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Ireland is currently fighting in Apple's corner in an effort to try and get the European Union's to change its mind on this year's €13 billion tax ruling against Apple. We heard that Ireland had planned to appeal the ruling earlier this year but since then, the appeal has been submitted with Ireland arguing that the EU overstepped its authority.
The appeal was published today in a three-page summary paper, which tries to counter the EU's ruling by claiming that the European Commission's ruling “did not depart from ‘normal' taxation”, essentially meaning the EU disregarded Ireland's own tax code, which states that outside companies should not pay income tax on profit not generated in Ireland.
Image source: Sigalakos on Flickr
Ireland has also added that the EU is trying to “rewrite the Irish corporation tax rules”, which as Engadget points out, are the same rules that have led companies like Microsoft, Google, Facebook, LinkedIn, Amazon and more to set up European Head Quarters in Ireland.
Apple will need to fork out the money for this fine quite soon but it will be held until a final ruling from the European courts. Additional hearings will be held to give Apple and the Irish government a chance to present their appeals but this process could take a number of years so it could be a while before we hear the end of this.
KitGuru Says: We've known about Apple and Ireland's plans to appeal the EU's tax ruling for a while but it seems that the ball is finally rolling. Now we just have to wait and see whether or not the EU will change its mind.
Ireland’s tax code benefits certain large corporations. In other words, it creates an unequal playing field where small competitors cannot get the same benefits that the major companies get. The goal is simply to get high-paying jobs to Ireland (it does not generate a lot of taxes). Now I don’t object to low taxes, but in this case they undermine the market economy, making it harder on the competition.
The US has similar situaties where states are allowed to just give tax credits to some companies but not others (see what Trump did to keep a few hundred jobs in the US). Even cities compete with one another.
It’s a fucked up system, with a race to the bottom, where the end result is consistently that middle class and low income families have to pay more taxes. Basically, government is financed less by the people who can finance it and who profit the most from it (major industries such as oil/gas/agriculture get billions in subsidies every year), and more by the people who have a hard time already.
So the Irish government should tax Apple on money earned in, for example the US even though the US government already taxes them on that income? Because that will quite quickly make the only rational option be to pull out of the EU altogether.
I neither said not implied that, and it bears absolutely no relation to the decision made by the EU, so I don’t get where this question comes from. It’s a straw man, plain and simple.
The point is that companies should be treated equally under the law, meaning that no company should have access to tax benefits, subsidies, or any other kind of state support that is not available to its competitors or other companies in general.
Which is exactly what the EU concluded Apple did: “This selective tax treatment of Apple in Ireland is illegal under EU state aid rules, because it gives Apple a significant advantage over other businesses that are subject to the same national taxation rules.”
Now if the Irish government wants to offer the same regulation to all companies functioning in Ireland, that’s their prerogative. And Ireland would not, I believe, have to leave the EU to make that happen; they already have one of the lowest corporate tax rates in the EU. That’s their right as a sovereign government. The only thing that would happen is that there is a budget gap of about 4 billion euros.
But if Ireland wants to leave the EU over this, they may do so as well. Of course, any profits Apple makes in the EU can no longer be taxed in Ireland, so the tax system that benefits companies like Apple, Microsoft, and Google will be gone. That would also mean that headquarters for those companies would have to move to other EU countries. So I’m not sure that’s a solution for Ireland.
No because money earned in the US would go through apples us office not there European HQ
That is the problem though. The Irish government has said the ruling from the Eu *does* require them to tax money not earned in Ireland.
It is not a strawman. At worst it was misunderstanding you.
The article above states:
‘The appeal was published today in a three-page summary paper, which tries to counter the EU’s ruling by claiming that the European Commission’s ruling “did not depart from ‘normal’ taxation”, essentially meaning the EU disregarded Ireland’s own tax code, which states that outside companies should not pay income tax on profit not generated in Ireland.’
Clearly the Irish government is saying that Apple is *not* getting special treatment and are under their normal taxation laws, which include not taxing “profit not generated in Ireland”.
You replied to an article stating that in the second paragraph, so I thought your statement took it into account. That means that the only way Ireland could tax Apple more without raising the corporate tax rate for *everyone* and not just Apple is to tax them on “profit not generated in Ireland”. I thought you took that obvious implication of the article into account. Apparently not. Ergo, a misunderstanding not a strawman.
“That’s their right as a sovereign government.” That is exactly what the EU do *not* think. They constantly make rulings overriding the soveignty of their member nations. That is one of the driving forces behind Brexit. The EU is trying to become a United States of Europe but without being elected unlike the way the United States government and President is elected. Remember the unelected European Comission holds all the real power not the elected members of the European Parliament.
Yes money back they are routing through there European office US sales are unlikely to be routed through Ireland
The rule, as I understand it, is as follows. Since the EU is a single market, Apple is allowed to treat any income generated in any EU country as having been generated in Ireland. So that income will not be taxed in other countries (and certainly not the US income). Apple gets a nice deal on doing this, whereby they have to pay virtually no corporate tax.
What the EU wants is not that income generated in the Netherlands is first taxed in the Netherlands and then in Ireland; Apple should be allowed to tax income only in Ireland since it is a single market, but in a way that is no different from other companies.
The way I understand it, Ireland violated that latter part. It gave Apple tax privileges that are not available to other, typically smaller companies.
Differences in corporate taxes are a big problem for the EU, because it means that EU countries compete with each other; it’s a race to the bottom. It’s one of the many problems of a single market that crosses borders of nation states.