Apple pays ireland taxes based on the laws on the books. Nothing wrong there. EU determines Ireland passed a tax law that is against the rule. Okay then, force Ireland to change their tax law. return to the beginning - Apple pays ireland taxes based on the laws on the books. This would all seem reasonable.
The only part that seems off to me is if EU says to apple that even though they paid per law, they are changing the law retroactively and now Apple owes back taxes and fines. That would be wrong IMO.
No, that's not how it works nor is that actually what might happen.
The European Commission (EC) has no authority to create legislation; they only have the power to propose legislation which must be approved by the Council of the European Union and the European Parliament. What is happening here is the EC is investigating whether or not the Republic of Ireland, as a member of the EU (and therefore subject to European law), violated rules governing the exercise of state aid. Offering companies exclusive tax breaks under a special scheme can be illegal state aid depending on the circumstances. The rules are designed to prevent member states from distorting the market which can be harmful to the economy and to other companies. If the European Commission finds a member state in breach of state aid rules, EU law grants power to the European Commission to direct a member state in breach of state aid rules to recover the money it gave out (or the tax it waived). In the case of Apple, if the Republic of Ireland are found to be in breach of state aid rules, the EC can require the Irish government to recover the tax that Apple did not pay under the reduced tax rate that was illegal in the first place.
So hopefully you understand by now that no new laws are being created. If you have received state aid that was given to you unlawfully, then you have to pay it back. In the case of Apple, that would be the tax it should have paid. The laws governing state aid were in place well before the Republic of Ireland agreed with Apple that it can generate profits in the country at a reduced tax rate. So there is nothing "retrospective" that could not already have been known to both parties at the time the agreement was formed.
Maybe if the United States modernised its tax rules, perhaps we wouldn't be having this conversation. The reason many companies do not repatriate their cash back into the United States is because of the ridiculously high corporate tax rate. Would you accept up to a 35% cut to bring your income back home? No, you might opt to keep your money at a bank overseas. I'm not saying it's right what Apple are doing - they should pay more tax in the Republic of Ireland and bring a portion of their cash pile back to their home country, but comments from the U.S. Treasury pointing to the European Commission for attempting to address this problem and sending a message to other companies operating in the EU is not helpful. It can easily be misinterpreted as interfering in a matter of EU jurisdiction.
Last edited: