.

Always humorous to see people who don't know anything about tax opine like they do just because they read a few things on reddit or HN and suddenly decided they were experts.

No, what's humorous is your insulting tone when you apparently do this for a living but are the one who is misinformed.

Just one example: the Net Investment Income Tax (1), which has been ruled in court to not qualify for the foreign tax credit.

https://www.thetaxadviser.com/issues/2021/nov/tax-treaties-f...

You have to then take that money paid to the US back to your country of residence and hope that their tax officials have any understanding of the situation, and will apply it as a credit against your tax owed.

News flash: Not all countries tax officials know all the rules either. And going to appeals court over $923.65 doesn't really make sense.

On the other hand, I know someone from the UK who moved away and lived in places like Qatar and Oman for 20-30 years, keeping their UK citizenship and paying zero taxes to the UK (and extremely low taxes in the gulf countries).

Then they retired, returned to the UK, sent their kids to subsidized state universities (in the UK), receive free healthcare on the NHS, and receive state benefits for retirees.

They receive all of these state benefits and they paid almost no taxes to the UK government for most of their adult life. Is that fair?

it's not, but it's not the general case and also you realise this is the very opposite of the US: you get taxed when overseas (unless your a large corporation) and then get no benefits when returning because that would be communism.

That's a bit of an exaggeration, social security (state pension) and medicare (state healthcare for retirees) are not perfect but they're not terrible either.

If you were outside the U.S. for most of your working life, it’s unlikely you’d qualify for social security (requires 10 years of work paying into it).

If I don't do any of the dodgy parts of that story but move to another EU country with children they'll also get free school, Healthcare and so on. For this to be "fair" you'd need some global EU contribution scheme OR nobody can move.

But then do the same people making the argument it's not fair to have paid zero taxes believe that welfare isn't "fair"?

I once heard a story of a family living abroad feeling quite bent about this extra taxation that they were paying no reason. But the story ends with the family being rescued by a USMC helicopter and airlifted to safety after a natural disaster, at which point they supposed they had been paying for something after all.

> at which point they supposed they had been paying for something after all.

but they would've been rescued regardless of whether they'd been paying their share of taxes, as long as they're a US citizen.

Thank you for summarizing this so well.

> If they can do it to Apple, why not to regular citizens?

The regular citizen doesn't debate-ably owe billion in taxes.

Sure, maybe if you're a centi-billionaire the Winds of Winter might change.

It would just be really good if companies stopped avoiding tax. Most countries are already pretty much bankrupt - it's worth thinking about for every debt (US National Debt is $35.35 trillion!!) there is a rich person on the end of it with the loan as an asset earning interest.

If companies avoid tax and rich people avoid tax it means more tax for normal people who work for a living.

Its just the prisoner dilemma.

If you don't your competition will.

We just need more spine in the country's legislation to close ANY loophole, because this wasn't illegal tax evasion, it was legal tax ellusion.

The point is that EU judged this unfair by Ireland and that effectively it stole revenue from other European counties to favor jobs in ireland.

Basically saying "you (country) can't have a lower tax rate than X" in our economic union.

Smaller countries with few industries would benefit disproportionately from bigger companies moving here the HQ.

A good way of thinking about the EU is as a solution to the prisoner's dilemma.

The EU is more of a problem than any sort of solution.

Do they tax LVMH? Or fine it for monopolistic practices?

The EU is a pretty one-sided solution to the prisoner's dilemma

> Do they tax LVMH?

Any reasons to believe it isn't taxed?

> Or fine it for monopolistic practices?

Well, currently it is being investigated it seems:

https://www.reuters.com/business/retail-consumer/french-poli...

And you can't bother doing a simple google search ? Their effective tax rate is about 27%, yes.

That will never work because the powerful will lobby the politicians to add some new loophole.

The only solution is to NOT have taxes, NOT have a government and then the market is fair for everyone. Unless you are into anarchy / voluntarism you won't like this solution, so keep enjoying your broken system with increasing inequality between the top 0.01% who colludes with the government and the rest - while the middle class gets their money stolen to pay for both rich and poor.

Not having a government is the same as handing you society over to robber barons.

Your solution would end with the reintroduction of feudalism as the only way that the rich and powerful can hold on to their wealth without it being plundered by the rich guy next door.

Markets can only be fair if everyone in the market has the same degree of financial power. This can never happen in large scale anarchies. The only chance of it happening is by having strong regulation.

Given enough time Anarchy is just the State with extra steps and less rights.

This is a very naive way of thinking about debt. Cash has a time value. Cash now is worth more than cash later.

I have a mortgage. This mortgage is worth more than the cash I own. That doesn't mean I'm bankrupt. The mortgage is paid on a fixed schedule over 30 years, and during those 30 years I'll have a home and be able to accrue other assets. If I didn't get a mortgage then I would still be saving for my home.

The same is true with the US balance sheet. It has accrued 35T in debt, but it's used that to fund it's operations. Those operations generate more for the US. As long as the US has enough to pay it's obligations over the next few decades there are no issues

That of course doesn't change the fact that tax loopholes can be problematic

I think it's rarely valid to compare countries' economics to your own personal finance, macroeconomics are a lot more complicated. Example: for employed people, going into (or avoiding) debt generally won't affect their yearly wages, but analogously it can for countries (e.g. well spent debt can stimulate economic growth).

The downside of state debt is the downward spiral.

If you spend 1/2 your tax income on just servicing the debt, that means either fewer services for people, or borrowing yet more, just to keep things going.

If you borrow more, then it gets even worse.

I really prefer that 1/2 my tax bill doesn't go to interest payments.

Let's say a city builds a bridge that doubles its tax income by opening up a lot of economic opportunities. It pays for this with a 35 year bond. During these 35 years, the entire additional income that the bridge generated goes towards paying off the bond. After the 35 years the bond is paid off and the city enjoys permanently raised tax income (not to mention better economy for residents).

Was there a problem that the city spent 1/2 of tax income on just servicing the debt?

Yes.

I could go into a lot of reasons, but I'll keep it simple.

It is incredibly rare for governments to break that cycle. This has been demonstrated over and over. Thus, there is no end in 35 years. There is just perpetual 50% taxes to interest on debt.

This means that as it is a persistent state, not perpetually losing 50% tax revenue would make an enormous difference.

It's just not helpful.

Think of it the other extreme though. Imagine governments never borrowed and only used actual 'cash' to build things. I suspect that virtually nothing would have been built over the past 200 years and the world economy would be 1% the size it currently is.

I think you are right in that governments (probably?) shouldn't be funding day to day spending anywhere near as much as they do with debt. This has been a more recent (post WW2) phenomenon with huge expansions of social security programs. But capital expenditure virtually has to be paid with debt.

It's easy to say with trillions of dollars of debt funded infrastructure debt is too high, but imagine the counterfactual - would you be happy with virtually no infrastructure but no debt?

200 years ago had vastly different taxation methods than today, so I'll stick to the last 100 years.

Your point is countered, by the fact that governments build roads, bridges, and more without any debt or by borrowing money. I think you are underestimating how large a budget governments of all levels have, especially when 50% of it is being used to finance debt. That 50% of tax income, literally disappearing to pay only interest on debt, instead could (for larger cities) literally be used to plop down cash for a bridge in one year.

A lot of this could be solved by better allocating taxation to its intended purpose. There are gas taxes, but often those taxes are appropriated into a general budget. Far better if those taxes were only used for roads, and adjusted accordingly.

(Even if you decide that some gas tax should be an 'environmental' tax, a portion of that gas tax can be allocated as 'road tax', and the above still gels. This could also be a 'tire' tax, or a 'register your car' tax, the method does not matter.)

There is a lot of nuance with taxation, but quite literally throwing 50% of tax revenue away just to pay interest to bankers is very poor form.

I want to add here that, as a Canadian, this isn't a "team" thing in the mental sphere of US politics. And regardless, every single government in the US, federal, state, and often city engages in this practice, regardless of political bent.

This is a "governments love to give things to get votes" problem, which covers all political spheres, and harms us all.

Which country spends 50% of tax income on interest payments? UK spends 8.4% (which is much higher than it used to be because of higher interest rates at the moment - was historically half that).

The US fed government is at ~20% from a quick google, which again is much higher because of interest rates (which again are to come down). Canada spends 10%

Where are you getting this 50% from? For comparison, Walmart spent $550m or so on net interest in their last quarter - out of $8bn operating income, so not a huge difference in the private sector.

> demonstrated over and over

can you elaborate on this please?

capital has upkeep costs, yes, but it seems trivial to look up infrastructure spending, debt service costs, GDP, tax burden, for various tax jurisdictions.

these things are pretty well studied. taxes do go down.

When I look at my federal and provincial government, I see 50% or more being spent on interest only payments. I've seen that number fluctuate a bit, but it's always been between 30% and 50%, if not higher at times.

When you look at the US fed, you see the same sort of thing.

That's demonstrated, therefore, over and over.

I'll put it another way. If Canadian federal and provincial governments weren't paying 1/2 their yearly tax revenue to interest payments on debt, I'll repeat that.. only interest payments, not principle, all of the funding issues with health care, and the military would be gone.

Put yourself in the same situation. Imagine you decide to spent 1/2 your post-tax income on only interest payments. You never make headway on the principle. So the debt is never going away. Now if times are tight (after all, why did you borrow to start with?!), how much worse are you with half your money gone to do absolutely nothing of value?

That's what many of our governments are doing.

In times of economic boom, some frugal governments pay off debt. They reduce that figure. But here's the kicker...

When times are bad, typically interest rates go up. So not only are you paying more as a government for those interest only payments, you have less tax revenue in a recession.

Frankly, I think it should be illegal for governments to borrow money. It's too tempting to gain votes. Politicians often don't care about 20 years from now, they care about the next election, and will tell themselves wild stories about how it will all be OK.

https://pbs.twimg.com/media/F7H8wy4WAAAJRRV.jpg

it went down to 6-8 percent in 2016

it was not higher than 20 for a long time

you don't have to convince me that governments are doing dumb shit, but it's not because of debt. it makes sense to borrow when it's cheap. especially for a state. (because when it's cheap it means inflation is low anyway. and arguably when it's too cheap it's imperative for the state to stimulate the economy.)

a lot of things should be "illegal", but since voters don't care legislatures don't either. :/

the obvious problem is the ROI on that debt. (hence the usual opposition to financing rich folks' tax cuts with debt, or subsidizing projects that are not sustainable financially, giving money to wasteful municipalities, etc.)

> Was there a problem that the city spent 1/2 of tax income on just servicing the debt?

Actually, yes.

Let's say I went to the Casino, put all my money on black and won. Great. Was there a problem that I risked all my money in the casino? There surely was.

The thing is, financing investments via bonds means that only parts of the citizens are actually financing it with their private money (and also enjoy the benefits like interest). But the city could also just make a contract over the 35 years with recurring payments instead of paying all upfront. And then it could simply raise the tax (if necessary) to pay the additional payments. The difference is that now all citizens pay for it rather than just a small share.

> Example: for employed people, going into (or avoiding) debt generally won't affect their yearly wages, but analogously it can for countries

While I do agree that personal finances are a bad analogy for state finances, that is not an illustrative example as to the reasons. An employed person can absolutely improve their yearly wage by going into debt, be it for investing in education to aspire to better paying positions, buying a car which increases their employment catchment area, or even —for a flexible definition of wage— investing in setting up a business.

I did say generally, but fair point :b

Generally, there are two types of debts: consumer debt, which you just spend and the debt you invest in something profit-bringing, like business.

Average people generally only accrue the first kind and rarely the second.

>The mortgage is paid on a fixed schedule over 30 years

But now imagine that you are never allowed to pay it off: you only pay the interest. And the debt will be passed to your children, and their children. This is the US Govt debt.

In feudal times, you worked for your lord and master. If you didn't pay, armed men would come and take your stuff. In modern times, you still work for your lords and masters, and if you don't pay, armed men will come and take your stuff. How they did this was to create an income tax, and then have their cronies in the house and senate spend more and more and never "pay off the mortgage".

In modern times, the lord and master is older generations (or soon to be old generations) that vote for greater and greater benefits and lower taxes for themselves.

> This is a very naive way of thinking about debt.

Well it’s how this economist and Citibank’s former number 1 trader describes our debt based money system. So maybe you’re the naive one here. Please watch this video and enlighten yourself: What is Money? https://youtu.be/_gcNMu40jqs

> As long as the US has enough to pay it's obligations over the next few decades there are no issues

This is rather my point, as more wealth is transferred from individuals and governments to the rich (who the tax system is largely optional for) there simply won’t be that tax take to support the debt.

> Cash now is worth more than cash later.

This is accurate, regarding preferences for optionality, and how our economy currently works. But I think it's worth questioning the expectation that giving up that optionality deserves compensation, whether morally or practically (resulting in compounding "money-on-money returns", usually at low risk if sufficiently diversified).

The Italian economist Silvio Gesell noted, that no other good besides currency works this way. Every other good with a use value (food, houses) tends to lose value over time (entropy being fundamental to the universe), and/or, to carry risk (a share of stock which represents unpredictable ROI). There is course an exception in land, which doesn't intrinsically depreciate, but whose value trends upwards thanks to location value (and which can be addressed separately via Georgist land tax).

Gesell proposed a "demurrage currency" [0], which gradually loses value as it is held: the idea being, rather than being entitled to a return, retaining high long-term optionality is actually a privilege that one should have to pay for, since the real-world value it represents is depreciating. And the incentive to invest (whether at high or low risk) instead becomes to break even (with the rate of demurrage tracking what we currently call the discount rate).

I have no idea if such a concept is practical in a trans-national, growth-dependent global economy (with deflationary crypto-currencies as a BATNA!); if anything, I'm fairly confident it's not. But it's at least worth thinking about: that it's not at all axiomatic that holders of value should be entitled to compensation for "forgoing consumption" (not only because the wealthy don't necessarily need such an incentive, but also because increased consumption can mean an increase in the velocity of money, and more total value created, per the multiplier effect, and the "hotel riddle" [1]).

[0] https://en.wikipedia.org/wiki/Silvio_Gesell#Economic_philoso...

[1] https://www.econlib.org/archives/2012/01/an_answer_to_a.html

Whaaaaat?

A) These bankrupt countries are exactly why we should think twice about funding their spending habit, with reevaluation only when they address their spending habit

B) These companies are tax compliant, barring when the ECJ rules against them

C) if what you meant was equivalent taxation - no amount of taxation of profits or income would fill these bankrupt countries budget holes

D) the countries tell you exactly how not to pay tax, they incentivize certain transactions and tax the remainder of funds that weren't involved. (The ECJ overruled an entire country, with retroactive logic)

>there is a rich person on the end of it with the loan as an asset earning interest.

About half of treasuries are held by the Fed or foreign investors which largely means other governments and foreign companies. Most of the rest are owned by pension funds, banks, local government, insurance companies, etc.

>> there is a rich person on the end of it with the loan as an asset earning interest.

> About half of treasuries are held by the Fed or foreign investors which largely means other governments and foreign companies. Most of the rest are owned by pension funds, banks, local government, insurance companies, etc.

So what? That doesn't mean you shouldn't think about it in terms of a rich person, like the GP suggests.

The modern capitalist system is a very slippery thing to think about, and there are all kinds of traps to mislead people. For instance, facts like the one you point out can draw people away from understanding the truth behind scenarios where the rich are the group that greatly disproportionally benefits while not being the group that benefits the most in absolute terms.

On a related note: IMHO the 401k is one of the greatest propaganda coups in the history of democracy. You have vast swaths of the public owning tiny, insignificant slivers of the overall pie; while the rich own big, disproportionate slices. But then the public votes to increase those tiny, tangible slivers by trading much more valuable but less tangible things.

There is no such slippery-ness or slippage. The system is fundamentally assessable with basic accounting and Econ 101. No, the 401k is not a coup. No, class-warfare advocates cannot fundamentally create value, improve the economy, or the better state of individual well-being—-either temporarily or permanently—-by wealth transfer, and their efforts typically result in gross infringement of human rights. Typically in history these wealth transfers have greatest negative impact against the middle- and lower- tiers of wealth. The study of the encomiendas in Columbia is perhaps somewhat insightful.

Economy is a prime example of a field where a bit of knowledge is worse than no knowledge, and nothing is more deranged than someone who has completed Econ 101, and thinking they now understand the world:-P

Most economists don't understand the world, only their theory of it. A theory which in many experiments has been show to be bonkers. Albeit useful bonkers in certain, limited, circumstances.

Spoken like someone who has never taken 300-500 level econ.

Maybe governments need to stop spending 40-50% of the entire GDP?

For example, the US federal government + state governments spend about $10 trillion a year. The US has a GDP of about $25 trillion. And the US isn't exactly known as a high tax country. France is estimated to be at 58%...

Universal healthcare and welfare systems aren’t free.

The welfare systems (in Europe at least) don't work. They work if you're old right now, but once the young people of today become old they won't get anything meaningful out of it. At least that's the impression I have and everyone else my age has.

And healthcare is unavailable anyway. Several month long waits to see a specialist.

So how come the US has worse health outcomes?

I'm not sure. I don't think anyone knows for sure, but obesity probably heavily factors into it.

53% of Europeans are overweight or obese. The same figure in the US is 72%. That's a 36% difference.

More than that, 17% of Europeans are obese (BMI >30) compared to the US's 42%.

The fact that the US has a life expectancy of 79.1 compared to the EU's 81.5 years with that kind of difference in obesity levels is actually surprising. You would expect it to be lower than that in the US.

> compared to the EU's 81.5 years with that kind of difference in obesity levels is actually surprising

It's probably considerable higher in EU15 i.e. if we exclude all the poor (currently or previously) ex-socialist Central and Eastern European countries that have a lot of baggage

Or at least men in those countries:

https://ec.europa.eu/eurostat/statistics-explained/images/2/...

Worse in some ways, better in others. The USA generally has higher 5-year cancer survival rates, and shorter waits for specialist visits and advanced imaging procedures. Of course there's a high variance in outcomes based on location and affluence.

> shorter waits for specialist visits and advanced imaging procedures

Those are not health outcomes, but merely services KPAs. The KPAs may be better, because a portion of population can't afford the services, so they don't have to be serviced at all.

> can't afford the services, so they don't have to be serviced at all.

If that's true how could:

> The USA generally has higher 5-year cancer survival rates

Still be true? Not providing any services to a significant proportion of population would result in a much lower average.

Not if they are not part of statistic as they cant afford it.

Any evidence that a significant proportion of people (compared to other countries) who died of cancer in the US were never diagnosed?

43% vs 13% obesity is a theory

Actually, given that, it's kinda remarkable the US life expectancy is only 2 years less.

About public healthcare it's pretty similar on Brazil! Many people can't pay for specialists, exams and etc. So, they have to go early morning (when it's dark yet), wait on long queues and many of them when finally is attended the local doesn't have more vacancies and need to go back another day.

I know multiple people whose cancer was successfully cured (or, at least, treated) in the healthcare system you can "unavailable". The systems in Europe typically focus more efforts on critical care (like cancers), and less so on mere annoyances, hence the queues for non-critical stuff. Compare that with the US, where for a sizable portion of population, treating their cancer leads to being bankrupt and homeless.

Here you have tons of USA citizens living in EU (and around the world) and ask them for first hand expirience on alternative.

https://www.youtube.com/watch?v=D1yT8swtVvg

Dont miss part 2, part 3,... and skip non health care related, you might not want to hear them.

And anyway, believe me that everyone rather waits in line (which is not really the case, if you are an urgent case, you trough the line), that not even go to the line as their medical insurance doesnt support the needed therapy as it would make their family bankrupt.

Funny fact, check the price of insuline.

>Here you have tons of USA citizens living in EU

And yet, the only country in the world with more Americans living in it than the other way around is Australia.[1] Revealed preferences expose the truth that no number of videos with cherry-picked participants do not.

[1] That's on an absolute basis. Since the US has 20 times as many people as Australia, the odds an Australian will move to the US is still far higher than the odds an American will move to Australia.

Sure, you have quite a few USA citizens living in Australia talking about how messed up the USA is. You just need to study the material.

And feel free to show "cherry picked" material, where such amount of people are claiming otherwise. From the people that have left USA for more than vacations.

Did you?

Asking as I have always loved this Mark Twain quote, “Travel is fatal to prejuidce, bigotry, and narrow-mindedness, and many of our people need it sorely on these accounts. Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one's lifetime.”

I regularly use it on local far right "peasants" in my country, that are sure, there is nothing better than their own turf while never stepping far away from it.

No but some countries such as Singapore provide them at a far lower cost than any western country.

Hmm, lots to dig into here.

The expectation that government provides certain services...

The nature of fiat currencies and what actually makes the USD worth anything or even usable as a medium of exchange...

Basic economics. Government spending == business revenue; the money doesn't just vanish.

> the money doesn't just vanish

Of course not.

Laughs in government contractor

LOL. Between how much Matt Stoller has made it to the top page of HN over the years and the waste I've seen anecdotally this made me chuckle.

The money might not vanish, but you're still working Monday through Wednesday for the government in France. It's as though the government was partly the business owner. The question this raises is whether the benefit for society in the long-term is actually worth it. The larger the share the government takes the less motivated people will be to make things better themselves.

Those numbers are not directly comparable. GDP is a measure of added value, not spending. Public sector spending may be ~50% of the GDP, but private sector spending is something like ~200%, making public sector ~20% of the total.

Interesting. I always think private spending is GDP - public spending.

Can you share where you get this numbers?

Total spending is not something that gets reported very often. I've seen the numbers for Finland but not for other countries. In the US, consumer spending seems to be ~70% of GDP, but I can't find any numbers for business spending.

Why wouldn't they be comparable? It's a measure of how much government taxes take out of 'your' paycheck - tax receipts don't tell the whole story, because they don't show inflation caused by money printing. Government spending does.

It effectively indicates that you're working for the manor lord Monday and Tuesday (and Wednesday in France), and are allowed to work on your own field from Wednesday to Friday. At the extreme it is obvious that this would discourage work and starting businesses. If the government took 100% it wouldn't make sense to do anything (legally). Therefore the question is: at what percentage does this start happening too much?

This is an important question, because government budget as a percentage of GDP has been increasing over the last century. At the start of the 20th century this percentage was around 3-5%. Today it's around 40-60%. And it seems to be increasing even today.

People don't like austerity, but if our current system is built on an ever-increasing share of government spending of the economy, then eventually we're going to be hit with austerity x10.

They are not comparable, because the whole economy is ~250% of GDP when you measure it by spending. The government spends ~50% of GDP. Households spend ~70%. And businesses spend >100%. You should either compare government spending to total spending or the part of GDP produced by the government to total GDP. Either way, the government is ~20% of the economy.

That's not even the same thing. The govt is bankrupt because it keeps printing money to get out of previous debt and other poor choices. The companies are following the rules and taking advantage of loopholes in the system.

It keeps printing money because we have socialism for the rich, they are never allowed to lose now.

It's not a funding problem, it's a spending problem. Taxes are insanely high around the world.

Only for poor individuals like you and me. Taxes for rich people and companies are insanely low around the world.

Countries aren't bankrupt, they can't really go bankrupt if they use their own currency. Countries are not businesses they don't need to make money to be able to spend.

Tax shouldn't be seen as the countries income but as a tool for redistribution of wealth and to keep trust in the currency as a whole. If you don't have debt you don't have money, every printed dollar goes into the system and can be used in various things not only an asset earning interest

Taxes don't fund government programs. Taxes are a way to mitigate the buying power of private capital when it comes to bidding against government for things. Governments just create money supply for programs. It's not tax money. That's just an old cliche.

Need a citation or some reading for this because it sounds like something you believe without cause.

It's literally in the 2nd paragraph of the wikipedia article. It's not a controversial statement. https://en.wikipedia.org/wiki/Government_spending

>Spending by a government that issues its own currency is nominally self-financing. *However, under a full employment assumption, to acquire resources produced by its population without potential inflationary pressures, removal of purchasing power must occur via government borrowing, taxes, custom duties, the sale or lease of natural resources, and various fees like national park entry fees or licensing fees. When these sovereign governments choose to temporarily remove spent money by issuing securities in its place, they pay interest on the money borrowed.* Changes in government spending are a major component of fiscal policy used to stabilize the macroeconomic business cycle.

Not saying this was his intent, but this is part of Modern Monetary Theory (MMT) which says governments print money to provide services, and collect taxes as a matter of policy to legitimatize the currency, and for inflation and unemployment controls.

While there is lots of tax fraud, I feel it’s probably a drop in the bucket. Countries will have to either cut back on spending or borrow until they collapse under the weight of their own inept budgeting.

> It would just be really good if companies stopped avoiding tax.

It would be great if everybody just stopped committing crimes, or being rude even when legal, altogether.

But what are our alternatives other than just waiting for everyone to just do this? Also, how will everyone know how to just contact me to just find out when using the law to avoid taxes when you can is just evil, when it's just the smart thing to do, or when avoiding a tax is just justice, hard-fought and well-deserved?

It would also be just great if it were autumn all year, and if alcohol and sugar were just good for you.

Agree. I'd also like tobacco free / alcohol free zones to actually mean they are made available free of cost to visitors.

> It would just be really good if companies stopped avoiding tax.

You first :/

I think this is a cultural problem. Every accountant everywhere works under the implicit assumption that taxes are to be avoided. Imagine if having a large tax contribution was something to be proud of. Perhaps the government needs to advertise more what the money actually gets spent on. Government works on boring stuff like the culverts that are essential to stopping roads flooding. People have no idea of the work that goes into this and just assume roads don't flood. It's like that old thing where you think everyone's job is pointless/easy except your own.

> If companies avoid tax and rich people avoid tax it means more tax for normal people who work for a living.

Which is exactly what is happening, with the gap between rich and poor increasing in the western economies.

Companies and high net worth individuals will never stop avoiding taxes, and it’s naive to assume otherwise. If anything, tax laws need to account for this reality more aggressively.

I found some rather troubling aspects within the ruling itself:

1. Retroactive application of arm's length principle

The Court's reliance on the arm's length principle, despite acknowledging it's not required by EU law, is problematic. As stated in paragraph 124:

  > "Article 107(1) TFEU gives the Commission the right to check whether the level of profit allocated to such branches... corresponds to the level of profit that would have been obtained if that activity had been carried on under market conditions."

This retroactive application of a principle not explicitly required by law at the time of the tax rulings is unfair and creates legal uncertainty for businesses.

2. Burden of proof

The Court's criticism of the General Court's approach to evidence, as noted in paragraph 245, lowers the burden of proof for the Commission in State aid cases:

  > "As the Commission stated in recital 441 of the decision at issue, its approach is based on an infringement of Article 107(1) TFEU, which has been part of Ireland's legal order since its accession in 1973, and not on a failure to have regard to the framework defined at OECD level."

This shift unfairly advantages the Commission in future cases and will lead to increased challenges to legitimate tax arrangements.

But, overall, yes, I get the concerns about legal certainty and applying rules retroactively. They're valid points. But when I weigh everything, I still think this ruling does more good than harm. It's a big step towards fairer taxes and more transparency in how big companies operate.

Yes, it might ruffle some feathers in the short term. But in the long run, it's setting us up for a tax system where everyone plays by the same rules – whether you're a small local business or a tech giant.

There's not much uncertainty for business really. If you're pulling the moves that Apple and other companies pull to "optimize tax", then you are with 100% certainty trying to game the system and violating the spirit of the law.

