back to article €13bn wings its way back to Apple after Euro court rules Irish tax deal wasn't 'state aid'

Apple has had a €13bn (£11.6bn) tax bill overturned after the EU's General Court ruled that the iGiant was not the recipient of unlawful state aid from the Republic of Ireland. This is the latest in the ongoing feud between Apple and the European Commission, which in 2016 declared Apple had been the recipient of competition- …

  1. macjules Silver badge
    Gimp

    Apple said the case was not about "how much tax we pay, but where we are required to pay it."

    Oh great. So from now on is it ok for us to buy Apple equipment from somewhere else in the world where it might be much cheaper?

    1. Lee D Silver badge

      Re: Apple said the case was not about "how much tax we pay, but where we are required to pay it."

      Did that.

      Was made to buy a ton of iPads for a workplace.

      Got them from some grey import from Singapore in the end. Damn sight cheaper, and I have an invoice from the usual IT supplier to say we paid for them in full - they're legit, and I wouldn't be liable for any taxation reinspection on them, so it's not my business where they have come from.

      Signed them all up, they all worked, for many years - some still in use years later despite my protestations. Never had a problem.

      The only issue is that Apple won't support them, but given responses received from Apple's support on a number of issues in the past, that's actually one headache less than if I had bought them in this country.

      Our usual suppliers threw all kinds of accusations at the company that supplied them (who we obviously went with because they were so much cheaper), but as a customer, that's not my problem - we weren't dealing with cowboys, so where our supplier gets them is their business, and they were very upfront in emails etc. that they were imports from Singapore.

      I'm far more concerned that it's cheaper to buy the same product in Singapore, ship it halfway round the world and STILL undercut all your competitors, than it would be to just buy the product direct in this country. That's the issue, as far as I can tell. And I don't believe that whoever imported them didn't actually pay import taxes, etc., as they were quite openly on the record doing so and it's not easy to import thousands of iPads under the radar, I imagine.

      When the profit margin for all involved happily ships expensive containers of heavy, valuable items around the world and still wins, there's something wrong with the business model.

      1. Paul Hovnanian Silver badge

        Re: Apple said the case was not about "how much tax we pay, but where we are required to pay it."

        Why not? Essentially you traded support for purchase price. Seeing as how Apple hardware isn't too bad. And software support can be had by Googling the problem and fixing it yourself, the only down side would be having to bin a few broken iPads rather than getting Apple support. And if replacements can be replaced cheaply through the same source, better still.

        Also, not having to deal with the Genius Bar might be seen as a benefit.

    2. idiottaxpayerhere previously ishtiaq/theghostdeejay

      Re: Apple said the case was not about "how much tax we pay, but where we are required to pay it."

      @macjules

      Yes. You can buy anything from anywhere. it is called the "internet"

      Cheers… Ishy

    3. cornetman Silver badge
      Facepalm

      Re: Apple said the case was not about "how much tax we pay, but where we are required to pay it."

      > Oh great. So from now on is it ok for us to buy Apple equipment from somewhere else in the world where it might be much cheaper?

      Erm, yes. Why would it not be?

  2. Doctor Syntax Silver badge

    Having made the tax rules it must be annoying when you find somebody obeys them and the outcome isn't what you want. It's almost like you got them wrong.

    1. Roland6 Silver badge

      >Having made the tax rules...

      Trouble is that we were told that Apple got a sweetheart deal that wasn't in the published tax rules and thus available to others, or is the court suggesting that it is open to any company to ask for and negotiate their own sweetheart deal Ie. just because it is an unwritten and generally not spoken about rule, doesn't mean it isn't legal if there is no rule prohibiting the use of unwritten rules...

      Now are Ireland contesting the revised contribution to the EU that these additional monies flowing through the country represent.

      1. Paul Hovnanian Silver badge

        No sweetheart deals were involved. Anyone who opens an office in Ireland can get the same. And many others besides Apple do.

        1. Anonymous Coward
          Anonymous Coward

          The Irish economy works like this:

          1. Get huge subsidies from the EU

          2. Using this money instead of tax revenue, charge very low corporation tax

          3. Use this low tax to attract businesses from other EU countries, by shielding them from paying tax in those countries

          So they are making out like bandits effectively double-dipping from the EU. Very sweet scam, but it's not obvious why the other EU governments have tolerated it for so long. Its their citizens tax revenue that's being "diverted".

