back to article EU verdict: Apple received €13bn in illegal tax benefits from Ireland

The European Commission has ruled that tax arrangements between Ireland and Apple were in breach of the EU's state aid laws, and said the American corporation needs to cough up €13bn in back taxes, plus interest. Delivering her judgment in Brussels this morning, the EU's competition commissioner, Margrethe Vestager, said: …

  1. anothercynic Silver badge

    Dear El Reg...

    You might want to update the '1 beeellion' article to refer to this updated article... Especially given that the tax ruling is 10 times the amount you quote (as given by Reuters) in the other. :-)

  2. Stretch

    how'd you like them apples

    1. DougS Silver badge

      This doesn't cost Apple anything in the long run

      Foreign taxes paid are a direct credit against US taxes. All this means is that Apple will (assuming the ruling holds) pay the €13 billion sooner, rather than being able to delay it for an arbitrary length of time by choosing not to bring the money home.

      Apple is already carrying a deferred taxes item on their balance sheet that's several times this amount, to reflect the US taxes owed on money they are holding overseas that will become due when it is brought back. When they pay the €13 billion their deferred taxes will drop an identical amount so the net effect on their market cap / stock price is zero.

      1. BlackAngus

        Re: This doesn't cost Apple anything in the long run

        While the market cap / stock price piece is a wash, expect the US to chime in. If those taxes are paid in the EU, it reduces the amount the US can expect to claim if the money is ever repatriated. (Never mind that the taxable business was conducted in the EU....)

        1. Danny 14 Silver badge

          Re: This doesn't cost Apple anything in the long run

          It might bot cost them in the long run but it means money for the EU coffers. Who do you think pays for all the Ferrero Roche at the balls?

          1. John Brown (no body) Silver badge

            Re: This doesn't cost Apple anything in the long run

            It's also €13b that Apple can no longer invest and use to earn even more money.

            1. DougS Silver badge

              Re: This doesn't cost Apple anything in the long run

              Apple is only "investing" the money is the most conservative investments possible, so they will lose one or two percent, which is less than the interest the US government is going to charge them...

              While the US may "chime in", they have little to say about how the EU's tax laws are interpreted. But if the EU prevails, this does NOT go into EU coffers. It goes into Ireland's coffers alone. The reason the EU is fighting this is because they feel that Ireland is getting an unfair advantage over other EU countries.

            2. localzuk

              Re: This doesn't cost Apple anything in the long run

              John Brown - Yeah, the government of Ireland will be able to invest it into their country instead, paying for those things like healthcare, education, roads and the like...

    2. Crafty volt 7

      Re:

      I'll take them on the run baby!!

    3. Anonymous Coward
      Anonymous Coward

      Re:

      I'll take them on the run baby!!

  3. AndyS

    Particularly interesting...

    ...as it substantially reduces the benefits of headquartering in Ireland, after the event.

    I wonder if they will now leave Ireland, since the benefit maybe isn't there, and if other high tech firms will follow?

    1. AMBxx Silver badge
      Pirate

      Re: Particularly interesting...

      Once Ireland decide to leave the EU, we can have a UK-Ireland free trade zone. We'll even let the use sterling.

      1. AndyS

        Re: Particularly interesting...

        >Once Ireland decide to leave the EU...

        As someone living here (well, the Northern enclave, anyway), once they do that, they'll quickly revert to being a third world economy, praying the potatoes don't fail again...

        1. nuallain

          Re: Particularly interesting...

          Lazy stereotypical racist bigotry. Nice.

        2. J. R. Hartley Silver badge

          Re: Particularly interesting...

          Good to see I'm not the only commentard from the occupied six counties.

          1. Danny 14 Silver badge

            Re: Particularly interesting...

            Talking of tax avoidance. There was a good documentary about a village that investigated the dutch sandwich approach to dodge tax as an entity. All above board (providing the UK was in the EU off course)

      2. John Lilburne Silver badge

        Re: Particularly interesting...

        This is about 20% of the EU bailout that was given to Eire. Isn't it about time that rather than defending corporate tax dodging with or without the connivance of dumb politicians of we got the bastards to pay their fair share.

    2. Baldy50

      Re: Particularly interesting...

      Wonder if the UK would offer them a deal after brexit?

      1. Jess

        Re: Particularly interesting...

        Wonder if the UK would offer them a deal after brexit?

        I suspect they would only be seriously interested if we remained in the EEA (and that didn't prevent similar preferential deals)

        The way I read it is that the EU are chasing dodged taxes for profit within the free market, not having an HQ within that would make it far harder to for Apple to avoid that, with import duties etc.

        1. Version 1.0 Silver badge

          Re: Particularly interesting...

          13 Billion in unpaid taxes! - I guess that's the way to make money in the modern world, screw profits - just don't pay your taxes.

        2. Yes Me Silver badge

          Re: Particularly interesting...

          Brexit? Is that still a thing? I'm expecting Ms May to announce that it's all off in a month or two, and I estimate that at least 400 MPs will support that decision.

          1. Anonymous Coward
            Anonymous Coward

            Re: Particularly interesting...

            I'm expecting Ms May to announce that it's all off in a month or two

            But only after David Davis, Liam Fox and Boris have all had to fall on their own swords and admit their incompetence at failing to achieve a workable Brexit ...

            1. Danny 14 Silver badge

              Re: Particularly interesting...

              They have already distanced themselves from Brexit. In fact even distancing themselves from having to push the button. Even the daily mail is being quiet (which speaks volumes)

    3. Knewbie

      Re: Particularly interesting...

      that when you have an issue with the TaxMan, they have been known to seize your properties until you get to an agreement.

      I repeat : seize the property of the company that possesses ALL OF APPLE's IP RIGHTS...

      Forgot what number we were at, but the next point should be "Profit"...(or thermonuclear war, depending ^^)

      1. Doctor Syntax Silver badge

        Re: Particularly interesting...

        "that when you have an issue with the TaxMan"

        In this case the tax man is still the Irish tax authority. They're not going to upset the Apple cart.

      2. Version 1.0 Silver badge

        Re: Particularly interesting...

        A good part of tax avoidance is the "transfer" - if in name only - of intellectual property rights and then "licencing" them back to yourself from a low-tax country to a high-tax country whereupon the money that you pay to yourself (if not in name) is a tax deductible expense.

        Politicians of all sorts rant about tax avoidance but in almost every bloody case, the corporate tax lawyers are only taking advantage of the laws that the politicians have written.

        1. Kumar2012

          Re: Particularly interesting...

          "Politicians of all sorts rant about tax avoidance but in almost every bloody case, the corporate tax lawyers are only taking advantage of the laws that the politicians have written." --- and most likely those laws were written after lobbying by the very corporations that said politicians rant and rail against in their increasingly futile efforts to show how they are with the 'little people'.

    4. Doctor Syntax Silver badge

      Re: Particularly interesting...

      "I wonder if they will now leave Ireland, since the benefit maybe isn't there, and if other high tech firms will follow?"

      It depends on what the EU decides about the other arrangements with Luxembourg etc. but for US companies 12% plus English as a 1st language is probably going to be a competitive deal.

    5. The Godfather
      Mushroom

      Re: Particularly interesting...

      This was no about head quartering in Ireland - It's about 'special deals' that are forbidden and rightly so. Peeved myself that Microsoft and others seemingly reached 'agreement' with HMRC. This is simply unfair to those that cough up at the correct rates.

  4. AMBxx Silver badge
    WTF?

    What about

    Luxemburg?

    Oh, of course. The person who set that up is now EU president.

    1. Voland's right hand Silver badge

      Re: What about

      That is happening too - Fiat, a couple of fashion houses, etc. She is not taking prisoners.

      Anyone who thought Steely Neelie was an incarnation of a Rider, have not dealt with this one.

      1. Charlie Clark Silver badge

        Re: What about

        Yes, but Luxembourg has come up with a new wheeze as a free port…

      2. John Brown (no body) Silver badge

        Re: What about

        "That is happening too - Fiat, a couple of fashion houses, etc. She is not taking prisoners."

        Exactly. I've seen a few comments from over the pnd that "they" are just going after rich American companies. The reality is that all companies trying it on have "them" coming for them. It;s just that the big US companies seem to be the most prolific and, as a tech site, the big US tech companies garner the main headlines here on El Reg. And Apples slice of the pie seems to be pretty damned big. Big enough to make headlines not just in the mainstream press here but around the world.

  5. Rocketist

    Of course, Ireland has already protested

    /Rant/ It's not like we can allow the rule of law to be applied like that, to all alike! /Rant off/

    So this'll be a case for the courts. How much will the lawyers' fees be when the matter in question is a puny13 beeellion? And what LR units do we have for that? The price of 20 million iphones?

    1. Version 1.0 Silver badge

      Re: Of course, Ireland has already protested

      So too has America - the EU doesn't have the right to tax American companies - that right is reserved by the US ... and no doubt, at some point in the future, they will get around the thinking about doing something about it - or not.

      Governments everywhere have to start recognizing that in a global economy they all have to co-operate and agree to a uniform tax structure - this sort of thing (moving your income on paper, assigning intellectual property rights to convenient locations) will continue otherwise.

      1. Anonymous Coward
        Anonymous Coward

        Re: Of course, Ireland has already protested

        The US should be happy about this. It would discourage the many inversions that have taken place (where big US company buys smaller non-US company and moves HQ to lower-tax non-US location).

        The reality of course is that those in charge of these big companies, or who are large investors in these big companies, have control of the US government (corruption, aka "lobbying") and other institutions and don't want to see people taking their big wads of money from them.

      2. Charlie Clark Silver badge

        Re: Of course, Ireland has already protested

        So too has America - the EU doesn't have the right to tax American companies

        It isn't. The Irish government was giving preferential treatment to two Irish companies, set up by Apple with specific purpose of doing trade in Europe.

        A uniform global tax structure is not only a pipe dream but completely illegal or unconstitutional for the majority of countries.

        1. Rocketist
          Holmes

          Re: Of course, Ireland has already protested

          That's actually the point. All the competition commissioner did was determine that one EU state had granted illegal subventions to two EU companies. Normally that's a clear case, and I'm not aware any of the previous similar decisions have ever been contended, let alone successfully.

          Of course, with a big name and a seriously big amount of money involved...

      3. Anonymous Coward
        Anonymous Coward

        Re: Of course, Ireland has already protested

        Irish Companies based in Ireland would be subject to Irish taxation at the appropriate level. Apple are of course free to move those monies to America and be taxed at the appropriate rate there.

      4. Anonymous Coward
        Anonymous Coward

        Re: Of course, Ireland has already protested

        "the EU doesn't have the right to tax American companies"

        I thought that the point of this action was that the companies in question were supposedly headquartered in Ireland, and therefore are technically Irish (EU) companies?

      5. uncle sjohie

        Re: Of course, Ireland has already protested

        These are 2 EU companies, not American ones. Mailbox companies/headquarters are easy to setup, but if you happen to do that in Ireland, you are not only subject to (favorable) Irish tax-laws, but also the risk of the EU overruling them.

        1. Nifty

          Re: Of course, Ireland has already protested

          Can't Apple just let it's mailbox companies go bust facing the tax bill then?

          If double-glazing companies can do it (and even reappear under a new name but same management soon after) then surely...

          1. Named coward

            Re: Of course, Ireland has already protested

            Considering one of them holds their IP...that would be fun

      6. Fazal Majid

        Re: Of course, Ireland has already protested

        The companies in question are Irish subsidiaries of Apple. Apple could reduce its European tax burden by repatriating the money to the US, but then they would have to pay US taxes, which are higher.

        Apple and Ireland will appeal, and they will lose eventually. I doubt Apple will move: Ireland will be the only English-speaking country in the EU, and its normal corporate tax rate (not the sweetheart deal) is lower than most.

        The same ruling is also applicable to Google and other tech companies whose too-clever-by-half tax avoidance strategies have been laid bare, even though the EC has not even touched the main tax dodge of using arbitrary intra-company payments for "intellectual property" to shift profits to tax havens.

      7. Doctor Syntax Silver badge

        Re: Of course, Ireland has already protested

        "Governments everywhere have to start recognizing that in a global economy they all have to co-operate and agree to a uniform tax structure"

        Some governments - e,g, Ireland - realise that at the level of multinationals there's a free market in tax rates. Individual governments can decide whether they're better off being poor competitors in that market in order to clean up taxing purely domestic businesses so it's not going to be a race to the bottom, more a matter of strategic choices.

        If the US wants to continue the high tax route it can scarcely complain about the obvious consequences with multinationals. Nobody's stopping them from lowering their tax rate if they wand to.

        Countries such as Ireland, however, are better off with a low tax strategy. Would it be right for the US or anyone else to force them into a tax regime they don't want to apply?

      8. Chika

        Re: Of course, Ireland has already protested

        So too has America - the EU doesn't have the right to tax American companies - that right is reserved by the US ... and no doubt, at some point in the future, they will get around the thinking about doing something about it - or not.

        Quite right if the company is doing business in America. The problem here is that the company is doing business in Ireland and are not only using this to dodge Irish taxes by agreement with the Irish government but avoiding taxation elsewhere in Europe by channelling its booty back to Ireland at every opportunity.

        If it wants to do business in Europe without paying taxes to the European base country they are working from, then close that company down and let them do their business directly from America instead, where corporates dodging taxes is a pretty common affair.

    2. kmac499

      Re: Of course, Ireland has already protested

      Oh Happy Day ... to be a lawyer in Ireland that is.

      Considering how hard Apple corp litigates to protect rounded corners, they are going to go all in when it comes to real money.

      What I don't understand is American citizens are liable for US income tax on any gains made outside the US. ( as per the IRS claiming capital gains on Boris Johnsons house sale.) But companies can offshore their profits until they are repatriated to the USA. Which suggests that overseas companies with US parents are truly 'foreign' and not under US law, so why the feigned outrage at the EU becoming supra-national within it's own borders??

      After all it's not like the USA has ever tried to impose any supra-national authority around the world..

      1. EddieD

        Re: Of course, Ireland has already protested

        Apple don't have to do a thing, for the time being, it's the Irish government who are spending the money.

        Only after the Irish government has either lost, given in, or run out of money to pursue the appeal against the decision and actually charged Apple the 13bn will Apple then spend money to appeal against the Irish government.

        This one could run and run.

        Of course, there's one other thing - if Apple do get charged 13bn in Ireland, they'll declare it as a loss to offset taxes in the US, so they won't lose the entire amount, and the US won't like that, as their tax take (40% of 13bn is 5.2bn) would be reduced, fairly appreciably, so they'll want to wade into the action. Fun days all round. We thought it was a protracted affair when one company sued another, add in nation states and probably our grandchildren will be watching the outcome of this.

    3. This post has been deleted by its author

    4. JetSetJim Silver badge
      Trollface

      Re: Of course, Ireland has already protested

      > And what LR units do we have for that?

      It's approximately a "Republic of Ireland annual healthcare budget"?

      https://en.wikipedia.org/wiki/Healthcare_in_the_Republic_of_Ireland#Health_Service_Executive

    5. Doctor Syntax Silver badge

      Re: Of course, Ireland has already protested

      "So this'll be a case for the courts."

      Right now it's more likely to be a case for the Irish tax commissioners.

  6. Anonymous Coward
    Anonymous Coward

    What I don't get...

    Is why Apple are expected to cough up. Surely they were told by the government of a sovereign state what tax was liable, so isn't it the Irish Government that are liable - i.e. can't they by sued for the liability?

    1. Version 1.0 Silver badge

      Re: What I don't get...

      If you read the full story you see that Apple told the Irish government what sort of tax they would be willing to pay and agreed to move a bunch of employees to Cork if the government went along with it.

      1. m0rt Silver badge

        Re: What I don't get...

        So the free market works, when the free market is actuall free.

        However, where does the free market actually exist in reality? Seems far too many larger companies do little sweetheart deals.

        1. Anonymous Coward
          Anonymous Coward

          Re: What I don't get...

          The free market is fundamentally broken. It was the primary cause of the Brexit vote; freedom of movement is a nice idea but in practice it doesn't get used how it was intended and despite what the Brexiteers think, the big losers are those countries, towns and villages who suffered the exodus of skills.

          The same goes for this. The rules should have been more tightly set up for this kind of thing to not happen in the first place. The sale of products of services within a country should be taxed in that country. All it's served to do is make rich people richer, at the expense of everyone else. Naturally, everyone else is mightily pissed off. Unfortunately there wasn't an option for "fix this bloody mess" on the ballot paper.

          1. Anonymous Coward
            Anonymous Coward

            Re: Unfortunately there wasn't an option for "fix this bloody mess" on the ballot paper.

            Even less fortunately, the brexiters managed to convince the public that a vote to leave was a vote to "fix this bloody mess"....

          2. It wasnt me

            Re: What I don't get...

            "The sale of products of services within a country should be taxed in that country."

            That's what I don't understand. Please, please could someone explain it to me? The only explanation I can get is that it needs to be done globally rather than unilaterally. I genuinely don't understand this.

            Starbucks effectively pay no tax. I am told that if you raise their tax bill to 40% or 25% of takings they'll just bugger off somewhere else.

            So what. Let them. People still need coffee. Someone else will fill the gap. Ditto Apple. If they don't want to pay tax on their phones don't let them sell them here. Tell them the tax rate as of tomorrow morning is 30%. They will either (A) completely leave the UK and surrender the market to someone who is prepared to pay tax or (B) pay the tax. People in the in UK will still get shiny phones. The UK will get their tax. I admit this is more complicated with services but apple make their money on hardware. I don't care for the argument that the money from a phone goes to patent licensing or snake oil fees. Tough.

            Seriously, what have I missed? Pay tax in the UK or piss of and surrender your market share to someone who is prepared to pay tax.

            Ditto Amazon. You sell me something physical in the UK then pay tax on it here. Its utter crap to say that Amazon will move their staff (jobs) out of the UK. All they'll have to do is massively increase postage costs and effectively surrender the market to someone who will operate (and pay tax) in the UK. Post Brexit you can then slap an import duty on anything from Amazon and really ensure that the market is surrendered to companies who are prepared to play by the rules.

            Seriously, whats so difficult?

            1. The Mole

              Re: What I don't get...

              They key thing to remember is that it is profits which are taxed. If a company has a widget which sells for £1000 but costs £999 to make then they would be charged the same amount of tax as a company which sells a widget for £10 which costs £9 to make. This is probably the right way to do it, why should we penalise companies who need a lot of costly materials to make their products.

              The difficult part is determining what the cost of making the widget is, it doesn't just include the time and materials (£3), but other things such as the design and prototyping costs (£3), paying the purchasing department (£1), the marketing effort (£1), the brand development (£1) etc.

              Some of this work is done by employees in other countries (working for other subsidiaries), obviously you can't just ignore the cost of the work done by the purchasing department in Switzerland, so "transfer pricing" is used for the UK subsidiary to pay the Swiss subsidiary a 'fare' price for the work they do. If the fair price is £2 not £1 then suddenly no profit is made in the UK and tax is no longer due.

              Companies like arranging it so that low tax countries happen to receive a higher 'fare' price than high tax countries, through basing hard to price intangible items such as the brand name 'Starbucks' in those countries. The name obviously has value, and costs associated with developing and maintaining that brand, so some payment is fair, but how much? This is what most of the tax fights are over - what is the fair amount of tax to be paid.

              Apple/Ireland went a step further by saying there was a company headquarters and almost all the work done by that company was done by the headquarters (even though it had no staff or premises) and in fact wasn't even located in any country. The Irish government went along with that due to the fact jobs were being created and they'd at least be able to tax the wages, the EU has said this arrangement is clearly bogus and effectively state aid in order to bribe apple to make those jobs.

              All in all trying to make it work fairly with big multinational companies is hard - however you frame your tax laws will almost certainly have winners and losers.

              1. It wasnt me

                Re: What I don't get...

                No. I still don't get it. Time and materials £3. Fair enough. Purchasing £1. Fair enough. £950 licensing the company name from some shell company in a shitty tax haven that charges 0.005%. That's fine, let Ireland have their 50 cents. But lets say there's an extra cost of doing business in the UK. Its 30% of sales. That's brings up your product cost from £1000 to £1300. Its entirely your business decision as a company. Option 1. Surrender your market share to someone else. Option 2. Pay the tax. Re-arrange your cost model accordingly to remain competitive. As a UK taxpayer I don't really care which option works. The investment in jobs argument from Apple is a complete nonsense. 30% of their sales will be far better for the economy than the handful of head office staff that they may move elsewhere. The stores will stay, the sales jobs will stay, they don't manufacture here anyway.

                I really wish our government would have the balls to say that the tax rate is x% of sales, non-negotiable. If you don't like it piss off. There is no doubt whatsoever that Apple would stay, pay the tax and the world would carry on turning.

                The sickening thing is that all of this bloody money they owe the countries they fleece ends up in an account where they can't even spend it for fear of being taxed when repatriating it. Or perhaps repatriate is the wrong word as it implies bringing it home rather than stealing and exporting.

                1. Velv Silver badge

                  Re: What I don't get...

                  @ it wasnt me

                  "I really wish our government would have the balls to say that the tax rate is x% of sales, non-negotiable"

                  So what you're saying is "let's do away with corporation tax entirely and only charge a sales tax to the consumer. Because that's what a tax on sales is, a tax on the end purchaser only. You really hadn't thought through your statement, had you...

                  1. Peter2 Silver badge

                    Re: What I don't get...

                    What we should do is write a very loosely worded new law called the "taking the piss" act.

                    On conviction via jury trial for "taking the piss" a company shall be taxed by a percentage of the companies annual turnover decided by the judge instead of on (declared) profits.

                    /problem.

                    You'd only need to make one conviction, everybody else would frantically settle with HMRC to avoid punative tax rates. We'd then be able to pay down our national debt and or increase spending on services that have had to be cut because of rampant tax evasion.

                  2. chris 17

                    Re: What I don't get...

                    @valv

                    We already have that. It's called VAT, currently @20% added to the price of goods by the end retailer which they collect on behalf of HMRC and receive a percentage for their trouble.

                    regardless of company accounting schenanigans every sale attracts a level of local government tax levied at point of sale. This drama is all about tax on profits after costs like manufacturing etc, eu gov's also already earned a pretty penny on the sales of these items.

                2. Roland6 Silver badge

                  Re: What I don't get...

                  Fair enough. £950 licensing the company name from some shell company in a shitty tax haven that charges 0.005%.

                  My understanding was that the EU discovered that the 'head office' that Apple IRE was using to avoid paying Irish taxes, existed only in the accounts of Apple's IRE business...

                  Naturally, given the Irish accountants and revenue guys should have seen through this wheeze, the EU has given them a rap over the knuckles.

                3. Anonymous Coward
                  Anonymous Coward

                  Re: What I don't get...

                  >. Option 1. Surrender your market share to someone else. Option 2. Pay the tax.

                  Ask Venezuela how well that works. You tax too high and much like price fixing if there is no profit motive the next thing you know people are being murdered in the streets for toilet paper. That market share in Option 1 doesn't always get filled by someone else if option 2 is not done right.

            2. Named coward

              Re: What I don't get...

              The difficult part on taxing at point of sale is in determining how much to tax. Some items have very low margins per item, other have huge margins. That's why tax is done on profit, but profit is moved around through other companies etc..

            3. paulf Silver badge
              Holmes

              Re: What I don't get...

              @ It wasnt me "Seriously, whats so difficult?"

              Brown envelopes full of money/company directorships/Knighthoods (<coughs> BHS <coughs>) etc is what makes it so difficult to change these things. Otherwise your analysis is spot on.

            4. Richard Plinston Silver badge

              Re: What I don't get...

              > Seriously, what have I missed? Pay tax in the UK or ...

              Just about everything about how businesses and tax laws work.

              Tax is levied on profit. Profit is the difference between revenue and costs. If a company arranges things so that they make only a tiny profit then they pay an even tinier amount of tax.

              For example: They buy iPhones for $400 and sell then for $500 so there is a gross profit of $100. From this they subtract salaries, rents, and other expenses. If the 'other' involves paying a 'licence fee' to an Irish company of, say, $60 per phone, then the UK company makes only a tiny profit on which they pay the full amount of the tax that is due.

              Of course the Irish company is hugely profitable. They pay the tax as assessed in Ireland.

              1. Danny 14 Silver badge

                Re: What I don't get...

                Only in this case the highly profitable irish company was fictitious and was concocted by the irish tax man and apple with some bogus rates and figures. EU rules this is state aid thus all that profit needs to be taxed at the proper rate now.

          3. Anonymous Coward
            Anonymous Coward

            Re: What I don't get...

            Free movement of people was previously based on the availability of work. That was changed fairly recently (Lisbn, I think?) to allow speculative migration - moving from one country to another to look for work - as opposed to the previous free movement of labour - moving from one country to another after acquiring work. The latter was working just fine. The former created just about every problem that provoked brexit in the first place.

            Fortunately (assuming that the government gets its head around the issue) there is a solution. The UK can remain in the EEA and invoke article 112 of the EEA agreement (an article similar to which previously existed in EU treaties but was removed for some inexplicable reason in the Lisbon treaty), which would allow it to restrict free movement to those who have already found work, or prevent migration entirely if it so desired.

            This neatly sidesteps both leaver and remain waffling about the whole issue. The UK retains membership of the common market, gains better control over migration, avoids the political integration inherent to the EU project, and regains a seat at the UN organisations that decide most international regulation that the EU repackages as regulatory directives. On top of that it can start to untangle some of the less beneficial legislation the EU has handed down in the past.

          4. Doctor Syntax Silver badge

            Re: What I don't get...

            "The sale of products of services within a country should be taxed in that country."

            OK, assuming you're in the UK*. You buy something off an eBay seller in Ireland. In which country is the deal done?

            This, of course, oversimplifies the matter given that eBay is Luxembourg so that's another country thrown into the mix.

            *It doesn't matter if you're not. It applies to any pair of buyers and sellers in different countries.

            1. Anonymous Coward
              Anonymous Coward

              Re: What I don't get...

              Easy, Ireland. When the item is shipped to the UK, you either pay import tax if there is no agreement with that country or you dont. The person that sold the item would pay in Ireland on their profits as the sale occurred on the item within Ireland which was then shipped elsewhere.

              If you walk into a shop in England and buy something, the thing was bought there. You buy something over the internet, where ever the item is shipped from is where it was bought from and then any applicable import fees are paid when it arrives.

    2. Voyna i Mor Silver badge

      Re: What I don't get...

      This is State Aids (disclaimer - I am not an expert but I have a relative who is.) The Irish government gave Apple an illegal state aid. They have to get it back. It's exactly as if someone gave you a stolen car; if they get convicted, you still don't get to keep the car.

      The money Ireland didn't get from Apple would have affected their EU contributions. This could have meant that other countries would have paid less. So this case (and others like it that will doubtless follow) is actually relevant to British relations with the EU. If countries like Ireland hadn't been breaking the rules to try to attract foreign businesses, perhaps UK voters would have been less anti EU.

      1. P. Lee Silver badge

        Re: What I don't get...

        >This is State Aids

        And indeed, would a European firm have done better if they had the same tax arrangements as Apple? Or would another country have got the chance to be Apple's host if Ireland hadn't created this arrangement?

        Level playing fields etc.

  7. EddieD

    Apple have strong bladders..

    No need to spend a penny... They can sit back and watch as a country that they paid minimal taxes to spend their taxpayers money so that Apple don't have to pay back the taxes and can continue to pay minimal taxes.

    1. Anonymous Coward
      Anonymous Coward

      Re: Apple have strong bladders..

      This whole thing sets a precident for the other companies that were attracted to base their EU operations in Ireland.

      The list is huge but includes Microsoft, Google, Adobe and a host of others.

      Then there is the small matter of Amazon in that other EU tax haven, Luxembourg.

      The EU went after Eire & Apple because apple were the biggest fish in the net. Publicity and all that jazz.

      At least the money won't go directly to Brussels but to the Dublin Government.

      The USA will be bissed off because whaever Apple have to pay to Dublin can be used as a tax writedown in the US. It also thwarts their (alledged) plans to make every US Citizen and Company pay full US taxes on every cent of income they earn anywhere in the world.

      1. GrapeBunch Bronze badge

        Re: Apple have strong bladders..

        "At least the money won't go directly to Brussels but to the Dublin Government."

        I imagine that within days, the bills will be going out from Brussels to Dublin, reassessing whatever bailouts and subsidies Ireland has received in recent years, an amount that might exceed 13 bn, especially if penalties and interest accrue. And some or maybe even all of that will be going to other Euro nations.

        I like the analogy of the stolen car, though I don't know how accurate it is. The Irish gov't will not "go to jail" for misappropriating money from the other EU nations, but they may have to pay it back, with penalties and interest. I also like the analogy of seizing the assets of the tax payer; wait and they could disappear as easily as they were created. The 13 bn could end up as an uncollectable bill, on more than account.

        As to the USA's role, remember this one: "The business of America is business." They may have said other things too, but beside that first one, everything else is crocodile tears.

        1. Danny 14 Silver badge

          Re: Apple have strong bladders..

          It depends if they have fake head offices. The starbucks method of expensive logos tax sandwich might have used a proper head office thus not a contrived fictitious paper exercise.

    2. Anonymous Coward
      Anonymous Coward

      Re: Apple have strong bladders..

      Honestly, I don't think that's going to happen. The very existence of the EU is at threat and the single market is right up there as the biggest cause of the problems. The current situation must end, and the only way to do that is to force companies to pay the tax they would have owed had they been any other company subject to the tax rules of the country in question.

      The additional benefit is public opinion is in favour of this happening. People are fed of the megacorps taking their money.

      1. Lars Silver badge
        Happy

        Re: Apple have strong bladders..

        "The additional benefit is public opinion is in favour of this happening. People are fed of the megacorps taking their money.".

        I agree on that, in addition this is not a USA versus EU war. There are strong forces on both sides of the pond who agree on these questions. Also it's not about a multinational company like Apple paying taxes either in the EU or the USA. They should pay in the EU for the profit they make in the EU and in the US for the profit they made in the world as a US company, in the US.

      2. Doctor Syntax Silver badge

        Re: Apple have strong bladders..

        "The very existence of the EU is at threat and the single market is right up there as the biggest cause of the problems."

        The single market was what it was all about originally. It's all the "ever closer integration" nonsense that's the cause of the problems. None of which is relevant to this case. The issue here is that Ireland decided to let Apple play silly buggers with paper companies. Apple would still have got a good deal at Ireland's standard tax rate although they'd probably have found a different tax haven for all the rest-of-the-world business that's been put through Ireland. In general I don't think the rest of the EU are terribly happy with the standard Irish rate but short of the EU imposing yet another EU-wide diktat they have to lump it.

  8. Slx

    Well, considering that Irish voters were promised time and time again that the EU did not have tax competency and it has now acquired it by function creep, I can see this resulting in no other EU referendum in Ireland ever passing again.

    BTW: We may need to have a referendum on approving the Brexit deal if it in any way impacts our constitution, so there could be a massive political sticking point ahead.

    What this will come down to in Ireland is jobs. If there are job losses in Apple or other MNCs that impact the economic recovery here, there will be a major political problem to deal with.

    1. Tom 7 Silver badge

      RE: tax competency

      Unless the Irish government pissed the 13 Billion up the wall then I'd imagine the Irish citizens are going to be quite please with the boost it gives to their economy - that's 2000euros for each person and is not to be sniffed at - probably far more than they got from Apples presence in the economy.

      1. Slx

        Re: RE: tax competency

        The issue remains to be seen if this will cause job losses though.

        1. Smooth Newt Silver badge
          Stop

          Re: RE: tax competency

          The issue remains to be seen if this will cause job losses though.

          Why should Apple be subsidised by taxpayers - don't they make enough money already? I am sure they can still make a hefty profit in Europe selling their overpriced tat even when forced to pay the same taxes as everyone else.

          People won't stop buying Apple kit even if the price goes up by a few percent.

          1. EveryTime Silver badge

            Re: RE: tax competency

            People won't stop buying Apple kit even if the price goes up by a few percent.

            Why would prices go up?

            Apple sets the price based on demand. Costs have nothing to do with it, unless the cost is higher than the price. Which certainly isn't the case for Apple products.

            Do you think that Apple offered a lower price in Europe because of their tax dodge? The higher profit might have encouraged them to introduce products earlier and prioritize deliveries to the region, but they still charge what the market will bear.

        2. Anonymous Coward
          Anonymous Coward

          Re: RE: tax competency

          "The issue remains to be seen if this will cause job losses though."

          Of course it will cause job losses, if companies don't pay tax, the Govt can't pay for roads to be laid and repaired so people can't get to work, hospitals to be built and staffed so people are fit to work...

      2. James Hughes 1

        Re: RE: tax competency

        This is the bit I find odd. Ireland are complaining about this, yet the money they have made/saved from Apple being in Ireland is dwarfed by this 3B. Surely they should be more interested in the larger figure, or are there too many entrenched people making money somewhere in this deal to actually give a shit about the country's finances?

        Oh, think I may have answered my question.

    2. Voyna i Mor Silver badge

      "Well, considering that Irish voters were promised time and time again that the EU did not have tax competency and it has now acquired it by function creep"

      The point surely is that Ireland were told what to do by Apple if they wanted headquarters there. All taxation is basically political; intelligent voters choose the MP whose party is likely to make them pay the least tax and allow stupid voters to get shafted. As soon as Ireland wanted access to a club which agrees certain taxes between its countries - a customs union - the Irish government has limits on the games it can play with tax as the other countries will have only so much tolerance for being exploited. It isn't function creep; it's inevitable.

    3. Charlie Clark Silver badge

      Well, considering that Irish voters were promised time and time again that the EU did not have tax competency

      This isn't about tax: Ireland is still (nearly) completely sovereign in the taxes it raises and the rates it sets. This is about a subsidy given to Apple in the form of a tax break. If the same tax break was offered to all companies in Ireland there would be no case to answer.

    4. Anonymous Coward
      Anonymous Coward

      Get over it or get with it

      This is not about taxation competency. It's about the law. All the EU is saying is that the Republic needs to apply its own laws.

      Seems fair to me.

  9. EveryTime Silver badge

    It's about time... over a quarter of a century late.

    The only aspect of this whole scheme that is about a free market is the market in global tax rates. For unfathomable reasons multinational corporations are allowed to shop for the lowest tax rates. And if they are big enough, they can negotiate down from there.

    Ireland took their special status as an economic investment zone, intended to encourage investment in real-life production jobs, and twisted it upside-down so that it was all about accounting fictions.

    It is clear that this will be a huge international incident. It can be pitched as "grab money from big US companies", But taxpayers (actual taxpayers) everywhere should be cheering.

  10. John Crisp

    Screw them

    Sorry.... where do I sign up for such nice corporate tax rates ? My company (and me and my employees cos they earned it as well) would really appreciate it thank you.

    Instead a few more lawyers will be upgrading their islands after the blood dries.

    I know the arguments about where you pay taxes is irrelevant (I miss my weekly lesson in economics from Mr Worstall)

    But it misses the point of what is construed as 'fair'. I don't mind paying tax, as long as it is on a relatively equal footing.

    What pisses me off is some can buy their way to better rates than others, and get much richer in the process.

    So screw Apple, MS$, Feckbook, Goggle et al. Play fair and stop screwing us.

    1. IT Poser

      Worstall

      Tim is still writing and is currently eating crow on his blog. He expect a settlement in the 100s of million range at most.

      He frequently has columns on Forbes as well. Unfortunately I have not found a way to load the site without allowing the 534623 scripts to run.

  11. Anonymous Coward
    Anonymous Coward

    The multi-nationals will be in big trouble once the EU becomes Political Union and all sovereignty is in Brussels. One tax to rule them all...

  12. Anonymous Coward
    Anonymous Coward

    My special word for today is "Posturing"

    Are they really going to get any money from Apple? If so, how? They are an American company and that money isn't even in America.

    Is this not just to placate the tax payers?

    1. John Brown (no body) Silver badge

      No. As per other posts further up, this is about the EU telling the Irish Govt. to properly impose it's own tax laws on two Irish companies who both have "Apple" in their names and who happen to be subsidiaries of the US Apple Inc.

  13. Anonymous Coward
    Anonymous Coward

    I wonder how much Dell is liable for

    They've had a sweetheart deal going back to the early 90's, well after the EU and Ireland had "done the dance"!!

    Even more tax probably as they <reportedly> use their Ireland facility to pre-build kit to ship to Japan and other countries!

    1. Slx

      Re: I wonder how much Dell is liable for

      Dell pulled a load of facility out of Ireland in 2009 in Limerick causing about 1,200 job losses and something like 9,500 indirect job losses to suppliers and service companies.