That doesnt mean regimes we respect should retroactively apply new rules in unpredictable ways

It's not a new rule.

They just found that Ireland's tax rules from 1991 and 2007 are illegal tax benefits according to the preexisting rule.

Just because they took so long apply existing law doesn't make it retroactive.

While that sounds true, the EU approved Ireland's 1% tax rate.

This is a retroactive ruling. This is playing favorites, the opposite game.

An approval doesn't mean it's legal. When they finally looked into it they found it's violating existing laws.

Same with the data contracts with the US, Safe Harbor, Privacy Shield etc. All approved, all later on found a violation of EU law.

That's not retroactive just slow.

Even if it was retroactive, which it is not, being punished for premeditated tax avoidance can hardly be called unpredictable.

The central difference of opinion is of course whether outright gaming the system is acceptable regardless of the written rules being followed to the letter.

I find it interesting how in american corpspeak "uncertanty" pretty much always means "our lawyers can't find a way to avoid this law without getting caught" ^^

EU companies dodge and bend rules all the time. See: VW, AirBus, etc.

And they do get their day in the courts as well:

From _today_ in a judgement pretty much identical to the one on Apple/Ireland:

> Commission orders recovery of around €14 million in incompatible German State aid from Frankfurt-Hahn airport and Ryanair

https://ec.europa.eu/commission/presscorner/detail/en/ip_24_...

---

> On Friday, January 31, 2020, courts in France, the United Kingdom, and the United States approved analogous versions of a deferred prosecution agreement (DPA) between prosecutors and Airbus that include a combined fine of $3.96 billion for the aircraft manufacturer. The resolution ends multi-year investigations by the French National Financial Prosecutor’s Office (Parquet National Financier or PNF), the U.K. Serious Fraud Office (SFO), and the U.S. Department of Justice (DOJ)

https://www.ropesgray.com/en/insights/alerts/2020/01/four-ye...

> Antitrust: Commission fines car manufacturers €875 million for restricting competition in emission cleaning for new diesel passenger cars

https://ec.europa.eu/commission/presscorner/detail/en/ip_21_...

And it's wrong when they do it, too.

So we should correctly call it "european corpspeak"

> I find it interesting how in american corpspeak "uncertanty" pretty much always means "our lawyers can't find a way to avoid this law without getting caught" ^^

Only if they're doing this.

Only if they use the word "uncertainty" in that way. Do they?

Did VW ever complain about uncertainty in diesel gate?

When you do shit to bend and avoid complying with the rules as much as possible, you don't get to complain about uncertainty on application of said rules.

Yep, which is why they get the stick of courts as well. What a strange argument.

What’s strange is to say it’s only an anerican issue.

Which is why I didn't say that :D

> I find it interesting how in american corpspeak "uncertanty" pretty much always means "our lawyers can't find a way to avoid this law without getting caught" ^^

What does “american” here mean then?

It is no surprise culturally that they do. When innocence/technical compliance with the law is no defense against the law why bother?

That's exactly right. Corporations need the law to be as predictable as a computer program, so they can find exactly where the loopholes are and slip through them. I'd be surprised if American politicians didn't make laws this way on purpose.

A law that says "you aren't taxed on money you send to overseas subsidiaries" is trivially gameable. A law that says "don't evade tax" is not, so corporations hate not knowing which side of the blurry line they're on. An ethical corporation (as if that exists) would just stay clear of the blurry region and have no problem.

Well yeah. The prime way they avoid the law is compliance. You would also be pretty pissed off if you couldn't avoid a law fining you for something you couldn't avoid.

>>Yes, it might ruffle some feathers in the short term. But in the long run, it's setting us up for a tax system where everyone plays by the same rules – whether you're a small local business or a tech giant.

Yeah, but that only ever ratchets in one direction. Putting everyone on the same rules won't reduce taxes for anyone.

I don't understand the ruling however, something doesn't make sense:

- Apple goes to a country and makes a deal with that country

- They pay the tax in the country and they comply with all the rules at that time in Ireland

- After a few years the EU government says "hey, Ireland that's not a correct deal"

- So they don't punish the Ireland government who didn't comply with EU regulation (as far as I understood) and retroactively charge the tax on Apple, who complied with all the regulation. Doesn't the burden of non-compliance be on the party that broke the EU rules and not the company who complied with all the rules?

Several questions arise:

- Was Apple breaking any rules in those years when they had the deal with the government?

- How can any company be sure that if they comply with current tax laws they won't be back charged in the future?

- Isn't that a bad precedent of "we change the rules now", but will punish you for you past behavior for non-complying with the new rules? (e.g. why don't charge back the increase in taxes for this year for the past 3 years)

These are not related to the ethical/moral or fairness evaluation of the situation. It's unfair to charge different taxes at all, flat taxes should be the norm, not charge more if you earn more. However the legal logic doesn't seem to be there.

Can you help me understand the situation?

They aren't being punished, they are simply being told to pay the tax that Ireland illegally said they didn't have to pay.

That's a distinction without a difference. Presumably, if Ireland hadn't offered this deal, Apple would have done their business somewhere else. Sure, they may have paid some other country more taxes, but potentially less taxes than what they now owe Ireland.

Apple isn't blameless here, but it definitely kinda feels like they got a little bit defrauded by the Irish government who now essentially is getting rewarded with billions of dollars for their illegal conduct.

Apple is a lot worse than merely 'isn't blameless'. They knew perfectly well what they were getting into and I'm confident that the current judgment would have been a scenario that their lawyers would have explored.

I'm sure that if Apple thinks that they have been hard done by that they could sue the Irish government for damages in the Irish courts.

I mean, don't you see how that's bad though? Ireland gets to just lie to people, promise them things, profit from their lies and then their courts get to decide if they were wrong?

Also, everyone's stating with a lot of confidence that Apple absolutely knew this was illegal under EU law. Is that in evidence in the case? Have there been other prosecutions of other EU states for doing this?

No, its not bad because it means that companies will be hesitant to do stuff like this in the future.

Apple knew it was evading tax and it's getting punished for evading tax. The law isn't a deterministic Turing machine.

> This retroactive application of a principle not explicitly required by law at the time of the tax rulings is unfair and creates legal uncertainty for businesses.

I don't see any problem with this. They knew they were gaming the system, and knew they could get in trouble for it. The law is NOT a computer program where all outputs can be fully predicted from the source code - it also takes common sense into account.

We should just pass a law that says gaming the system is illegal, then we won't need to find silly justifications against people who game the system, but silly justifications work too.

I expect to see very abusive definitions of 'gaming the system' under such a law such that anything which is the slightest inconvenience is viewed as gaming the system. Just like how common sense isn't common.

In support of GP, my experience with judges and lawyers says the law* is much less fond of "rules lawyering" than engineers typically believe.

* to be fair, this varies with legal system: my personal opinion is that one finds significantly more successful rules lawyering attempts in common law systems than in code systems.

Unfair and uncertain taxation is a European specialty.

Taxation in Europe is much simpler and more certain than the US.

Simple and fair are not the same thing. Also, wait until you’ve issued stock based compensation to employees in a few jurisdictions before you make any certain claims.

Well after this ruling it's finally "fair" (well kind of) just still somewhat uncertain.

> Yes, it might ruffle some feathers in the short term. But in the long run, it's setting us up for a tax system where everyone plays by the same rules – whether you're a small local business or a tech giant.

That would be a truly wonderful thing to behold.

There's a separate ruling for Google that was released at the same time:

Docket: https://curia.europa.eu/juris/documents.jsf?num=C-48/22%20P

Ruling: https://curia.europa.eu/juris/document/document.jsf?text=&do...

And other news reports confirming the same:

https://www.reuters.com/technology/eu-court-upholds-googles-...

https://www.bbc.com/news/articles/cjw3e1pn741o

CNN also has links to both (summaries of the) rulings: https://www.cnn.com/2024/09/10/tech/europe-ruling-apple-tax-...

An important point that seems to have been missed by most of the comments: the reason Apple lost this case is not because of the profit shifting scheme itself, but rather than they did not set up the scheme correctly:

> ASI's 2014 structure was an adaptation of a Double Irish scheme, an Irish IP–based BEPS tool used by many US multinationals. Apple did not follow the traditional Double Irish structure of using two separate Irish companies. Instead, Apple used two separate "branches" inside one single company, namely ASI.[34] It is this "branch structure" the EU Commission alleged was illegal State aid, as it was not offered to other multinationals in Ireland, which had used the traditional "two separate companies" version of the Double Irish BEPS tool. Under the Double Irish structure, one Irish subsidiary (IRL1) is an Irish registered company selling products to non–US locations from Ireland. The other Irish subsidiary (IRL2) is "registered" in Ireland, but "managed and controlled" from a tax haven such as Bermuda. The Irish tax code considers IRL2 a Bermuda company (used the "managed and controlled" test), but the US tax code considers IRL2 an Irish company (uses the registration test). Neither taxes it. Apple's subsidiary, ASI, behaved like it was IRL2, it was "managed and controlled" via ASI Board meetings in Bermuda, so Irish Revenue did not tax it. But ASI also did all the functions of IRL1, making circa €110.8 billion[6] of profits from non–US sales. The EU Commission contest IRL1's actions made ASI Irish, and the functions of IRL1 over-rode the Bermuda Board meetings in deciding the "managed and controlled" test. The commission had not brought any cases against US multinationals using the standard double two separate companies Irish BEPS tool. (https://en.wikipedia.org/wiki/Apple%27s_EU_tax_dispute)

In other words if they had actually set up two separate Irish companies instead of just using two separate branches of a single Irish company, their tax scheme would have been fully legal and not considered state aid. (Since many other companies availed themselves of such a scheme.)

What a timeline we live in where the EU is basically telling Apple that they weren’t smart enough with their tax evasion - “see if you did it like other FAANG you could’ve gotten away with it!”

It should be said that loophole was supposedly closed in 2015, after prolonged pressure on Ireland and the Netherlands.

I'm aware, but the taxes being paid by all these global corps did not change at all. Clearly there's enough loopholes to keep exploiting!

So if such an easily obtainable, and comparatively lucrative (but fully legal) option were available -- and if it's so obvious, one has to presume Apple's people would have been perfectly aware of it -- why didn't they just take that route from the beginning (or if not, at least much earlier in this saga)?

Something tells me there's more to the story here.

Probably because the original tax rulings were made prior to the existence of the EU. As to why it was never "fixed", I have no idea.

The Google judgment was also released by the CJEU today, but it was a separate judgment. I've found it by going to the CJEU website https://curia.europa.eu/jcms/jcms/j_6/en/ (or https://curia.europa.eu/ and then click on "en" for English), where official CJEU press releases about both the Apple and Google judgments were linked on the left under "News".

Here's the CJEU press release about the Google judgment: https://curia.europa.eu/jcms/upload/docs/application/pdf/202...

Inside that PDF press release, there is a link to to the case docket, including the final judgment and an abstract of the judgment: https://curia.europa.eu/juris/documents.jsf?num=C-48/22%20P

And here's the full judgment linked in the above docket: https://curia.europa.eu/juris/document/document.jsf?text=&do...

The full judgment is available in English and French; the abstract is available in French but not English.

I should also note that there were actually four CJEU judgments released today, not two. But the other two were unrelated to tech.

Somehow Ireland gets a 13 billion euro payday for illegally subsidising Apple so they do business in Ireland.

<facepalm> You realise these are American companies exploiting American laws to circumvent their tax burden while operating as MNCs in Europe?

The notion of Ireland somehow getting a '13 billion payday' due to malfeasance or illegality is fantastical beyond belief.

All the tax law says that if they bring the money to the US, they have to pay US taxes. So they just don’t bring it to the US. There is no US law that requires you to move the money.

"According to Commission estimates, Ireland had given illegal tax benefits worth €13 billion to Apple" - ECJ

Ireland gave illegal tax breaks to attract business from other countries which it succeeded in, and now also gets the tax back.

> fantastical beyond belief

You might disagree with something I've said but it's certainly not "fantastical beyond belief"

> MNCs in Europe?

Why would you expect them to pay corporate taxes on all the income they make outside of the US? Would hardly make much sense...

The issue isn't with Ireland per se, as if Ireland wouldn't do it, then Netherlands, Luxembourg, Cyprus, Bulgaria or someone else will gladly take Apple's 13 billion at the expense of the other members of union.

The right fix would be EU wide legislation to prevent EU member states of fighting against each other on who can screw over the taxpayers by providing the biggest tax breaks in exchange for corporations' bread crumbs in a race to the bottom, as this causes all EU taxpayers to loose and corporations to win, and then we wonder why we have no money for education, healthcare and infrastructure. Well of course we don't if you help big companies avoid paying tax and then your state budget relies only collecting tax from citizens and small business who can't dodge taxes.

Making a tax deal to pay only 1% or 0.005% for a specific company is an illegal aid - regardless of the EU member country ...

I remember that Ireland had a 0% tax on patent royalties till 2015, and till 2020 for companies that used the scheme before.

From discussions in the past, I was under the impression there was general sense that if Ireland should have legitimately taxed them to this degree. That ultimately the taxes owed should probably be paid out to the countries where the sale occurs. As one country reaping the rewards of the tax for the entire European operation would be bizarre, when that country just has a medium sized support/sales operation (which was what Ireland was originally collecting tax on).

Does this also have the knock on affect that these companies can now write off this tax so their owed US taxes are much less (assuming they ever repatriate these earning - which they have often avoided to avoid paying US tax)?

Anyways, writing the above shows me how much I don't understand about these cases.

> That ultimately the taxes owed should probably be paid out to the countries where the sale occurs.

This is hard to implement in practice.

Imagine selling in a country with 50% tax, and having a country with 10% somehwere, anywhere in the world.

For easier math, let's say you buy dildos from a chinese manufacture for 1eur (including shipping), and sell them for 11eur to end customers. You've just earned 10eur, and you're taxed 5eur, giving you 5eur of profit.

