European Union Accuses Ireland of Giving Apple Illegal State Aid with Tax Deals

[Cybbe]

I personally do not see that Apple did wrong. They got a good deal and leveraged it. If the EU deems what Ireland offered to be illegal, I guess they can void the deal. However, doing so retroactively would be wrong. It should only be going forward. Apple can then decide what to do for tax shelters moving forward, but paying back taxes seems to penalize Apple for the "illegal deal" made by Ireland.

EU regulations exist in order to ensure a level marketplace. If Apple receives illegal state aid, it skews the competitive landscape. This is wrong for a multitude of reasons.

There is no retroactive law being applied here. If you receive illegal state aid, it may - under law which was applicable at the time - be recovered. In this case, it is limited to 10 years, or from 12 June 2003. Apple may have to pay this back:

The Commission wishes to remind Ireland that Article 108(3) of the Treaty on the Functioning of the European Union has suspensory effect, and would draw your attention to Article 14 of Council Regulation (EC) No 659/199935, which provides that all unlawful aid may be recovered from the recipient.​

http://ec.europa.eu/competition/state_aid/cases/253200/253200_1582634_87_2.pdf
​

I would recommend that you read the letter from the commision as well as the applicable regulations.

 

[Erasmus]

I don't blame Apple. I don't blame any company that legally evades tax. Sure, it makes them heartless bastards, but that's Capitalism. Instead, I blame governments around the world for not having the balls to try and simplify taxation, remove loopholes, and apply it fairly to everyone.

And by extension, I blame the weak-willed general populace, who allow themselves to be manipulated by said businesses and politicians into killing off any progress in this area via the power of their vote.

 

[Cybbe]

Not really, worse for Ireland


http://www.forbes.com/sites/timwors...use-the-company-of-anything/?partner=yahootix

That guy is a hack. If you read the actual letter from the commission, you'll see that they do exactly what he says they wouldn't do:

Based on the above, the Commission is of the opinion that the contested rulings do not comply with the arm’s length principle. Accordingly, the Commission is of the opinion that through those rulings the Irish authorities confer an advantage on Apple. That advantage is obtained every year and on-going, when the annual tax liability is agreed upon by the tax authorities in view of that ruling.​

Also, while it is true that no fine will be levied upon Apple (in this case), it may be subject to recovery of any illegal state aid received, with interest.

 

[samcraig]

I personally do not see that Apple did wrong. They got a good deal and leveraged it. If the EU deems what Ireland offered to be illegal, I guess they can void the deal. However, doing so retroactively would be wrong. It should only be going forward. Apple can then decide what to do for tax shelters moving forward, but paying back taxes seems to penalize Apple for the "illegal deal" made by Ireland.

Well I believe one of the findings was that Apple negotiated these rates using jobs as leverage. Which wouldn't exactly make them completely "innocent." Did Ireland have to take the deal? No. But it sounds a bit conspiratory to me on both ends.

 

[ArtOfWarfare]

Because EU law supersedes national laws.

Really? I figured EU laws were below local laws... it seems quite odd to me that nations would choose to join if it meant giving up some of their own sovereignty.

 

[scat999999]

As long as the law is followed, they've done nothing illegal, unethical or immoral. To qoute US District Court Judge Learned Hand...

“Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.” – LEARNED HAND

 

[whooleytoo]

To be fair though, they do apparently employ around 4000 people in Cork - which is around 3% of the population. That would be a fair chunk to lose if they decided to relocate. Add in other major multinationals in Ireland for the same reason and you'd have quite an unemployment bubble bursting.

When you look back to how knackered the Irish economy was after the banking crash, it would be wise to not rock the boat too hard, too quickly.

This in no way defends the morally dubious practice of tax avoidance. While some methods may be legal any company with an iota of ethical conscience should pay their fair share.

Apple's value is about three times the GDP of Ireland. I'm sure they can contribute a little more without upsetting too many shareholders.

Absolutely, they contribute massively to the Cork & Irish economy. But the other businesses in the city collectively employ many tens of thousands and contribute hugely too. The reason Apple (seems to) get favourable treatment is because it's easier for them to up and leave, than it is for someone who has a local shop, or runs a creche etc. It's not a fairness argument, it's about who's holding the cards.

(And I'd argue as long as countries fall over each other to cave to pressure from multinationals, the companies will continue to hold all the cards).

 

[silvetti]

EU laws are mostly guidelines and can be interpreted by each country differently. That's why the law is different in every European country...

 

[AppleP59]

Double Irish With A Dutch Sandwich.

 

[Cybbe]

EU laws are mostly guidelines and can be interpreted by each country differently. That's why the law is different in every European country...

No, they are not. Council regulations are immediately enforceable as law in all member states. In this case, the applicable law is found in Council regulations.

You might refer to EU Directives, which in theory give some leeway to national interpretation as long as they achieve a particular result. However, calling them "guidelines" is seriously misguided. In any case, it's not relevant for this case.

 

[samcraig]

As long as the law is followed, they've done nothing illegal, unethical or immoral. To qoute US District Court Judge Learned Hand...

I think the point of the investigation is to determine if laws were broken. So there's that.

 

[whooleytoo]

I wonder was this triggered by Cook's comments to the Senate in May this year where he claimed they had a deal with Ireland - the Taoiseach quickly refuted this, but the damage was done. It's one thing Apple secretly using tax evasion techniques, it's quite another if Ireland is complicit in it.

 

[AdeFowler]

I’m struggling to see what Ireland have done wrong. In essence, it appears that they’ve offered a tax break, in order to provide jobs for the populace. What's wrong with that? They control their own taxes and decide how much to collect.

Even the EU are in favour of tax breaks when it saves jobs:

The European Commission has approved tax breaks for the UK video game industry.

