No, they were temporarily booked in a stateless corporation, and then eventually into the US. That was the whole point of the Double Irish setup.
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Apple Hits Back at EU Law in Court
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Temporary for 16~ years is quite impressive. The second issue was misapplied profits to the Irish branch that Ireland under taxed.
I have no idea what you're referring to with either of these statements. Are you trying to change the topic to avoid admitting you were wrong?
Claiming something is Temporary for almost two decades isn’t temporary. And apples deferral tax payments to the irs have zero relevance or impact on the tax issue that Ireland did by not levying appropriate amounts of taxes. The us having a global tax policy is not relevant to EU or Ireland.
Sigh. No. The tax situation that the EU had a problem with only lasted one decade, and Apple repatriated funds to the US over that decade.
But again, you're simply changing the topic. Again, the point of the Double Irish setup was that the profits were booked into a stateless corporation. Not in Ireland as you claimed.
Apple had the tax arrangement between 1991-2014, EU could only go back 10 years, they had an issue with the entire thing . The profits being repatriated is irrelevant to the case. It could have been permanent or temporary for a million years or a microsecond, eu would still rule it as illegal state aid.
The stateless head offices were central to the Double Irish structure. But those entities were still Irish-incorporated, and the profits were recorded through Apple’s Irish subsidiaries and Apple Sales International (ASI) and Apple Operations Europe (AOE).
The issue wasn’t that the profits were never in Ireland, but that Ireland accepted Apple’s allocation of almost all profits to these “head offices,” which had no employees, no physical presence, and no real economic activity. The profits attributed to those stateless entities were disproportionate to the work actually performed by the Irish branches, which should have been taxed in Ireland before being shifted offshore.
And the commissions issue was that the profit allocation lacked arm’s-length justification and did not reflect the economic reality that the Irish branches actually performed the functions, bore the risks, and used the assets that generated those profits, but wasn’t taxed.
Thus, those profits should have been attributed to the branches and taxed in Ireland.
Nope. (Still not the mysterious 16 years that you referred to.) In the early 2000s, Apple switched from a traditional two-corporation Double Irish model to two branches within the same corporation with the permission of the Irish government. This is the ruling that the EU decision found to be illegal state aid. The EU did not seek recovery from any corporation that continued to use the traditional model.
Assuming that your claims here are true, you're acknowledging my point. They were stateless under Irish law. That was the whole point of the arrangement. We can't know what Apple would have done if that wasn't true.
1: The case was concerned with the question of whether two tax rulings (from 1991 and 2007) obtained by Apple from the Irish tax authorities involve the receipt of advantages in the form of state aid from Ireland.
2: eu law limits the years that they could to 10 years from the initial request. Hence why the period was limited to 2004-2014, instead of 1991-2014
3: what Apple would have done is completely irrelevant because the economic activity was deemed to be taxed in the Permanent establishments in Ireland because that’s where the economic activity occurred, that includes the IP licensing revenue generated.
one of the core issues in the case is a question that is of critical importance to the taxation of branches (technically, “permanent establishments” or “PEs”) under international tax principles.
So the companies being managed by a non Irish entity doesn’t circumvent the territorial tax requirement of the permanent establishments in Ireland. And apples individual tax agreement.
4: had Ireland had this agreement publicly for other to do as general tax guidelines it would probably not been ruled as state aid.
Classic EU ridiculousness. "We acknowledge any company was allowed to do it, but because only one company thought to do it, it was illegal aid to that company. Had more companies done it, it wouldn't have been illegal aid."
But sure, it's a complete mystery why everyone, including EU ministers themselves, thinks the EU is a regulatory nightmare.
Its why it was under state aid, what Ireland did, not Apple.
And individual Favorable tax rates and tax agreements are not allowed.
The European Commission didn’t challenge Ireland’s general tax law or the “Double Irish” structure itself.
Instead, it challenged two specific tax rulings that Ireland gave Apple in 1991 and 2007.
According to the Commission:
- Endorsed a method for calculating Apple’s taxable profits in Ireland that had no factual or economic justification, and
- Allowed Apple to allocate most profits to a “head office” that existed only on paper, so Apple paid almost no tax on its EU sales.
Article 107(1)
“any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market.”
Tax loopholes and profit shifting should be severely prosecuted, just about everyone agrees on that.
But it was available to other companies! Just no one else asked. You said it yourself: "had Ireland had this agreement publicly for other to do as general tax guidelines it would probably not been ruled as state aid."
If I have a bunch of employees and one of them asks for a day off, and I grant it, and no one else asks, that doesn’t mean the day off wasn’t available to everyone else. It just means no one else asked for it.
I'm honestly shocked any businesses in the EU are able to be successful at all. If you guys ever figure out how to stop shooting yourselves in the foot the US might be in serious trouble!
It wasn’t available to anyone because the tax rulings went against Irish tax law as well as OECD standards.
So the issue wasn’t “the Double Irish” as a tax planning scheme it was the Irish tax authority’s individual rulings, which the Commission said effectively “custom-tailored” a method just for Apple. Had it not Ben individualized it wouldn’t be state aid.
Same if you have your employees and you have the legal obligation to pay them 30 vacation days a year, but you make a personal agreement to forsake it so you can work more or some other reaso, you would still be legally required to pay those 30 days irrespective of your agreement
Ahh. It's "irrelevant".
Ireland: "If you do business in Ireland, then we will allow you to create a stateless corporation to defer US taxes as allowed by US tax law."
More than two decades later...