What you then do is open a company in a low-tax country, the company is "completely independent" and the owner (your cousin) works with both the manufacturer and you. You buy the dildos from your cousin for 10eur, he buys them from china for 1eur has them shipped directly to you, and you sell them for 11eur.

So, your cousin earned 9eur, and will pay 10% tax on that (90c, 8.10eur of profit) and you earned 1eur, and will pay 50% tax on that (50c, 50c of profit for you).

So instead of paying 5eur in tax, you only paid 1.40eur, and pocketed 8.6eur. Yes, there are some additional costs (another company + paperwork, some percentage for your cousin) but you still earned more.

The same can be done with patents and licences, branding deals, etc. Company in rich country made 100M of profits... just have the company in a cheap-tax country charge them 99M for licencing, 1M gets taxed in the expensive-tax country, and 99M in the cheap one.

Multinational corporations have subsidiaries not cousins.

A great number of tricks go away if you treat subsidiaries as a single company. Countries are reluctant to pierce the corporate veil, but it’s all arbitrary rules.

I was giving an example with 11eur dildos, you have cousins for that.

And for every regulatory change will bring changes to tax avoidance... subsidiaries will just get "one more step" removed from the main company...

Ultimately profits flow to a single entity. Taxing 1 levels down and stopping was clearly not the intent of my suggestion. If it’s under the control of Alphabet/ its profits go to Alphabet treat it as a single entity Alphabet.

The idea that subsidiaries, trusts, etc have any meaning whatsoever when collecting taxes is simply a loophole which can be closed at any time.

That is not a fictional example, in case any might still be wondering. I worked many years for an american/canadian/global company in europe. The software WE developed would be owned by a separate company entity. Whenever we sold "OUR" software systems to our real local customers, "we" would 'borrow/rent' OUR software from that separate entity, at a hefty silly price. Incidentally, that silly price was so high, that "we" (our company entity) would consistently produce a loss each year (even though our parent entity was raking it in, through that separate entity and the silly-price money we were transferring to them). Those losses of course are tax deductible, so our company would consistently pay zero taxes or worse (I don't know if they were also able to trigger things like the state having to reimburse them..) It is/was, as far as I know, totally legal and totally disgusting :-/.

The irony as I see it, was that the software was developed by us locally and used by local clients, but somehow ended up being "owned" by carribean islands.

That's basically how Hollywood accounting works, with some of the highest grossing films and franchises in history not paying a penny in tax due to showing a 'loss' on paper.

Harry Potter and the Order of the Phoenix (2007) ended up with a $167 million loss on paper after grossing nearly $1 billion. According to New Line's accounts, the LOTR trilogy made "horrendous losses" and no profit at all. Same as Forrest Gump, Men in Black, and Return of the Jedi.

The Music industry is far worse in its financial machinations.

With some minor exceptions, the companies involved in this are all American.

Ikea does the same with everything they sell in their stores, the stores have to licence design rights from the Netherlands, where royalties are only taxed a few percent. All the stores imposable amount are reduced to zero.

> ultimately the taxes owed should probably be paid out to the countries where the sale occurs.

As I wrote in another thread, that's not how business works in the EU. If Volkswagen, incorporated in Germany, sells a car in Poland, they're not required to pay a corresponding sliver of their net profits to the Polish exchequer. It all stays in Germany.

> their net profits to the Polish exchequer

I believe that part of the reason is that they still pay other taxes (eg VAT) in the country of sale.

VAT is a tax paid by the consumer, not the manufacturer. If you buy an iPhone, it's you that pays the VAT on it, not Apple.

Isn’t all corporation tax a tax on the consumer? For the consumer what difference is there compared to a tax on revenue?

If there was a 20% tax on revenue, companies would increase prices in kind…

If you allow me some jest I would like to point out that at the checkout of my local stores I never saw officers collecting VAT, I usually just give all the due money to the cashier

All the money Apple gets come from customers, no? All of it. Do they print their own dollars or something? Are they subsidized by governments?

Do the dollars that make up the profits, and the dollars that make up the taxes on profits, come from somewhere else than the dollars that make up the VAT?

I gather from your disdainful tone that you think you've just schooled me on something really fundamental, but the point you're trying to make is unclear to me. If you're asserting that VAT and the taxes paid on corporate profits are in reality one and the same, then no, that's wholly incorrect.

Yes, this is correct, although it may be more obvious to visitors than to residents.

The evidence that this is correct follows: visitors, tourists if you prefer, can collect reimbursement for VAT payments, the first link I hit was Norway but this is very common if not universal: https://www.toll.no/en/tourist-in-norway/reimbursement-of-va...

If VAT were a tax on the corporation, it would make no sense at all to reimburse it to specific consumers who are not obliged to pay it. That only makes sense when the tax is on the consumer, and merely collected by the corporation. Which is how VAT works.

VAT is collected by the retailer and paid to the exchequer of the country of sale.

The VAT sum is recorded at the time of sale, but the whole amount sits in the company finances until the VAT is settled with the exchequer.

The company holds the VAT sum between collection and settlement, potentially benefiting from the temporary cash flow in that period.

Sales taxes are collected by the seller for reasons of convenience. They are intended to act as taxes on the consumer. For political reasons this is as not obvious as possible.

If they weren’t taxes intended to fall only on the consumer then:

* businesses wouldn’t be able to claim back sales taxes on their purchases.

* consumers wouldn’t be personally liable for taxes on goods they import.

None of that contradicts what I posted. What point were you trying to make again?

Exactly. Was a great boon for 30 years for Germany as their domestic exports were the only game in town for cheap and whitegoods consumer hardware within the EU - e.g. Miele, Siemens, Bosch, Braun, Grundig, Neff, Whirlpool, Grundig...

The second it advantages another EU country at their expense, however...

If you want to tax sells in a given country charge VAT. Corporate income tax is just a fundamentally bad tax. It's hard to enforce, even with good will it's hard to calculate (is paying $X for a license a legit expense or not?), unjust (buying more expensive things to provide the same service leads to paying less tax) it sets incentives to mix corporate and private use of resources, it incentivizes building holding companies to use losses of one entity to offset tax of another, it gives big players an advantage and it gives dishonest players an advantage.

I think it should be 0 and we should tax use of resources and consumption instead. Then let countries compete to create business friendly environment. It doesn't provide enough revenue to be worth all the hassle with enforcement and accounting.

Other countries aren't getting it -- afaik that was a possibility regarding fall back mechanisms should their primary argument collapse before this ruling. The EU has won their primary case and thus Ireland must be forced to collect an spend it.

This is will force a political crisis as the government is complaining it has no money to build houses. So all the those comments saying other EU countries just has to sue Ireland to get some of that won't happen.

If Germany gave state aid to Deusche Bank and DB operates in many EU countries it wouldn't make any sense for Spain to get a cut of that if they were forced to hand it back, even if the revenue was generated in other countries by DB this doesn't concern the state aid given.

> This is will force a political crisis

no it won't

> as the government is complaining it has no money to build houses

no it isn't

I'm not Irish and I'm a lazy reader at this time so I won't search who's right, but the comment you are answering to was way more convincing than yours.

I'm Irish and the later is more correct. There isn't going to be a major political crisis over this. Irish corporate taxation is to the Irish electorate what the flag is to Americans. It's quasi religious.

The government isn't really blaming lack of money on the housing crisis more they are claiming it takes time.

They're correct on both. The Irish government is running a budget surplus due to massive increases in the corporation tax intake over the last several years. The issue with delivery of housing and projects in this country isn't due to a lack of money, but a lack of capacity. The economy is already running at full capacity and there aren't enough workers available. Throwing more cash at things wouldn't have a material increase in output for several years until supply could ramp up.

The Republic of Ireland is predicted to have a €65.2bn (£56.3bn) budget surplus by 2027. The government is projecting a headline surplus of €8.6bn (£7.4bn) for this year alone. https://www.bbc.com/news/articles/c88zg586782o

The government couldn't even spend an allocated €1 billion of its housing budget over the last three years. https://www.thejournal.ie/housing-budget-underspend-6038256-...

If you were Irish you'd know exactly the issue - a mix between the local planning and rural needs schemes which prevent one-off building in established rural communities, and the farce that is An Bord Pleanála - our Planning Authority.

Given our absolute position as a Republic and a Democracy, we have incredible powers for individuals to block major developments. The one in the major Dublin suburb of Dundrum, adjacent the largest shopping Centre in Europe, is just the tip of the iceberg.

https://www.independent.ie/podcasts/the-indo-daily/indo-dail...

I think people would revolt if you raised VAT to 30% and lowered corporate income tax to 0%.

Even if this sounds like a huge fine, this is effectively meaningless, even if they end up paying it. 13 billion, for a company with market cap of more than 3 trillion is around 0.4% of their cap.

Until these fines become meaningful, companies will just continue breaking the law and asking for forgiveness later, as the changes to their market cap can offset this fine in hours.

> Until these fines become meaningful, companies will just continue breaking the law and asking for forgiveness later, as the changes to their market cap can offset this fine in hours.

Up until recent years the EU didn’t even know if it could take action against U.S. based tech giants. Now that the EU has established wins in fines, usb-c, user replaceable batteries, and alternate app stores, I expect EU regulators to take even bolder action.

> Up until recent years the EU didn’t even know if it could take action against U.S. based tech giants.

What do you mean by that? Due to geopolitics? Or at a technical level of the current law?

> What do you mean by that? Due to geopolitics? Or at a technical level of the current law?

Geopolitics, but the technical level of law certainly plays a part. Europe had no idea what the effect of leveling lawsuits against a fortune one company would yield. However the EU has proven rather adept at identifying technological practices harming consumers and a strong capacity for rectifying them. Now that the EU is beginning to find its stride, I expect it to become more assertive in how international commerce is conducted.

Market cap is the theoretical value of all the company’s future growth/cash flows brought forward to today. It’s speculative, and fluctuates with the stock price.

Tax bills have to be paid in cash, not stock. A better analogy is to simply look at Apple’s net profits, since that’s where the money will come from.

$13B is not nothing, even for Apple.

Note we also accept stock too if companies want to fork that over instead

It is nothing. Apple's profits over the period mentioned were probably hundreds of billions.

This is 27% of their cash on hand. It simply cannot be spun as "nothing".

Heh: https://en.m.wikipedia.org/wiki/Braeburn_Capital

top ai result just said apple has 47 billion cash so 27% sounds like quite a fine.

Read it again. The court has not imposed a fine. The €13 billion represents taxation on many years of corporate profits, that the EU's competition authority asserted Apple should have paid to the Irish exchequer, but did not due to a favourable taxation agreement dating back to 1991.

Why would you compare to market cap? The company is going to sink or swim regardless of what the market pegs it at.

It provides an excuse to believe the this is an example of the government not taking bad behavior by corporations seriously.

Apple didn't break the law, Ireland did.

they both did, as they made a deal that was illegal under EU law. I assume it's similar to a US state and corporation therein both falling under federal law.

That’s ascribing a lot of power to the EU which I don’t think is politically cut and dry and certainly not a result of elections.

13bn is not meaningless for Ireland – that'd fund several major infrastructure projects – stuff the Irish people missed out because of these illegal tax shenanigans.

Apple would have gone elsewhere if the scheme didn't exist, so it's not accurate to say Ireland has missed out on 13bn.

“The most recent projections for the final cost of Metrolink set a maximum outlay of €12.25billion, excluding VAT, though the rail link is not expected to go live before the middle of the next decade at the earliest.”[1]

13bn would cover the cost of Dublin's first metro system, unlike most European capitals Dublin does not have a metro. This is what this ruling means for the Irish public. shame on the government putting corporate interests ahead of public finances.

[1] https://www.irishexaminer.com/news/arid-41386906.html

Irish Corporation tax receipts for 2023 alone were valued at €23.8 billion. The ruling was for the benefit of the Irish public to indicate our willingness as a good faith and hospitable host for American MNCs now and in the future.

Given the propensity for the EU to throw us under the bus when the Teutonic books don't balance, its a lot more important for us to maintain our special cultural, economical and political relationship with the USA.

In any case, that money would never end up ringfenced for a Metro that has been in planning hell since the 80s. We're well able to afford white elephants (e.g. the new Children's Hospital).

This take makes no sense. The whole reason the 13bn exists is because of the tax arrangement. Apple would have gone elsewhere if not for that.

Note that in the case of Apple, the fine is proportional to the benefit Apple gained from Ireland. So if the fine is meaningless, then so was the original value of the ill-gotten gains.

(This is in addition to the other commentators, who have correctly pointed out that if you just divide market cap by the fine, you're producing a number that isn't useful for anything but misleading people).

> ill-gotten gains

We are assigning moral value to this? You don’t think EU is a self interested party looking to interpret the law as favorably as they can?

Just to clarify, the money has already been deposited to a holding account awaiting this ruling. So Apple will not be paying over any money, they will not be getting the money refunded to them.

Yeah, I think the only impact on Apple now is that they finally have to write it into the financial reporting and close the book on it, which means that this quarter has a slightly higher than normal taxation rate?

Might give a slight wobble in the stock price, but that's nothing unusual for AAPL at this time of year anyway.

Big tech companies can absorb these penalties without a major dent in their finances, and as you pointed out, sometimes the market value can rebound quickly, negating the effect of the fine.

It's not a fine is it? They are just paying what they should have.

This goes to reduce Ireland's public debt, which was about 140 billion euros as of 2022. 10 % debt reduction overnight (albeit accrued over 20 years) is no small impact for a country.

https://fred.stlouisfed.org/series/TDSAMRIAOGGIE

Market caps aren't cash.

It's an odd comparison and is dishonest to minimize the payment through a speculative value that the market decided on. If Apple owned 50% of the shares and sold all their shares today, they would not be getting 50% of that $3T because of market forces.