 

[Oletros]

Really? I figured EU laws were below local laws... it seems quite odd to me that nations would choose to join if it meant giving up some of their own sovereignty.

Perhaps they have more benefits by joining

 

[silvetti]

No, they are not. Council regulations are immediately enforceable as law in all member states. In this case, the applicable law is found in Council regulations.

You might refer to EU Directives, which in theory give some leeway to national interpretation as long as they achieve a particular result. However, calling them "guidelines" is seriously misguided. In any case, it's not relevant for this case.

Yeah...

I wonder what Luxembourg and Netherlands will say about that...

 

[Reason077]

The EU should fine Ireland a multiple of taxes lost, in the same way European companies are subject to such fines in the US. It is time for this to end.

I'm sick of the British, and the EU, blaming the Irish for all their problems. It borders on racism, and it's time for it to end.

 

[Oletros]

The key thing is this is not Apple fault this is Ireland. They wanted the business bad and the question is did they go to far.

You can't punish apple for going the cheapest legal route (for them that is)

Yes, they can ask Apple to return the aids as the EU has done in similar cases

 

[69Mustang]

I personally do not see that Apple did wrong. They got a good deal and leveraged it. If the EU deems what Ireland offered to be illegal, I guess they can void the deal. However, doing so retroactively would be wrong. It should only be going forward. Apple can then decide what to do for tax shelters moving forward, but paying back taxes seems to penalize Apple for the "illegal deal" made by Ireland and Apple.

Your explanation conveniently overlooks the glaring fact that Ireland didn't make an alleged illegal deal with Ireland. It takes two parties to make a deal. If it is deemed illegal then the profits made by tax manipulation are illegal. Rarely do offending parties get to keep the illegal gains. Do you think an exception should be made because it's Apple?

Bolded: fixed your quote since you seem to be implying Ireland acted alone.

 

[takao]

after the developments of the last few years everybody could have seen this coming.

That Ireland on the side crashed and needed a bail out from the rest of the EU while on the other side sold itself to big US corperations by keeping ridicilously low corp-taxes was just asking for trouble in the long term.

let's be blunt: if it weren't for the tax-loop holes ireland/luxembourg (& partly the netherlands) would never have gained all that business in the first place.


I still remember the interview with Dietrich Mateschitz (50% Red Bull Owner) where he said that paying tax in Austria was matter of fairness and responsibility. As a consequence Red Bull pay their taxes for their world wide profits completly in Austria without using any of those tax-avoidance constructions/tax havens.

 

[KALLT]

The key thing is this is not Apple fault this is Ireland. They wanted the business bad and the question is did they go to far.

You can't punish apple for going the cheapest legal route (for them that is)

Oh yes, they can. One of the possible penalties for illegal state aid is recovery. That’s why companies should always be careful when accepting public money or tax breaks.

 

[Reason077]

Really? I figured EU laws were below local laws... it seems quite odd to me that nations would choose to join if it meant giving up some of their own sovereignty.

EU laws don't supersede national laws, or vice-versa. EU laws (which don't actually exist - they're called 'directives') are implemented by each member nation by passing their own laws. So basically, "EU laws" and national laws are the same thing.

 

[Thunderhawks]

To be fair though, they do apparently employ around 4000 people in Cork - which is around 3% of the population. That would be a fair chunk to lose if they decided to relocate. Add in other major multinationals in Ireland for the same reason and you'd have quite an unemployment bubble bursting.

When you look back to how knackered the Irish economy was after the banking crash, it would be wise to not rock the boat too hard, too quickly.

This in no way defends the morally dubious practice of tax avoidance. While some methods may be legal any company with an iota of ethical conscience should pay their fair share.

Apple's value is about three times the GDP of Ireland. I'm sure they can contribute a little more without upsetting too many shareholders.

What Ireland has done was actually smart. Short of major economies to offer they attracted higher level of education personnel with their practices.

The EU will have a hard time to get anything done retroactively (Why didn't they step in sooner?) AND there will be lawsuits which will take a long time to get this sorted out.

We are probably talking about close to 6 digit unemployment they would be causing if all the corporations move their jobs.

 

[KALLT]

EU laws don't supersede national laws, or vice-versa. EU laws (which don't actually exist - they're called 'directives') are implemented by each member nation by passing their own laws. So basically, "EU laws" and national laws are the same thing.

Not entirely true. Directives need to be implemented into national law, but EU regulations or Commission decisions are directly applicable without implementation. However, even directives can have directe effect under certain circumstances, this has been the law for quite some time.

 

[Oletros]

What Ireland has done was actually smart. Short of major economies to offer they attracted higher level of education personnel with their practices.

The EU will have a hard time to get anything done retroactively (Why didn't they step in sooner?) AND there will be lawsuits which will take a long time to get this sorted out.

We are probably talking about close to 6 digit unemployment they would be causing if all the corporations move their jobs.

What lawsuits are you talking about?

If corporations move their jobs the ones to blame are the corporation and Ireland, no one else

And, by the way, nothing is done retroactively

 

[bandrews]

What Ireland has done was actually smart. Short of major economies to offer they attracted higher level of education personnel with their practices.

The EU will have a hard time to get anything done retroactively (Why didn't they step in sooner?) AND there will be lawsuits which will take a long time to get this sorted out.

We are probably talking about close to 6 digit unemployment they would be causing if all the corporations move their jobs.

Yeah, it wasn't long ago there were several documentaries on TV about how so many young people were leaving Ireland for Australia because of poor job prospects.

I guess nothing was done sooner because there wasn't a public/media outcry about it. Much like the nasty, sordid business with Jimmy Saville and Rolf Harris - now every "celeb" who looked at a girl's boobs the wrong way 20+ years ago is being hauled up in the courts whereas a couple of years ago it was apparently a non-issue.