          1. fatalXception

            My tongue is very firmly in my cheek here, but I do think we are missing point 4:

            4. Take on 200BN+ euros of debt in 2008 by bailing out banks, bondholders, investors, gamblers and general financial vultures (most of whom are not Irish, many of whom are in fact these other EU citizens from whose children's mouths we are now apparently stealing bread) and placing the burden of the loss directly on its citizens and their children + grandchildren. I reckon that's more than balanced any EU subsidies we have received over the years :)

            We took (or depending on who you ask, were forced to take) a major one for the team in the last crash, personally I am delighted that we've won this case (assuming we also win the next appeal from the EU). If we lose, and Apple has to finally fork over the cash to the Revenue, we won't see a red cent of it. The rest of the EU countries will be lining up to take their "cut", many of whom have their own ways of spectacularly ruining their own economies, but it's easier to blame the Irish tax system, I'm sure they will find some way to blame us for Wirecard next :)

            I love being part of the EU but part of that willing to stand against the bad actors in it, and this is not the first time the EU's Commission - which let's be honest, generally over-represents the interests of those in Europe who see themselves as more equal than others - has taken what is essentially unilateral action and it's not the first - nor the last - time they've had their noses bloodied as a result.

            Almost gives me a new and somewhat sympathetic perspective on Brexit :)

            Again before this is downvoted into oblivion, I am only half serious in all this, my opinion is probably completely misinformed, etc, etc.

          2. LucreLout Silver badge

            1. Get huge subsidies from the EU

            2. Using this money instead of tax revenue, charge very low corporation tax

            3. Use this low tax to attract businesses from other EU countries, by shielding them from paying tax in those countries

            #2 isn't quite right. All those companies headquartered in Ireland or using it as a staging post, require expensive lawyers, accountants, IT folk etc etc which creates a significant non-domiciled demand for those services, which means many more high income tax payers, which provide the revenue for everyone.

            Its been going on for decades and nobody else has had the political balls to copy the play, so Ireland just laps it all up while everyone else sends their granny to jail for avoiding the telly tax instead.

      2. anothercynic Silver badge

        There. Was. No. Sweetheart. Deal. That's the point. That's what's been said all along.

        And Ireland, to their credit, did fix the loophole in their laws that made 'more efficiency' possible. Now if the Dutch could fix their 'foundation' loophole, that'd be nice.

    2. LucreLout Silver badge

      Having made the tax rules it must be annoying when you find somebody obeys them and the outcome isn't what you want. It's almost like you got them wrong.

      Indeed. It won't be popular in these shires, but the EU makes tax arbitrage oh so very easy. It's literally like the "internal market" was designed to facilitate it above all other concerns.

      Ireland may be playing the game better than most other states, but it isn't the only one - each of the countries has their own specialism for tax avoidance - the easiest one for people to understand is Holland - why do people think a certain band with a name similar to T1 hold their IP in a hedge fund there?

      The only way the EU can stop this is to harmonise taxes across the board and force states to live within their means by revoking their ability to issue debt. Otherwise there will always be an arbitrage play for those willing to read a few books and fill in a few forms.

  3. Anonymous Coward
    Anonymous Coward

    IIRC the Irish use GNP when discussing their economy - GDP is too misleading due to this financial engineering.

  4. codejunky Silver badge

    Good

    The gov is not entitled to private property and that includes money. Good luck to Ireland as the EU attempts to go after low tax areas to even things up (reduce competition).

    1. Shades

      Re: Good

      So you want, for instance, all roads to (eventually) return to dirt tracks or become toll roads then, right?

      1. Paul Hovnanian Silver badge

        Re: Good

        Road can (and often are) financed through user fees. Vehicle license fees and fuel taxes. It may only take an office staff of a few hundred people to handle all of Apple's business in Dublin. They earn incomes and pay taxes. It's not like they are hauling truckloads of cash over Irish roads, so the wear and tear won't be higher.

      2. codejunky Silver badge

        Re: Good

        @Shades

        "So you want, for instance, all roads to (eventually) return to dirt tracks or become toll roads then, right?"

        Thats pretty insulting to the Irish. Do you think all their roads are dirt tracks because they dont tax as high as you want?