> "We always pay all the taxes we owe wherever we operate and there has never been a special deal," he said.

Ιf that is true it should be easy to prove. Letting them pay peanuts is an insult to the whole of EU by the Irish government

Insult-driven thinking is really, really low grade.

So why do it?

Me? I wasn't insulted.

Direct link to the full text of the judgment:

https://curia.europa.eu/juris/document/document.jsf?text=&do...

Another article: https://www.politico.eu/article/commission-scores-surprise-w...

Full ruling: https://curia.europa.eu/jcms/upload/docs/application/pdf/202...

Fascinating, how does that work? Can anybody explain in simpler terms how that was legal to begin with?

> Both companies were incorporated in Ireland but not tax resident in Ireland. Those tax rulings approved the methods used by ASI and AOE to determine their chargeable profits in Ireland in relation to the trading activity of their respective Irish branches.

Well, they had Ireland on their side.

> "Ireland granted Apple unlawful aid which Ireland is required to recover," the Court of Justice said on Tuesday.

>Well, they had Ireland on their side.

This is one of the reasons the EU is set to remove the single country veto rule since it was open to abuse. You'll then need two countries on your side to alter the EU's rulings.

> This is one of the reasons the EU is set to remove the single country veto rule since it was open to abuse. You'll then need two countries on your side to alter the EU's rulings.

There are definitely countries calling for this rule to be removed or otherwise reformed, but I wasn't aware that the EU "is set" to do it. My understanding is that this change would itself require unanimous agreement in order to make it happen (without effectively forking the EU in an extreme step no country has yet seriously proposed), and that this unanimous agreement is not yet present.

Have I missed some recent major announcement on this point? I know the EU Parliament voted about this some months ago, but their wishes on this point will never become EU law through the current procedures without unanimous agreement from the member states.

Won't this lead to this-for-that alliances within the EU and might turn member countries against each other in the long run? "France didn't help us veto a decision we wanted, so we won't help them either on this other front" or a more straightforward "if you help us veto this tax decision we will help you veto something that would affect you later".

Definitely, but at least it's a step in not making vetos as easy as before.

For some issues unanimous agreement is already not needed. For example recently a law was passed in the Council with 20 of 27 votes (only with the help of an Austrian minister against the wish of her government).

https://www.dw.com/en/eu-ministers-approve-contested-nature-...

The full rules are here, 'of course' taxation still needs unanimous agreement: https://en.wikipedia.org/wiki/Voting_in_the_Council_of_the_E...

Yes, I'm aware that unanimity is not currently always required. But a claim that the EU "is set" to remove a rule is discussing a change to the status-quo rules in this regard, which I haven't heard about except as a very much not unanimously agreed aspiration of some legislators and some member states.

Yeah this is not going to happen.

I'm not sure I understand what you mean. AFAIU, Ireland just refused to demand the money from Apple. I'm not sure what that has to do with vetoes. Can you point to a concrete instance relating to the Apple case, in which Ireland used a veto?

Ah, so the Netherlands and Cyprus, and off you go... If a third country is needed, a flirty wink to Luxembourg, and the party continues.

That appears to be a summary of the ruling, although it contains a link to the docket: https://curia.europa.eu/juris/documents.jsf?num=C-465/20%20P

Judgment: https://curia.europa.eu/juris/document/document.jsf?text=&do...

Thank you, and sorry. Had the wrong link in my clipboard.

Good.

Not because I particularly dilike Apple or big US tech firms (I have a whole bunch of Apple stuff right here), but because Ireland has been able to undermine the tax regime of the whole EU, by giving these sweetheart tax deals to big firms, who can then run their entire EU business from there.

This gives an unfair tax advantage to the multinationals over homegrown EU companies, skewing the market.

Is it Apple's 'fault'? That's not really the interesting question here, IMHO.

Yeah, agreed, Apple is simply doing what any corporation does, trying to do business as profitably as possible. The only tar bucket you should be having handy is for Ireland for trying to screw over the whole rest of EU.

Why do you give Apple the leeway to do what a company has to and not Ireland to do what a country has to succeed that's very hypocritical of you.

Because Ireland has joined the EU and knowingly chosen to participate in treaties pertaining to the shared market. If Ireland wanted to leave the EU then it would be free to do so, then it can cut Apple all the tax breaks it wants. However as is, Ireland is trying to please two masters at the same time and the court cases seem pretty clear about how that is going for them.

Apple willingly sold in the eu then found loopholes to save on tax. They created shell corporratioms to save on tax yeah Apple is correct and Ireland is only one in the wrong.

It's not, because Ireland chose to be part of the EU which its actions are undermining. Also, we accept the fact that in capitalism companies have the goal to maximize profit, but the purpose of a country is not to maximize tax income compared to others

Yeah the purpose of a country is to maximize the opportunity of its citizens which is exactly what Ireland is doing. They're not trying to maximize tax income otherwise they would have a higher rate

Ireland is part of much bigger bloc, and milking it hard since Apple couldn't care less about some irrelevant tiny island nation. The only interesting part of it, it can 'hack' into EU via dodgy tax deals that circumvent EU policies.

Not 100% sure if its illegal, but its highly amoral, no questions there. Here in Europe we don't like that, money is not above else, greed is not good.

The view on this topic boils down largely where your opinion on above stands.

At the end, Apple is just another greedy amoral corporation, just like the rest. Which is fine on its own, but would be nice if some folks would be less fanatical about that brand and got a bit more... balanced view on reality.

And what part of Germany or the Benelux do you hail from?

Also "money is not above else, greed is not good" is absolutely not the policy of the major economic powers in the European Continent. The 2008 banking crisis and the subsequent austerity imposed on Ireland by the IMF as a consequence of bailing out unsecured bondholder in European Banks in order to stop a contagion effect completely refutes that notion.

Absolute nonsense. The Netherlands does the same stuff and calling Ireland an irrelevant nation is an incredibly ignorant statement to label a country that vastly punches above its weight in science, technology, and research.

Here in Europe competition is good and you have some countries that don't like losing out.

And it is welcome to leave the EU and cut whatever deals they like if they think that's gonna benefit their citizens. But they're not going to do that, because the value of being in the EU vastly outstrips the inconvenience of this judgement.

A country purpose is to give the best living conditions to its population if that means collecting more tax without directly taxing it population then they are using the most optimum method just like apple with its shell corporations. My problem is with neither rather people giving apple and other corporations hand away absolution for their behavior just because capitalism

> we accept the fact that in capitalism companies have the goal to maximize profit

Not by committing tax avoidance.

This is why stronger regulations and tax laws are welcome. I fully expect every corporation to pursue profit no matter how illegal their actions are, and no matter gow much damage they cause to society.

Well they're not trying to screw over the rest of Europe. They're just gaining a competitive advantage by offering favorable deals. Its something that countries have been doing for much of their existence. To claim their screwing over the rest of Europe is just anti-competitive nonsense. The Netherlands does the same stuff just not as successfully

Yeah no, there's a very big difference between being a country all by itself and being a part of the EU. If you want to be in the EU, you have to play by its rules, that's a part of the deal. You can't only get the upsides of the shared market, but not follow the rest of the rulebook that actually make the whole thing work.

> The Netherlands does the same stuff just not as successfully

Well, that's absolutely not orthogonal to the "screwing over Europe" statement. That simply makes two countries trying to gain an unfair competitive advantage.

Nicely hypocritical from the Netherlands by the way, as they are always the ones on their high horses complaining about the financial laxness of the southern and eastern European countries, while at the same time draining them of tax revenues through such constructs.

Regarding the Netherlands, It looked like they where working and making good progress of dismantling this system. But in the end it was all a façade and feet dragging... Now I just hope that with our current government it wont get worse.

But hey, we voted for these muppets. So if the EU again fines us we deserve it.

> Now I just hope that with our current government it wont get worse.

Hope dies last! Let's see how long the current government holds. And hope the replacement would be better...

Yes, every company will engage in tax avoidance if they think they can get away with it.

Good that Apple was punished for it. It should happen more often.

What about Luxembourg?

All offshores should be either forced to increase min taxes, regulation and financial transparency (i.e. cease being offshores), or should be expelled from everywhere and sanctioned. I wonder how people aren't protesting this crap, which allows to directly steal their money. But whatever, I guess scary migrants working for slave wage are more important for people that multinational megacorps, as long as they are churning shiny new iphones and stuff.

Biden pushed other countries to adopt a minimum corporate tax of 15%, but those taxi breaks on patent royalties might be another loophole. Anyone to clarify the link between the 2?

Which secret sweetheart deals does Luxembourg have?

The secrecy and exclusivity were central to the judgement. The EU requires a level playing field for all companies, which is why individual governments striking secret tax deals not available to all companies are seen as an illegal thing.

I bet if Ireland had opened the same tax deal they did to Apple, to all companies this would not even have been a matter for the courts.

Isn't the EU specifically set up to allow competition between states on tax grounds?

Yes.

The problem was not about the tax level, nor the inter-state competition. The problem was that it was _not_ a free and fair competition. The tax deal was not offered to all companies. Ireland secretly did this to only select companies, and it therefore crossed the threshold into [secret and illegal] state aid.

Ah I see. Yeah, that doesn't sound right. Thanks.

Selling phones in Poland and paying taxes in Ireland is not competition, it's tax arbitrage.

That's... literally how every company in the EU operates. If Volkswagen, incorporated in Germany, sells a car in Poland, they're not required to pay a corresponding sliver of their net profits to the Polish exchequer. It all stays in Germany.

Surely there is VAT on that sale that is paid to Poland?

VAT is a tax paid by the consumer, not the manufacturer. It's collected at the point of sale by the retailer and passed on by them to the local tax authority.

You are correct in essence but that is not exactly how it works.

VAT is paid on the gross margin on each transaction. It only looks like the end user is the only one to pay because for that transaction the gross margin is the whole of the price. Car makers are to a large extent assemblers of ready made parts so some, admittedly small, VAT is certainly paid at various points in the supply chain.

https://en.wikipedia.org/wiki/Value-added_tax#Comparison_wit...

VAT is physically paid by businesses in EU. At the end of the day it's a tax on final business to customer transaction (like sale tax). It's levied on a transaction. Saying one party pays it but the other doesn't is meaningless. It's added to the transaction and then collected by the business and transferred to government.

No.

Yeah this theoretical half-reading of wikipedia always leaves out the practical considerations.

This level playing field lasts right up to the point where each individual government of the Eurozone is mandated to cover the losses of their private sectors, including banking. The days of Germany dictating to their neighbours how their countries should be run are over outside of the ECB and the Euro. If they have a grievance then they can go through the EU courts like Germany did with the Apple case.

Big countries signed up to a common market without tax harmonisation and they would leave if it wasn't working for them, just like the UK did.

Guess which country was forced to bail out Europe's banks and unsecured bondholders in the last crisis? We also don’t benefit by the setting of ECB rates like Germany does, and we're going to get slammed as they rebalance their books following pandemic social payments.

Ireland gets the blame for Apple not paying its fair share of taxes but the issues is entirely a US one: Apple is a US company, yet the US won't force Apple to pay taxes on its foreign earnings. In contrast, if you're a US citizen who resides elsewhere, you're still expected to pay US taxes...

In France the statutory corporate tax rate is 33.3% while the actual effective tax rate is lower than Ireland's 12.5% at 8.2%.

Luxembourg has a statutory rate of 22.5% but an effective rate of just 4.1%.

Belgium has also only 3.75% tax rate on patent royalties:

https://taxfoundation.org/data/all/eu/patent-box-regimes-eur...

In Luxembourg, it's higher at 5%.

I remember Netherlands had 0% at some point, but they might have changed it.

In any case, multinational corporations pay peanuts in taxes using that scheme.

Surely an EU company, if big enough, could have moved to Ireland and negotiated a similar deal.

I understand that the issue here is the nature of the deal with a specific company, but the EU does not want member states to have too much leeway to cut taxes in any case. They have set minima for corporation tax and VAT, for instance.

Ultimately this is a question of competitive advantage and of ways for small, peripheric countries to survive and prosper. If everything was the same everywhere in the EU, then why would companies pick Ireland?

The US have "domestic tax-heavens" and the country is not falling apart... The EU isn't at risk, either, including because of the huge VAT levels compared to corporation tax.

Effectively, I think this boils down to powerful EU states who want to have high taxes and don't want others to undercut them.

It's odd that the view here, at least among Europeans, seems to be that the higher the taxes the better when the issue is obviously much more complex.

The US is a country, though.

us is falling apart did u see how much they printed usd? the pay gap, vanishing middle-class, stealing resources from all over planet..

> Surely an EU company, if big enough, could have moved to Ireland and negotiated a similar deal.

yeah but "negotiate" is not how this is supposed to be, because it creates a non-level playing field. If I planned to move my single-person enterprise to Ireland I should be able to get the same deal as Apple did without having friends in the government.

One can argue that countries should be able to do this, but EU countries have agreed not to do it.

> an EU company, if big enough, could have moved to Ireland and negotiated a similar deal.

Probably not, because their home country would go after them / make Ireland liable. These kinds of schemes usually work across jurisdictions

Hmm, "move to Ireland" means "home country" becomes Ireland. Obviously. Companies can do that, and in fact they do that. Fiat merged with Peugeot and suddenly the company is headquartered in the Netherlands, not France or Italy, for similar reasons.

In that case the EU would deem the state aid that the company receives is illegal. This is actually what this ruling claims, that Apple received illegal state aid.

I understand but that's not really the point of my comment. This is just the first line that replies in passing to the previous one...

Ah well, the EU does have tax havens and it will keep them after this ruling. But there are limits because after all the EU can't be a fair open market if one state gives out so huge state subsidies.