      They moved to Poland and that plant was then sold to Foxconn.

      1. Danny 14 Silver badge

        Re: I wonder how much Dell is liable for

        The call centres moved to india too. Lots of the old slough calls were routed to india and the motherwell site was almost mothballed.

  14. Stevie Silver badge

    Bah!

    Wonder if Ireland will have to sign an NDA like Macbook owners did in order to get replacements needed due to crappy build back in the oughties

  15. Anonymous Coward
    Mushroom

    Tax Harmonisation

    Doesn't the EU want to implement a tax harmonisation policy anyway?

    Wont be long before there is a maximum and minimum tax rate each state is allow to set, and Ireland's tax advantage will disappear over night.

    1. Lars Silver badge
      Joke

      Re: Tax Harmonisation

      "Wont be long before there is a maximum and minimum tax rate each state is allow to set".

      I would hope so too, then again the EU countries could have done it all by themselves long ago. The EU does not have that power unless it's agreed upon. Incidentally the USA doesn't have full power over the states either in many similar questions.

      PS. "a maximum and minimum tax" is like from the pen of a politician, 100-0%.

  16. a pressbutton

    Not surprised

    a) the US is not happy

    The us has a long history of arranging deals with small countries that benefit multinationals (us corporates) at the expense of local companies in that area (the EU).

    This looks like such a deal. As such, tough, but the amount of retrospection does make me pause.

    The idea is that $1 of tax not paid in the EU is 40c of tax that will eventually be paid in the us.

    So that looks like ~$5bn that the us govt will not get.

    b) it happened

    Why should someone in the EU subsidise a us multinational to the tune of 13bn

    c) the basis of tax will be changing

    Govts like sales taxes because they are really hard to dodge

    Corporates are getting v.v. good at dodging taxes

    One answer is amazon turns over ~4.3bn and paid ~10m tax. with a lot of money routed via holland / luxembourg / ireland back to the us where no tax is paid because they choose to not make a profit.

    The UK's pov should be that amazon is taking advantage of the fact this is a rich developed country with a lot of nice infrastructure they sell into and if they consistently made a loss or were not selling would not bother, so it is time to pay towards that infrastructure and those middle class people who buy $stuff.

    1. John Brown (no body) Silver badge

      Re: Not surprised

      "The us has a long history of arranging deals with small countries that benefit multinationals (us corporates) at the expense of local companies in that area (the EU)."

      Yes this is a big part of what TTIP is all about. Fortunately for us, so far the EU hasn't seen eye to eye with the USA on one single point of the of the proposal yet. If the USA wants to make any progress, they really ought to keep schtum on this internal EU matter.

  17. Anonymous Coward
    Anonymous Coward

    leprechaun's don't pay tax...

    Apple will pay all it's overdue and unpaid tax to the leprechaun police in magic money.

    The hipsters will keep buying CRAPple products.

  18. gerryg

    that I should ever say anything in support of Apple...

    They either broke the law or they didn't. I find it difficult to believe that they did anything other than get advice on how to sail as close to the wind as possible, as all corporations do.

    Many people dislike international tax policies in the same way that many people are always keen for rich people, defined as anyone that earns more than they do, to pay more tax.

    Is this about the EU flexing its muscles on weaker EU states or is there a genuine issue? All answers would seem to have to start with the word "Luxembourg"

    Apple's view

    Other views include Guido Fawkes Irexit

    1. Named coward

      Re: that I should ever say anything in support of Apple...

      "They either broke the law or they didn't. "..according to the EC commission Ireland broke the law (state aid) and have to recover the owed money from apple. The case wasn't about the tax policies.

      1. Fazal Majid

        Re: that I should ever say anything in support of Apple...

        Actually it's Ireland that broke the law by granting state aid, and the remedy is for Apple Ireland to disgorge the said aid plus interest. This is not a fine or penalty. All in all, Apple got off lightly (well, when Ireland exhausts appeals, that is).

        1. Danny 14 Silver badge

          Re: that I should ever say anything in support of Apple...

          If they appeal and win this is now out in the open. You can bet other large multinationals such as MS google etc will be going for another chat.

  19. Grubby

    Reform is needed

    Your books should say how much revenue you made by country and costs incurred by country. And then tax should be applied to the profits, simple as that. No dodgy rerouting of money etc. In the case of Apple they would end up paying little or no tax in China as the assembly costs are all accumulated there, but they would pay a shed load in the UK and Europe where the products are mainly sold. China would benefit from employment and so make up for the lack of tax income, UK would benefit from the tax. Swings & roundabouts so they say. Don't want to pay too much tax, build it there.

    You could argue that the company, in this case apple, would not want to sell their product in the UK. So OK, don't sell your product in the UK. But if you combine tax changes with patent and copyright protection law changes to say that the protection is only relevant if the company holding it intends to use it they'd soon change their mind. Spend millions developing a product you have no intention to sell in the UK, then your patents mean nothing in the UK. I'm sure there'd be a few firms eager to build the UK i-Whatever in Manchester to sell to all the London folk.

    This is just one way that could improve things, it's not going to be the only way or even the best way, but building on the 30k word current process is the wrong way forward. Throw it in the bin and start a fresh.

    Also, no way Apple will ever pay anywhere near that 13bn...

  20. Howard Hanek
    Coat

    A New Phase for the EU

    Having committed political suicide the EU is now committing economic suicide because, you know, that's who they are.

    1. ecofeco Silver badge

      Re: A New Phase for the EU

      Collecting money owed is suicide? Spoken like a true thief.

      1. Howard Hanek
        FAIL

        Re: A New Phase for the EU

        Spoken like a true socialist. I state the obvious consequences and that earns me an epithet of 'thief'? In your infinite wisdom and all knowing condition of personal perfection your ascension to a higher plane of existence must be imminent.

  21. ecofeco Silver badge

    About damn time

    Well it's about damn time. If the folks in Europe are not happy about a $13 billion tax dodge, you can imagine how Americans feel about it because guess who gets to make up all that lost revenue that Apple and the thousands, THOUSANDS of other companies are are not paying using the same dodge?

    Yeah, the same rubes who bailed out Wall St.... Joe Six Pack.

  22. Marketing Hack Silver badge
    Holmes

    Right about now...

    There are lots of tax shelter republics who are calling Apple's HQ in Cupertino to ask if that overseas HQ might be moving anytime soon, and would Apple like a promotional kit.

    1. Robert Sneddon

      Re: Right about now...

      Problem is, those tax shelter republics aren't in the EU so any profits they make selling Shiny!s in the EU can't be shuffled through a third-floor rented office in TaxShelterStan to appear on Apple's books for their quarterly reporting without paying the going rate of corporation tax. Bit of an embuggerance, that.

  23. J J Carter Silver badge
    Happy

    FAO Tim Cook

    Come over to Blighty as we'll soon be free of these meddling cheese-eaters and surrender-monkeys!

    1. Lars Silver badge

      Re: FAO Tim Cook

      Too late Carter. You must have slept then but he phoned Boris right after the referendum, it was on the telly. Boris was very exited and hasted away showing only his arse to us viewers.

  24. Slx

    At the end of the day, all of these companies basically play places that are desperate for jobs and investment off each other and extract maximum subsidies.

    I remember seeing a documentary about Amazon in the UK and their Welsh warehouse had received subsidies to setup in terms of laying out a red carpet of facilities and infrastructure to support it. The same company was basically wiping out large sections of the retail economy in the UK, none of which was receiving supports.

    You've car plants in cities that desperately needed investment that were incentivised by tax breaks, free facilities, you name it.... red carpet rolled out. These are super wealthy companies in many cases that do not need state aid.

    Budget airlines approach small cities' airports and basically get those cities and regions to help market their products.

    Add in all the European "national champions" who were state aided and subsides for no reason other than national pride was being injured or there were threats to loss of employment.

    Then throw in the banking industry which was basically state aided to the tune of hundreds of billions, if not trillions when you add it all up. The banks just pretty much put a gun to the head of every state with a threat of financial armageddon if they weren't bailed out and they were 'too big to fail' and so on.

    The list is endless and it happens all over the world.

    The same business lobbyists tend to bemoan social welfare and public expenditure yet they're all in receipt of huge handouts, often to the determent of other businesses that play entirely by the visible rules and don't have the lobbying power or scale to come up with these complicated structures.

    As states and regions and cities, we're being played. It's as simple as that.

    One could even argue the City of London is being played as banks mould it to suit their needs, not its citizens'. New York is being played, the US government is being played.

    All of these companies have us by the short and curlies and states simply aren't as powerful as they used to be. The balance has tipped towards corporates and it is getting worse and worse as time goes on and more power is consolidated in richer, and richer companies.

    Ireland's not the bad guy here, it's a country that had a dire need for investment to create jobs. So, did "whatever it takes" to get those and that clearly included ensuring that this company paid ludicrously low tax.

    We're all competing to try and lour investors and and are being rewarded with the right to work there and earn money, which generates tax and economic activity. The profits however are simply not being taxed.

    The effective tax rates across Europe will tell you a completely different story to the headline corporate tax rates. Everyone's talking out of both sides of their mouths when it comes to this topic. Even high tax countries like France have effective rates of corporation tax that are really surprisingly low.

    1. Rocketist
      Meh

      Re:at the end of the day...

      You have a point there. As is so often the case, there's legal, moral, political, and business aspects to this case. The legal ones may just be clear, and if they are, the authorities *must* act on them. The moral and political sides are far murkier, and the business... We'll see.

      1. Slx

        Re: Re:at the end of the day...

        Still remains to be seen if the legal ones are clear.

        I've a feeling this one will drag for months, if not years.

  25. Slx

    All I know is that I'd better pack the bags!

    Well, it looks like I made a colossal mistake settling down in Ireland again after the recession.

    If those MNCs pull out, that's 200,000+ jobs gone and absolute economic ruin.

    Couple it with likely trade barriers due to Brexit, falling £ Sterling values and Irish SME's being massively exposed to the UK market, you could be looking at Ireland going back to being broke in the medium term.

    I suppose I'd better have my exit strategy planned, just in case, as this looks like a potential mess!

  26. chris 17

    We already have sales tax!!

    So many fares calling for a tax on sales. We already have one, it's called VAT and is applied to most non essential items at 20%.

    Every new piece of hardware attracts VAT that the retailer collects from the consumer and pays to tax authority minus a percentage for the trouble of collecting it.

    A £1200 laptop is actually £1000 + £200 VAT. Apple probably wholesale the laptop to pc world at £800, allegedly making ~30% so costs them ~£600. that £200 between wholesale and resale has to account for marketing, staff, stores, etc leaving a little for profit to of world.

    The tax authority is by far the biggest earner of the lot, earning a huge 20% after everyone else has whacked in their costs and profit margin on the actual wholesale cost plus earning a percentage of each member of the chains profits, for essentially permitting the product to be sold in their area.

    We consumers end up paying almost double the price the manufacturer sells the product into the channel for, especially when you consider we pay for goods and vat out of already taxed income, I.e you have to earn more than £1200 in order to take home £1200.

    I'm not seeking to justify tax avoidance, but tax isn't simple or clear cut, lots of compounding and the tax man always takes the most.

  27. Unicornpiss Silver badge
    Meh

    It would be nice to see that money in the US..

    Or in Europe if this is where the money was actually earned on EU sales. But I hope Apple at least ends up paying every penny of it and it benefits *someone* besides the already obscenely rich.

  28. JeffyPoooh Silver badge
    Pint

    Apple Ireland "holds the rights to all of Apple's I.P."

    Solution is trivial. Can be implemented tonight.

    Apple 'Wherever' exports their profits..., I mean "submits a royalty payment", to Apple Ireland for use of the IP.

    Apple 'Wherever' are importing 'Rights'. The nation of 'Wherever' can slap an import duty on imported 'Rights'. Payable at time of import, or triple if discovered later when the books are audited.

    Such Import Duties can be slapped on immediately, starting tonight. Governments do exactly that during Trade Wars; instant duties and import taxes. Overnight.

    This Tax Avoidance scam is a solved problem. See above. Done.

  29. mrjohn

    I think compulsive tax evasion/avoidance should be treated as a mental health issue.

    Apple squeezes its suppliers and squirms at the thought of paying tax, if a corporation is a human they are the whiny teenager.

  30. Frumious Bandersnatch Silver badge

    Euro paean to Irish tax arrangements

    Just looking at the image at the top of the article. Irony much?

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