EU: "Now that Apple's hugely popular, we're going to change the rules retroactively because we think it's unfair. So you have collect all those taxes that you promised they wouldn't have to pay. But, of course, all the other companies that use this strategy have 5 years to change it, and you don't have to collect back taxes from them because they did it slightly differently. Even though we still consider it illegal state aid. Of course, we acknowledge that Ireland was the one that we believe broke the rules, but obviously, Apple is the one that should be punished."
The revenue being deferred to the U.S. isn’t even relevant here, the EU’s case was about Ireland’s tax rulings, not about Apple’s American homework. In fact, EU only found out about the whole thing because of a U.S. Senate hearing. So if Apple got “targeted” it was by C-SPAN.
And The rules weren’t changed, and the EU didn’t suddenly wake up after 20 years and decide to go after Apple. State aid law has existed since before anyone at Apple was born.
And no EU didn’t close the Double Irish arrangement, Ireland did it under pressure from the OECD and G20, after the whole BEPS project started shining light on these tricks. So let’s retire the idea that Apple was some tragic victim of sudden Brussels vindictiveness. They got a sweetheart deal for two decades, and eventually someone noticed the sweetheart part. Apple wasn’t hunted as they just got caught with a tax structure even leprechauns couldn’t explain with a straight face.
The double Irish by the others wasn’t state aid. Because they did it not slightly differently but actually traded with other companies that did work and had employees… while Apple trained with itself to itself on paper with a branch with no personal or even chairs.
You keep saying that things that don't fit your argument aren't relevant. I think it's very relevant because that is where it was taxed and was always intended to be taxed. I'd argue that it's likely where much of it would have been taxed at the time had Ireland (or someone else) not allowed them to defer it in a stateless corporation.
It’s not relevant because it has zero impact on the taxes Ireland didn’t levy. If Apple had payed taxes in the us because they brought the revenue home every quarter, then Ireland would still be ordered to recover the wrongly provided state aid. Ireland is the one who broke the law not Apple.
The state aid violation happened the moment Ireland applied a special tax ruling that let Apple allocate almost all its European profits to a stateless “head office” with no real activity. It doesn’t matter what Apple did with the money afterwards whether it kept it offshore, sent it to the U.S., or burned it to power iPods.
Even if those profits were quickly taxed in the U.S. every quarter or sent to the Moon doesn’t undo the fact that Ireland undertaxed profits generated by economic activity in Cork. And it would still have been:
- Ireland granting a selective advantage under EU law, and
- Ireland’s duty to recover that advantage.
- Still required to reclaim 13 billion plus interest
Then what’s your point? I’m not ignoring things that don’t fit my argument, they legally have no relevance despite your moral qualms about it.
His point was that profit wouldn’t have been booked in Ireland without the arrangement!
The reason the profit was booked in Ireland only because of the arrangement. It isn’t because Ireland has some inherent right to Apple’s ex-US revenue.
If Apple didn’t have the subsidiary at all, that money would have been booked to Apple US and would have been taxed in the US; no one who understands international tax law disputes that. The only reason Ireland is “entitled” to that money is because Apple chose to use the arrangement to delay paying the US taxes. In a universe where Apple doesn’t care about delaying US taxes then then the profit is booked in the US.
That’s why I keep saying the EU effectively stole what would have been U.S. tax revenue. It wasn’t theirs to claim! The only reason those profits ever touched Ireland was because Apple used the arrangement to defer US taxes. It has nothing to do with the "US global tax structure" or "EU profits have to be taxed in the EU" (you realize Ireland got tax revenue on Apple's African and Middle East sales because of this, right?) or whatever other nonsense keeps getting repeated in this thread.
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So ironic, that a U.S. Senate hearing tipped the EU off about the illegal state aid. I did not know about this.
Sigh… the issue isn’t where Apple wanted the profits to end up, it’s where the profits were actually generated. Apple carried out substantial economic activity in Ireland through its permanent establishments there thousands of employees, logistics, and the administration of regional sales. That makes the profits taxable on a territorial basis, under both Irish and international tax principles fully within OECD terms. Apple’s middle eastern or African revenue isn’t ”claimed” by Ireland. What Ireland taxed is the portion of profit linked to the work done in Ireland to manage those regional operations.
This constant insistence that ”Ireland only got this money because Apple deferred American taxes” flips causality on its head. Apple didn’t accidentally have its profits appear in Ireland, they deliberately used Ireland as the operational and contractual hub for its non-U.S. sales
The irony is that Apple used the Irish structure to route profits from all over the world through Ireland which is precisely why Ireland had a duty to tax them properly in the first place. You can’t claim ”it wasn’t Ireland’s money” when the paperwork, the people, and the business functions were all sitting in Cork… So no, the EU didn’t ”steal american tax revenue.” The profits weren’t American income waiting to be claimed, they were profits generated within and through Irish operations that Ireland chose to almost completely exempt was the issue.
You’re free to read the OECd guidelines on page 123~ regarding the arms length rule as well as the case when Apple even argued the state aid was legal to justify the price transfer rules.
I don’t even know where to begin refuting everything that is wrong with this, so I’m not going to bother. I suspect if the head of the OECD could post in this thread and you’d tell him why he was wrong and you were right.
Not even your own tax authority believes that. the position taken by the Internal Revenue Service (‘IRS’) in the Glaxo case, ie, intangibles derive their value primarily in the country where marketing activities are carried out and not where research and development activity is performed. And in protracted sure you won’t say the U.S. should not be allowed to tc by EU company profits made in the U.S. considering all the RnD they do outside it…
I’m even going according to what the previous director Saint Amans of the Centre for Tax Policy and Administration at the OECD. It’s even described in their rules. The U.S. does not verbatum have a right to 100% to apples profits they made in other nations.