The major problem is that Ireland, Netherlands, and Luxembourg also have veto powers when it comes to EU wide regulations. Luckily they understood this was alienating the other EU members and so they conceded to a minimum of 15% taxation rate [1]

[1] https://taxation-customs.ec.europa.eu/taxation/business-taxa...

Yes, they are small and weak and had to concede to the big and powerful... And "alienating" is exactly my point: Those big and powerful don't want others to set lower tax rates than they have.

No, the 25 other states don't want them to set those tax rates.

This is not a bad thing. In isolation those countries would be weaker, and would have a lot less negotiating power against bigger countries.

The Netherlands is the 5th biggest EU economy.

Fair, but then you should allow other countries tax stuff however they want. It's not fair saying "Ireland can lower taxes as much as they want for big tech, but countries that are food producers can't tax exports to Ireland a bit more to make up for the loss of income due to Ireland's taxation rate".

And if you allow that, what is the point of the European Union?

Good. Because I do particularly dislike big US tech firms who don't pay their taxes and have absolutely no problem owning that emotional capital. This corrects an injustice and seeing that happen makes me feel better, without any need to rationalise or appeal to economics.

btw: I also agree with your economic reasoning

Quite stark to note the precise moment at which Americans came online. Idea: Someone could do an interesting cultural sentiment analysis by watching how certain comments rise and fall in popularity as the planet rotates.

I don't understand why this is Apple's fine and not Ireland's?

It's not a fine. The EU is saying: "You know those taxes you didn't pay and Ireland looked the other way because it benefitted them? Ireland couldn't look the other way because they signed an agreement with 25+ other countries to not do that, so be a good sport and pay all those taxes we told you to".

"I'm not making you pay me. My boss is making you pay me. So don't be mad at me, be mad at my boss while I get your money."

Ireland fought against this decision because it's a short term win, but potentially a massive long term loss.

So Ireland double-dipped here by luring the tech companies, and now it gets the foregone tax anyway. Does feel a bit like the EU should get the cash, not the state that was responsible for it

Correct me if I'm wrong, but the way I understand it, it's not really like Ireland is demanding Apple pay suddenly, the EU is saying that Apple owes Ireland the 13B and has to make up the losses due to Ireland & Apple colluding to strike an tax deal that is unfair (for all other EU members) for Apple.

Ireland itself probably doesn't want to do this, since those deals exist for a reason.

> since those deals exist for a reason.

Scam the rest of the EU countries?

To be exact, the ruling is that Ireland gave unfair advantage to Apple, compared to other companies. If Ireland want to set corporate taxes at 1%, it can, but it should be for all companies. Amazon notably didn't get the same deal Apple did, which is anti-competitive.

Shouldn't Ireland be fined 13 billion from the EU then?

This is not a fine, tho. It's just the amount that Apple would have paid in taxes, if the special deal didn't exist.

The EU is not imposing any fines on Apple. They're just ordering Ireland to collect the taxes owed to them (Ireland), since the tax deal was found to be unfair/illegal.

Yes. Which if you think about it, is doubly unfair. First Ireland reaped the benefits of keeping Apple in the country; then it gets paid Apple's taxes anyway. Sure, this puts a stop to the practice and makes it much harder to sell such deals in the future, but for the moment Ireland had its apple cake and ate it, too.

It would be unfair if the term was fair to begin with, but it wasn't, according to that court.

What would be interesting is to see Apple revealing the cost of its lobbying, to claim a claw back. It won't.

It turned out great for Ireland yes, it is odd the court didn't fine that country for offering illegal tax terms.

I think that the court ruled that it was unfair to other countries, not to Ireland. Ireland gained from the deal, didn't lose anything.

No, it's unfair to other _companies_. The issue like I said was that Apple was taxed ~1%, when others were taxed ~12%, which impact fair competition.

True. In any case, not unfair to Ireland.

> If Ireland want to set corporate taxes at 1%, it can, but it should be for all companies. Amazon notably didn't get the same deal Apple did, which is anti-competitive.

This was formerly the case, but actually now they no longer can set them that low, due to a deal by many countries to effectively force a 15% minimum. This was also largely aimed at Ireland's low 12.5% tax rate, which is being phased out as a result.

Sure, but here Ireland has gotten both the benefit of the illegal agreement _and_ will get the tax revenue. Those deals existed to attract large tech companies to Ireland, and create an ecosystem there, and I don't think that'll go away just because Ireland can't offer any new ones.

Not suggesting that Ireland did this expecting to get both sets of benefits, but seems a little counter-productive that they are in fact receiving those.

> Does feel a bit like the EU should get the cash, not the state that was responsible for it

The EU court judges that a member country didn't tax a company enough, so the EU takes the money? That would be ripe for abuse.

Country should get the tax cash, then company and country should both be fined by EU.

No more so than any other fine the EU raises

If the EU can judge that one country's taxes have been "unfairly low" for the last N years, and take what would have been the tax receipts for the last N years, they can raise a lot more than they do by fines. This is especially true if they decide to do it for all of the businesses in a country, instead of just for a few.

I mean, look, the EU is still a place that is more or less governed by rule of law. All I'm saying is that, if the EU keeps the money, that creates the temptation to abuse it.

They didn’t do that, they decided that specific tax deals made with specific companies were outside of the law

Yes, I know that. That's all that has happened... so far.

And I maintain that, to keep it that way, it is good that the money not wind up at the EU, but rather at the member state.

It seems the zeitgeist has changed. When I first started using HN 5+ years ago, whenever you'd see a similar new, Americans and jump in and claim that this is just the lazy Europeans extorting the poor American companies. The reaction is very different these days.

Dupe: https://news.ycombinator.com/item?id=41498377

Why is it Apple that has to pay for what Ireland did wrong? Genuinely curious here, it's not like Ireland is some random dude on the internet selling stolen goods and Apple should've known better.

I guess it's within the power of legislation that the wrongly calculated taxes are now corrected.

Sure, but Ireland doesn’t get the money, the EU does, so it’s not actually correcting the taxes but rather redistribute them, which seems like a bit of totalitarian approach to regulation. Ireland did not want the money back.

Ireland gets the money. The EU is making Apple pay us. And yes we didn't want it - mainly for reputational reasons and partly because our argument was "we never done it".

I stand corrected then, thanks. I was under the assumption this is like most legal wins for the EU that it goes into the pot to lower member fees.

oversimplified you can think of it as

Ireland is required to collect the taxes it always should have collected

(but waved to get a competitive advantage for attracting tech giants and giving them in turn a competitive advantage over EU based competition)

as a side note tax benefits to attract companies aren't perse illegal but what Ireland did went far beyond what is healthy/acceptable for the EU

First line of the judgement: “Ireland granted Apple unlawful aid which Ireland is required to recover”

But Ireland refused, so the fault still lies with Ireland in this case. I mean the EU is full of tax elimination or subsidies for targeted companies, far beyond this case, so it seems that this is more about Apple than the actual taxes.

What are you arguing exactly? This isn't punishment or fine, this is paying what they should have all along.

The target of the case is wrong, it should be Ireland, not Apple. Many companies have unique (to them) tax benefits across the entire EU, some hidden under things like “electricity subsidies”. If the company pay what the country mandates, then the rest should be between the country and the EU, not the EU and the company.

The target for this case is Ireland. They lost the case and now need to fix what they charged wrongly. Again, what are you arguing about?

The argument is that because Ireland needs to recover money from Apple, Apple is going to have to pay that money, hence Apple is getting punished.

They are not getting punished, as far as I know no fine whatsoever is required against them.

Paying your taxes, even if late, is not a punishment.

They are setting up an example for other companies doing same. Fuck with EU taxes, we will fuck you up (and lets be honest here, 13 billions absolutely nothing for Apple given 500+ million wealthy market they cater to).

Law often does that to perpetrators. Ireland tried to save the shady deal by refusing the money it should have received (corruption in plain sight, with these sums its not unexpected it goes to highest places plus something about saving nation's public face), so this is how they got about it.

Not sure its 100% best process but overall a very good move and precedent for future.

€13,000,000,000 is not “absolutely nothing”. It’s almost twice the entire EU defence fund budget.

And just to be clear.. this is really an example of how badly Apple were actively robbing society through their tax avoidance bullshit.

> It’s almost twice the entire EU defence fund budget.

The EU defence spend in 2022 was €240 billion.

That’s very interesting but not what I said.

https://defence-industry-space.ec.europa.eu/eu-defence-indus...

True, but IMO it's a bit misleading because you were using as a point of comparison something that sounded like the military budget of Europe without specifying that it's something completely different (that people probably never heard of — at least I didn't and neither did my grandparent). I'm not saying it's intentional or anything, just wanted to point it out.

If you're referring to a single pot of money that exists to support Research and Development, you would typically refer to that as "The European Defence Fund" as "entire EU defence fund budget" would be interpreted differently.

That is the amount spent by EU member states on defence; not what the EU itself spent.

"13 billions absolutely nothing for Apple"

LOL no there is not a single company or person in the world for whom 13 BILLION dollars is 'absolutely nothing'.

> LOL no there is not a single company or person in the world for whom 13 BILLION dollars is 'absolutely nothing'.

Apple's revenue last year alone was $383 Billion.

Isn't that more than the EU defence budget from 2022? Not gonna lie, I'm kinda a little scared now. I realise that there's less than a 1 in 1 billion chance Apple is gonna set up its own military and attack the EU, but still...

The EU doesn't have "defence budget", the EU isn't a sovereign country, the EU doesn't have any armed forces.

What EU does have is the European Defence Agency (EDA) which is a body that organises collective projects and coordination on behalf of its members.

The EDA's budget in 2023 was €44.8Bn.

Combined defense budgets of all individual member states was 214 billion in 2023. That's 'spending budget', not revenue like the 300 something billion of Apple's revenue cited above.

This means 3.39% of their worldwide revenue, and an even bigger share of their profits. It's not negligible at all, even though it's just collecting taxes late without a penalty.

I think this is a common practice in every country. If the tax payer is at fault, the tax payer pays. If the treasury is at fault, the tax payer still pays.

Apple is selling to the whole of EU. Is it unreasonable to conclude that they should have known to follow the EU laws rather engaging in a tax scheme offered by Ireland?

I'm not entirely sure what to think myself about the fairness of this. But going forward I definitely prefer that corporations will have to be careful about engaging in unfair tax deals in the EU.

Otherwise those corporations would just be looking for the next country to take advantage of - risk free.

Amazon got away with it and so did Fiat, smaller sums and in Luxembourg and Netherlands, still, company specific tax deals based in country specific laws. Apple clearly picked the wrong horse, but unless there’s actual reform (which will likely cause a whole slew of other issues) the tax setup of multinational companies will carry on, maybe not risk free, but it’s still a win for them long term no matter what.

" and Apple should've known better."

Of course Apple should've known better. Their lawyers warned them about the risks of these deals (I do not have internal knowledge, I just know they did, they do to everyone who enters into deals like this). For years (rather, decades) everybody bet on this being too widespread to be corrected like it is now. You can't really blame them for trying, but in the end, this is the corporate/tax version of 'fuck around, find out'.

Can Apple simply exit Ireland effective immediately and claim they paid their taxes, and do not wish to be around for this new rule?

Since the ruling has already been made I doubt they can avoid it other than by exiting the EU market altogether. The result of exiting EU would be Apple's competitors becoming more dominant, decreased sales from loss of an entire market, and reputational damage from quitting over a petty tax dispute.

Isn't Ireland now effectively getting the penalty funds that their taxation malpractices caused in the first place?

This is how you tax these companies. They f around, they hand over part of their profit. Good.

Nice of them to announce it the day after a major launch. Barely any price action

Well, you gotta balance all that tax evasion with something.

What does "illegal" mean? Why is it in quotes? Did they break the law or not? If they didn't break the law, if they adhered to the deal they negotiated with Ireland, isn't this a dangerous precedent? You can just ignore deals because you (EU) said so?

Edit: Please downvote me if you must but also post a comment about why I'm wrong. Thanks!

> You can just ignore deals because you (EU) said so?

Of course you can, because EU law has precedence over Ireland's deal in this situation.

Even if it was legal under the EU at the time? Maybe Ex Post Facto only applies in the US.

It wasn't legal at the time, that's what's just been established by the verdict.

Apple (uniquely) having a near zero tax rate is considered illegal state aid to a company. Private companies are supposed to operate on the same terms within each European country.

It wasn't.

I guess what comes as a shock is how much control the EU has.

At the same time, if bureaucrauts in Ireland were a bit smarter they could have just written in a special exemption for companies with certain specific requirements - which end up being Apple and a few big ones.

Apple was also pretty dumb to go to Ireland while Malta, Cyprus and Bulgaria offer pretty low taxes out of the box. I guess they did that to access UK talent / lower language barrier even if the fiscal setup was riskier.

> they could have just written in a special exemption for companies with certain specific requirements - which end up being Apple

That's not how the law works. The courts look at the intent behind the law, the spirit of the law, as well as the text.

It might take longer and more argument but would eventually be struck down as well.

Or Ireland could just lower the tax for every company making it a level playing field. I am not a fan of EU economic ideas at all but I am happy they are starting to enforce this one. My country (Poland) has done such deals as well. Wanna start a small business? 19% corporate tax, 23% VAT, 19% cap gain tax. Some German car company thinking about opening a factory here? Let's offer 0 tax rate for many years + additional incentives!

This really is demoralizing how they set rules for small guys but then give big incumbent companies everything they want.

CNBC likes to use quotes for emphasis. It's supposed to emphasize that the EU court believes the tax treatment from Ireland to be illegal.

The EU isn't applying any penalty here, this is owed taxes that apple were not billed by the Irish tax authorities.

Once you enter the EU, you forfeit part of your sovereignty. That's what Ireland failed to do here. There is no slippery slope. This is the very foundation of the union.

Is that what you'd call "scare quotes"?

I don't think so. scare quotes would usually imply some sort of ironic detachment or sarcasm. In this case I really would call it emphasis. They're using it as I'd normally use italics or a word I'd follow by a citation. To signify that this is important and that the word is important for the meaning of the article.

I do disagree with that typographic choice, but looking at their other articles I think they're consistent in that usage.

It’s a drop in the bucket and cost of doing business.

Pocket change

I’m confused.

So EU runs Ireland’s tax system? What happened to sovereignty? How does this work?

What do you think a political and economical union does exactly ?

Lose sovereignty, it appears.

Strange.

Yeah very strange... people get together, vote laws, and respect the laws they voted... how strange indeed

You can be for or against the EU but none of that is strange lmao. You can't play the game for the nice rules and say "no" when the rules you don't like affect you

No, the EU checks if the tax systems are fair and held to certain standards. In this case this special deal was only available to a select few companies.

Were these companies selected on the basis on employment numbers or revenue?

AFAIK Apple doesn’t have so many employees in Ireland that would generate enough revenue for a 13B tax bill. So they must have been booking offshore revenue via an Irish subsidiary.

When I buy software licenses here in India I’ve noticed that the billing almost always is in Ireland.

Ireland doesn't produce anything of value by itself, it's full of ghost offices claiming revenues for the entire EU market.

That is completely untrue.

https://observer.com/wp-content/uploads/sites/2/2024/07/unna...

https://www.politico.eu/article/ireland-gdp-growth-multinati...

The country is a tax vessel, nothing more, remove the megacorps offices with barely any local businesses as well as the plane registrations and they drop right back somewhere bellow the average gdp per capita of europe.

Ireland economy is 85% services, compare that to Germany's 68%

Germany has the Rhine and is the centre of the continent, and also has the Marshall Plan boost post 1950 for their infrastructural development. Ireland is an Island whose population only hit pre-famine levels in the last 3 years.

Of course our economy is going to skew heavier service based! How are you going to ship cars and heavy industrial goods from Ireland to the rest of the EU and compete with Germany or France on shipping, raw materials etc..?

The tax vessel bit is just peak lol. Have a walk down the Silicon Docks at 9am on a weekday morning. https://en.wikipedia.org/wiki/Silicon_Docks

If you can't be intellectually honest and accept that Ireland would be a fraction of what it is without its tax evasion system idk what to say, there is literally not a single source that will tell you otherwise, even their own official reports mention that it is the case.

When 25% of your GDP comes for a single foreign company with 6000 employees in your country it's time to raise an eyebrow, especially when the facility's job is to assemble "made to order" computers (like the dude at the corner of my street).

> The "multinational tax schemes" used by some of these multinational firms contribute to a distortion in Ireland's economic statistics; including GNI, GNP and GDP

> A particularly dramatic growth in Ireland's 2015 GDP (from 1% in 2013, to 8% in 2014, to 25% in 2015) was shown to be largely driven by Apple restructuring their double Irish subsidiary

https://en.wikipedia.org/wiki/Apple%27s_EU_tax_dispute#

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

We don't use GDP because we're not a bloody Coal and Steel Union in the 1950s, we're a Service based economy in a Globalised marketplace.

We use Modified GNI (GNI*) - GNI minus the depreciation on Intellectual Property, depreciation on leased aircraft and the net factor income of redomiciled PLCs - which accounts for almost all of what you're citing bar some more egregious BEPS tools which are closed for years.

For someone regurgitating Wikipedia, you're avoiding the obvious article. https://en.wikipedia.org/wiki/Modified_gross_national_income

You are talking absolute rubbish.

https://www.idaireland.com/explore-your-sector

Dublin alone has more than 70,000 people employed in technology and IT companies take 40% of office space, placing it in the top three of EMEA Tech Cluster Rankings by CBRE and the number one location for digital companies. Ireland overall hosts 16 of the top 20 global tech companies and the top 3 enterprise software providers 106,000+ people are employed in the ICT industry.

430+ financial services companies operate in Ireland with 47,000+ people employed in the industry.

Seven of the ten of the world's top pharmaceutical companies including Janssen, AbbVie, Eli Lilly, Pfizer, Merck/MSD, Novartis, and Thermo Fisher Scientific call Cork home. In total there are now over thirty companies operating in the sector that employ over 10,000 people in Cork alone. 90+ pharmaceutical companies operate in Ireland. 45,000 people employed in IDA client companies

We have €116+ billion annual in pharma exports and are the third largest exporter of pharmaceuticals globally.

Ireland is home to 14 of the top 15 MedTech companies – with over 40,000 people employed in the sector

Yeah this is the way it works. The "pre-sales" of working out what you need is don e in whatever country you are in. Then at the last moment, when everything is prepared and the invoicing is ready, they transfer you to an Irish sales person who takes your payment.

And voila, the sales are all done in Ireland

Other countries have deals that cover IP revenue or certain taxation tresholds which effectively give little taxation to multinationals, so discrimination is not enough to be considered unfair.

They probably just screwed with the process and didn't get the deal in a generic enough format to be accepted by the EU.

This incompetence will cost dear to Ireland as the next big tech companies will go elsewhere to sell to Europe.

What's to be confused about?

Treaties bind nations to behave in certain ways all the time, it's basically what they are for.

EU membership is in effect a set of treaties that a member-nation signs up to, which create these supra-national bodies like the court and also a lot of trade and tax rules which get harmonised across the union. Ireland has signed these treaties, which give it access to the market and the benefits of being in the EU.

If it wishes to set its tax rules without reference to the EU, it will either need to get the EU rules changed through the political process, or leave the treaties and treaty organisations.

Yes, you can view this as ceding sovereignty, but in some ways every treaty does that.

Eventually Apple will pull out of Europe and I’ll be sitting back laughing my ass off.

I hope so too. Maybe if apple and google finally pull out, the EU will be forced to innovate again. I'm sick of only having two shades of poo to pick from.

EU regulations make it a nightmare to innovate there. While millions of people cheer on "sticking it to big tech," they don't notice how the EU has become a barren wasteland of technological innovation for the past two decades.

The only way to force the EU to innovate is for US tech to pull out entirely, thus disabling vast swaths of technological infrastructure and product the EU relies on and takes for granted. The absence of this technology will force the EU to recognize its importance, and thus the importance of crafting a regulatory environment that enables such benefits to come about.

Without the fundamental recognition of the value of technology - and without this recognition happening at the level of the citizenry - the EU will continue to technologically stagnate while passing more and more regulations designed to rent-seek from the US.

If Apple leaves, you only have one choice. Then you’ll know what a monopoly really is.

There used to be a saying, if you can’t beat them, join them.

The EU seems to have modified to read, if you can’t beat them, hammer them with legislation until you can.

If both google and apple pull out, who will be your monopolist? And what makes you think that they won't also get hammered with legislation?

And even if we assumed that this would be the case, maybe suffering under a "real monopoly" is _exactly_ what the EU needs to push them out of their local maxima. I hope they continue to hammer the ever living shit out of every company that abuses its position to exploit people and deny them their rights. Abusing copyright to prevent people from fixing their own property? Screw every single one of them.

I find it funny this comment is so low in the thread, while all the "Good EU for sticking it to big tech" is much higher up.

As a European, I find the tech situation in Europe (and UK) horrible - much lower salaries for tech workers, inconsistent and high taxation, no measurable innovation in tech since forever. At the same time EU wastes taxpayer money on "research" that is only slightly more advanced than a second year student's project, all in the name of promoting innovation.

Congratulations, now you understand how a timeline works.

Yeah the greediest company on the planet is definitely going to pull out of the 2nd largest market on the planet. I'm sure the psychopaths who only care if line goes up are going to be real happy about that decision.

Give me a break, I WISH Apple would fuck off out of Europe and I didn't ever have to deal with anything Apple-related ever again.

Nice.

Maybe now the Irish government could do something about the housing crisis. Ah who I am kidding, they'll blow it all on fancy hats or some such.

Good one, have a potato.

You know it's EU state aid rules that severely constrain government spending like that?

Is that supposed to be a joke about the famine? It's in poor taste if so.

EU state aid rules don't stop governments building houses...

Seems wrong that Ireland cheated the system to attract tech companies then also gets a huge payout.

The idea was that these big companies will move back to the big centers (Paris/Frankfurt) once they have to pay the same taxes. That didn't happen (surprise) and Ireland is now ending up with a tax deluge and high value tech companies.

The idea was that these big companies and the Irish government obey the law.

What’s interesting is the deal Apple got was fine under Irish law at the time.

Nobody foresaw how things would pan out literally decades later.

Irish law yes, EU law no.

It's like saying that you couldn't forsee a state law overriding a lower level region/county law.

That's not how the EU works. To give just one major example, our constitution regularly overrules EU law - Ireland has to go to referendum for Treaties - e.g. The Lisbon Treaty.

EU law has precedence, period.

No, no it doesn't. The primacy of EU law is completely negated in a number of fairly basic instances - the common market first and foremost.

Specifically for Ireland, we are the only EU member state that are obliged to hold public referendums on Treaties. Ratification of the Treaty in all other member states is decided upon by the states' national parliaments.

Ireland, Netherlands, and Luxembourg also have veto powers when it comes to EU wide regulations. That's why Article 116 exists. You don't know what you're talking about.

Your interpretation just lost in court, so who here doesn't know what they're talking about?

It's literally enshrined in German Case Law as 'Identitätsvorbehalt'.

The Polish constitutional court OUTRIGHT ruled that EU law does not supercede national law. Thus, primacy of EU law is wholly rejected in Poland. https://www.euronews.com/2021/10/07/polish-court-rules-some-...

I could go on, but responding to Dunning-Kruger commentary is a Pyrrhic battle at best.

Why are you talking about Poland in Irish case now? :)

A case which questions the ability of EU to override Polish consistution. Did you establish that corporate tax law is a consistutional issue? And note that the decision the tribunal has made that redress for differences between EU law and Polish law will have to be handled by: leaving EU, changing the constitution or changing the EU law. I'm not sure Poland wants to push that.

There are whole parts of EU law that always precede local law without the need for local harmonization.

At least read up on basics of how EU works if you're going to debate law.

> literally decades later.

So given the time value of money, Apple still has an unfair advantage?

Actually Apple is supposed to pay interest as well, but it's probably going to be a very low "legal interest rate".

From the original decision:

----

1. Ireland shall recover the aid referred to in Article 1(1) from Apple Sales International.

2. Ireland shall recover the aid referred to in Article 1(2) from Apple Operations Europe.

3. The sums to be recovered shall bear interest from the date on which they were put at the disposal of the beneficiaries until their actual recovery.

4. The interest shall be calculated on a compound basis in accordance with Chapter V of Regulation (EC) No 794/2004.

----

https://eur-lex.europa.eu/eli/dec/2017/1283/oj

Linked in https://curia.europa.eu/jcms/upload/docs/application/pdf/202...

All tax treaties and agreements between countries (including intra-EU) are bilateral country to country agreements. Most are refreshed every 3-7 years based on OECD (or EU) recommended standards. Ireland's laws and treatment are 100% compliant.

Rather than competing and reducing their tax rates countries like France prefer to moan, as politically they can’t be seen to favour big bad businesses.

This of course was no problem with the EEC where Germany, France and the other ex-colonial powers made out like bandits selling their coal and steel to Ireland and the CT being paid there.

Enter an English-language dominated SaaS economy from the 90s and they got caught out as they were more interested in domestic economic protectionism than dealing with the realities of a paradigm shift towards tech. We pivoted completely to an information economy and service based economy from a predominately agrarian one. Now have a look at the tech job market in 2024 in Dublin versus Paris, Frankfurt, Berlin, Barcelona etc..

If any one of our EU or the other non EU countries were really dissatisfied with Ireland, they have the right to withdraw at any time.

Look, it's nice that Ireland is finally not a poor country anymore.

That's primarily due to EU politics and support.

It is, however, economically nowhere even close to France or Germany, no matter how large you think the "tech job" market there is [0].

> If any one of our EU or the other non EU countries were really dissatisfied with Ireland, they have the right to withdraw at any time.

Who should withdraw from what?

[0] For the facts regarding economic strength, read this document by the central bank of Ireland. https://www.centralbank.ie/docs/default-source/publications/...

How could we be? We're not a post-colonial power like France or Germany who spent years exploiting the African continent in egregious human rights violations. It is literally only since 2021 that we have reached our pre-English Genocide population levels of 1851 https://www.theguardian.com/world/2021/aug/31/ireland-popula...

Germany has 20x our population, France is not far off it. Neither has anything close to the job market per capita in the IT and Services sector that Ireland has.

As for us dragging ourselves up, that has more to with our special relationship with the US. The EU were initially helpful with infrastructural development, access to a Common Market, and to drag us out of the Vatican Law era, but we gave up a huge amount of fishing rights to do so - massively enriching spain, portugal and france who had overfished their own waters. Note also we're not part of Schengen, but maintain a CTA (Common Travel Area) with the UK.

Eventually the EU took the legs out from under us in 2008 and forced us at gunpoint to bail out unsecured german bondholders to maintain the integrity of the Euro and prevent a contagion run on German Banks.

Irelands FDI sector was highly developed in the late 80s and combined with entities like Enterprise Ireland - ranked first in the world of venture capital investors by deal count in 2020 - hammered home the advantage via our highly-educated English speaking workforce and relatively low cost of living. Even now the number of investments completed by Enterprise Ireland was 42% more than its nearest competitor, French sovereign wealth fund Bpifrance.

Germany was never a significant colonial power and did not extract much value from them. Especially not compared to Spain, Portugal, the United Kingdom, France, the Netherlands or Belgium.

> Germany has 20x our population, France is not far off it. Neither has anything close to the job market per capita in the IT and Services sector that Ireland has.

If you say so. And yet those employees are payed less.

These jobs exist because Ireland gave US companies large tax breaks and because it is an English-speaking country. Otherwise they would perhaps been based in the UK before Brexit.

It's good that Ireland attracts business, but encouraging tax dodging is not the way and this particular judgement is an opportunity to acknowledge this.

We encouraged or facilitated nothing of the sort.

The commission has caved to political pressure and has fabricated a state aid case. The original general court ruling was unequivocal.

This ruling has been overturned by the ECJ - absolutely shamefully; with the entirety of their case is that Apple, and Apple alone were the beneficiary of state aid. That is demonstrably untrue.

So according to you everyone is wrong, all the courts, all the other EU countries (which unjustly are wealthier than Ireland due to colonialism), the commission and the court and of course the decision taken by it.

> It is, however, economically nowhere even close to France or Germany, no matter how large you think the "tech job" market there is [0].

Shouldn't they then keep their low-tax environment so that they can catch up to the rest of Europe ;)

> All tax treaties and agreements between countries (including intra-EU) are bilateral country to country agreements.

That is completely wrong on multiple levels.

- You’re likely thinking of the double taxation treaties that follow the OECD model convention. These hardly get refreshed every 7 years. The German/Irish one is from 1962, the French/Irish one is from 1966, and the UK/Irish one from 1976. - The OECD’s BEPS multilateral tax treaty has now 85 state parties, including Ireland - There are other example of multilateral tax treaties, e.g. the Nordic countries have a multilateral double taxation treaty - There’s plenty of EU legislation around taxation covering predominantly VAT and excise duties bit also such details as the tax treatment of moving personal property between member countries or how royalty payments between associated companies are treated

TBF VAT is its own special category which I'd omitted so I'll give you that.

OECD BEPs isn't a tax treaty per se, its a Multilateral Convention to Implement Tax Treaty Related Measures.

Re: the Nordic treaty, Norway and Iceland aren't in the EU.

> The German/Irish one is from 1962

Correct. Here's the 1962 version https://www.revenue.ie/en/tax-professionals/documents/double...

and here are the last three UPDATED versions

https://www.revenue.ie/en/tax-professionals/documents/double...

The law forbids the rich and poor alike from sleeping under bridges. The law in the EU is written the France and Germany.

"The law in the EU is written the France and Germany."; that is an overt oversimplification. Obviously France and Germany have more influence in the EU than other member states, but it is by no means a monopoly.

Ireland has a pretty big advantage for getting big American companies to settle there since it's the only place in EU where English is the official language.

Well, technically Malta also exists, but I imagine that not a lot of companies are looking to set up on a small island the size of Kansas City.

It's not just the language. It's also the culture. In fact I would say the culture is even more important.

Germans and Americans wouldn't understand each other, even if they spoke the same culture. Their understanding of how life works, their worldview, their expectation of others, ...etc all of these are quite different. For example, a project is ongoing, but in the course of completing the todo list, it is apparent that a certain issue is going to prop up. An American would immediately jump on it, try to fix it and then make sure to boast about it at the next meaning to take the credit. A German would either ignore it completely because it is not part of his responsibilities or bring it up at the next meeting, but not before finishing the todo list as planned even if the last points are rendered obsolete by the emergence of this issue. And when the American starts presenting his solution at the meeting, the German will feel slighted and held out of the loop, and all sorts of confused that this guy acted so independently and out of line, without following procedure. Just an example. There are whole courses about the different corporate cultures and how people find it hard to work in different cultural environments.

I am sure the Americans prefer to work with the Irish who although they don't have the same culture, I never heard of major issues in communication between the those two cultures.

Not just the culture; Irish law is based on common law, something that Ireland and the US share. Most other EU states use a civil law basis.

I think you should be cautious about saying "Ireland cheated the system". The onus is placed more directly on the Irish tax authority, and then more broadly the government, and then more broadly the voting population, and only then the entire population.

Consider how the ruling says "Ireland had renounced tax revenue, which had given rise to a loss of State resources". This means many people living in Ireland got less government resources than they would have, including people like children and immigrants who did not have the right to vote so cannot be said to have been involved in the cheating, even though they are part of Ireland.

Legally speaking it's not a "payout" but "recovery of unlawful state aid."

> This means many people living in Ireland got less government resources than they would have

No it doesn't. Ireland did this deal to benefit from it. What they lost from direct tax in one area they gained in others. Had Ireland not made this deal, it's unlikely it would have become the conduit for Apple profits from around the world.

The subject of the ruling contains "concerning tax rulings issued by Ireland in favour of Apple"

Just because a country has children and immigrants does not absolve it of criticism.

Can you explain where exactly did Ireland gain benefit from not collecting these taxes?

The jobs provided via Apple, FDI in Ireland, Tax paid by apple staff in Ireland... general spend?

There is just a tiny count employees in Ireland, mostly legal to run the sandwitch.

> There is just a tiny count employees in Ireland, mostly legal to run the sandwitch.

Utter nonsense.

Apple Ireland has more employees than Germany, France, Belgium, Denmark, Netherlands, Norway, and Sweden combined.

There are employment quotas for the tax arrangements.

> https://www.apple.com/ie/job-creation/

That is completely untrue. There are over six thousand people employed in their Irish HQ.

That is a tiny amount in comparison to their 170.000 person workforce, isn't it?

Because getting even <1% of Apple's, Google's, $FANGs EU wide tax revenue is a lot better than getting 0% of that revenue if they were to set their HQs in another EU country that would give them and even sweeter tax deal.

And that's the problem right there. It's a constant race to the bottom between EU states where the EU taxpayers are the loosers and the corpos are the winners.

Would it be really 0%? Is there any grounds for that? Those companies are based in Ireland due to IP law, not tax law.

Can't companies abuse the IP law to wash other profits as IP costs?

Yep, this is why they were based in Ireland - due to their IP law. Which isn't quite the same as 0% taxes.

The Irish patent box was at 0% tax till 2015.

While <1% is correct it's over two magnitudes too large. Saying <0.01% would be more informative.

"The EU head office said that Ireland granted such lavish tax breaks to Apple that the company's effective corporate tax rate on its European profits dropped from 1 percent in 2003 to a mere 0.005 percent in 2014." https://apnews.com/article/apple-european-union-tech-b1575db...

You can google why do countries give tax breaks.

Are you suggesting that Ireland did not benefit from this illegal deal?

Yes, I'm suggesting that Ireland as a country did not benefit from this deal. That does not mean that some Irish individuals did not.

Apple Ireland has over 60 open positions for roles like Machine Leaning or Data Analytics while similar sized countries like Finland, Lithuania, Croatia, Denmark, Slovakia, Austria, Hungary have 0.

Apple Ireland is home to Apples only self-operated manufacturing plant in the world employing ~6,000 people building iMacs to order by hand (lol). There are employment quotas to meet for the tax arrangements which is one example of how Ireland as a whole benefits.

So how many decades will they have to pay taxes to recoup 13B$? :)

No idea, that doesn't matter though because if Ireland didn't give these massive unlawful tax deals then it wouldn't be a major tech hub for large tech companies like Apple, Google, Facebook, etc.. and that 13b$ tax bill wouldn't exist in the first place.

Ireland is ranked 2nd with the highest GDP per capita in the world and they got there by being an unlawful tax haven benefiting as whole at the expense of others.

> You can google

Can we write “search”? Google is hardly a usefull search engine anymore.

> What they lost from direct tax in one area they gained in others.

Where is your evidence? I quoted the court decision to support my position.

The very existence of revolving door politics is an example of how conflicts of interest can exist which favor those in power, to the overall detriment of the population.

Government officials and politicians are well aware there may be a cushy job for them with the big companies they once regulated, so long as those companies are happy with them.

Thus I again caution on using "Ireland" in a way which blurs the difference between those in Ireland who gained from unlawful state aid and those who gain from its return.

so they lost on the unit and will make it back in volume?

As Ireland are still saying, this €13bn (plus interest) is going to work against them.

It's supposed to work against them, as a chilling effect for any company trying to work EU states against each other for preferential treatment. I'm sure Ireland will argue that they'll offer any multi-billion multinational this sort of treatment, but that's really the point. The EU doesn't want a race to the bottom and if EU-local businesses are unable to leverage this sort of accounting break, it's a massive leg up for external businesses.

While this is a large lump, this fine covers a decade of accounts, and this final decision comes 32 quarters after the original fine. Each of those quarters could have paid this off from flat profit. They're doing okay.

While I largely agree, I don't think there is any fine involved; it is just a requirement for Ireland to collect taxes that the ECJ says Apple should have paid. Hence not a fine.

You're right, of course, but Apple and Ireland won't see it that way ;)

prior to brexit, the UK lost a ton of US inward direct investment to Eire … Dell, Intel, Apple etc. the factors were Eire corporation tax was low and public policy was to footdrag in the attempts to set an EU minimum tax, fantastic lobbying by Irish representatives in Washington leveraging the big Irish diaspora, big subsidies that walked to the edge of the EU rules (as seen here), and an English speaking workforce with ability to bring in speakers of all national languages for EU wide customer support

meantime the UK civil service was gold plating the EU rules and then came the brexit disaster

The UK government seems intent on getting the "worst of both worlds" out of every single issue.

The previous one seemed to. The jury is out on the current one.

AT best it will be similar. SO far the main difference seems to be a willingness to be harsher to old people and those on moderate (not minimum wage, but lowish to average) incomes.

> harsher to old people

Old people not on pension credit.

The old WFP was £300 in the pocket of every pensioner, regardless of means and that's a stupid thing for a government to be paying for when it's trying to balance the books.

I do accept the problem —as with many means-tested benefits— is catching and supporting the people who don't qualify, haven't filled in the paperwork, and still vitally need the support the WFP gave them. The DWP has to be given the support to help people who need it, and quickly, especially in Y1.

But I think they're getting way too much stick for this.

They are not getting anything as much stick as the Conservatives would have if they have done it. Every Labour supporting rag would have been going on about it, and my FB feed would have been flooded with people complaining about "uncaring Tories".

I suspect we are going to get a lot of austerity and privatisation in the next few years simply because Labour can get away with things. Some good things may happen (IMO the NHS badly needs reform) but so will a LOT of bad things.

"Eire" is a weird exonym. The country this happened in is called Ireland (officially and colloquially). It's a republic and shares the island (also called Ireland) with a non-sovereign country called Northern Ireland. It's often referred to as the Republic of Ireland, which is a fine description, but not the official name.

In the Irish language, the name of the country is "Éire", but saying that in English is like saying Magyarország instead of Hungary. The accent on the first letter isn't optional, and the pronunciation is difficult, it's hardly worth it.

Please just say "Ireland".

Ireland can also refer to the whole island though, so it can be ambiguous.

We have the same problem, even worse, with people calling the EU "Europe".

Do you also avoid using the names of Korea, Georgia and China?

The diplomatically neutral term is "the island of Ireland" for the whole thing.

"These islands" refers to the British Isles, in the context of Anglo-Irish relations.

It's some fascinating wordplay, born out of the Good Friday Agreement, trying not to step on various people's buttons.

It's not really ambiguous. When talking about Ireland in an economic sense, we generally refer to the Republic of Ireland. Geographically you would say the island of Ireland if you were to include Northern Ireland.

will do

btw I think I got the idea that its the official name from the word Éire being stamped on all the coins

There was also a long tradition of the British government (and by extension, the BBC) using Eire as they didn't want to acknowledge the name Ireland in case it was seen as a recognition of claims on Northern Ireland. Since the Good Friday Agreement in the 90s however, that was resolved, and now even the British government uses Ireland and most style guides in the UK media advise people away from "Eire" (It slips through occasionally though).

In fairness, the UK got a lot of 'opt-outs' which probably gave it a competitive advantage in certain areas.

I can think of one set of EU rules where the UK used its considerable influence to secure major changes to the original proposals only for UK regulation to limit the benefits of those changes.

Of course, those rules were later held up by the UK Govt as an example of where the UK could reap 'Brexit benefits'.

As a eu citizen, what is the impact of this to me? Will this money be used for us? Nope. Some club of politicians will have a nice bonus, FAANG will be more aggressive against the EU. Look, if rules are broken ppl will have to be held responsible. But thats not entirey clear in this case.

Thanks again EU

That will hit Irish economy really hard. Good.

How's that exactly?

Incorrect, and vile.

It seems that Ireland giving aid specific to Apple and not others is the crux of the issue? Not sure how that’s illegal.

I guess there are some rules setup in Europe so countries do not try to "cheat" the system (getting benefits from membership in the EU, avoiding regulation). It's sort of people want to avoid taxes but demand perfectly maintained roads, etc.

Ireland giving special benefits to a private company like Apple conflicts with the principles of a free and fair market.

Because tax incentives do not exist in the EU, like the German car industry.

Of course it does. Now why EU should finance foreign company trying to circumvent local taxes like some chinese sweatshops vs local massive company that gives work to hundreds of thousands local people?

US does exactly the same, also in car manufacturing. This is normal market behavior, countries protect their companies. Apple has nothing substantial in EU, completely foreign force milking the market and paying nothing in taxes. Now if they opened big factories and research centers, they would be treated very differently but they prefer Foxconn or other chinese companies.

Ireland having tax sovereignty was doing what it felt was best for itself, the low tax ecosystem it has fostered is in its benefit. Much like car and farming tax incentives favour Germany and France respectively.

Now perhaps the EU as a entity is moving towards collective taxation policies, but it's not there yet and there's still an aspect of getting away with certain fiscal policies depending on any member nations "clout". Perhaps Ireland is mostly guilty of not having said clout.

Tax incentives to businesses are legion. They just need to be notified to the EU and pre-approved to be valid, otherwise they're null and void.

https://competition-policy.ec.europa.eu/state-aid_en

This means that every company now needs a lawyer who understands the Treaty of Lisbon! Just in case some EU country tells them to do X, they now need to know if said country can actually say so! How is this a good thing?

Nothing new there, companies better have lawyers to enter new markets the size of countries.

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