    2. Steve Todd

      Re: Good

      I think you’ll find that most governments have decided that they are entitled to a percentage of any money you make, private or not. The only question here is whether or not Ireland was following the rules over how much they decided that Apple owed them.

      1. codejunky Silver badge

        Re: Good

        @Steve Todd

        "I think you’ll find that most governments have decided that they are entitled to a percentage of any money you make, private or not."

        They may think that but reality tends to bite when they try it. Instead there is more of an agreement of how much they tax and how much they provide. If people dont like it they (those with the money the gov want) leave or at least move their money away. The agreement being the laws of the land and how well they are enforced/kept to.

        1. Steve Todd

          Re: Good

          So they are entitled then. It’s only by agreement of the governed over how much.

          The problem here is that Ireland is part of a bigger union (just like the US states are part of a union), and they also have to follow EU rules when deciding tax numbers (there is, for example, a minimum rate of VAT that may be charged, and once levied on a good or service it may not be removed).

      2. Paul Hovnanian Silver badge

        Re: Good

        "I think you’ll find that most governments have decided"

        In a democracy, which Ireland is, it comes down to the people deciding this. The Irish government (and ultimately the people) decided that they didn't want this money.

        "The only question here is whether or not Ireland was following the rules over how much they decided that Apple owed them."

        Again, they are a democracy. And it's their rules. And they were perfectly happy NOT taking the money.

    3. Jim Mitchell

      Re: Good

      Your "private property" only exists because there is a government to insure that I don't take yours and make it mine.

      1. DavCrav Silver badge

        Re: Good

        Must. Resist. Temptation. To. Correct. Insure. To. Ensure.

        It's no good. Every time.

        1. Jim Mitchell

          Re: Good

          Isn't Ensure a nutritional drink?

      2. LucreLout Silver badge

        Re: Good

        Your "private property" only exists because there is a government to insure that I don't take yours and make it mine.

        Not so much. Private property predates all forms of government and corporate or income taxes, that's just a fact.

        1. Jim Mitchell

          Re: Good

          Technically correct. Now, this is my friend Bob the Ogre. Give me your stuff before he gets upset, please. Society/government enables property rights, but does not create them, but a right you can't keep others from violating isn't much of a right.

          1. codejunky Silver badge

            Re: Good

            @Jim Mitchell

            "Society/government enables property rights"

            In some countries is it the society that enables it. In some cases against their government.

          2. LucreLout Silver badge

            Re: Good

            Now, this is my friend Bob the Ogre.

            Hi Bob the Ogre, have you met my pack of Ogre eating dogs? And did I show you my shotgun which I keep loaded for bear? (No society, no rules, means nobody can stop you having an M-16 if you like so your whole world view falls just about here).

            What you perceive as society has never protected me from criminals because most criminals don't care about another conviction and a slap on the wrist from an aged judge. What the law does very well is protect those criminals from my retribution because I do need to keep a clean record until the end of my career. Once I retire however, well, as my ex-finance colleague used to say, there is no justice but that which we take for ourselves. 10 more years and its open season on scrotes.

            Society/government enables property rights, but does not create them, but a right you can't keep others from violating isn't much of a right.

            Wow, you really think society prevents others from taking your stuff? It doesn't. Society occasionally identifies, catches, and "punishes" someone for taking other peoples stuff, AFTER they have taken it, but that is no kind of deterrent hence the 2+ million reported thefts last year. There's probably at least as many unreported on top of that.

            Sorry Jim, but you've got this whole thing arse about face. The state exists because of private wealth - taxes can only come from private wealth to fund public spending, and as such it is logically impossible to have a state without private property rights, while it has historically been the case that private property rights have existed long before the notion of countries, states, or society.

      3. Paul Hovnanian Silver badge

        Re: Good

        "Your "private property" only exists because there is a government to insure that I don't take yours and make it mine."

        No. That's why my AR-15 exists.

        For hundreds (a few thousand?) years, the government was only able to provide security for the nobility. If you made it inside the castle courtyard when the bandits arrived, you were OK. Outside the walls, you were pretty much on your own. Same holds true today. When the barbarians approach, the police are nowhere to be found. You get on your roof with a rifle.

  5. Mage Silver badge
    Unhappy

    The Elephant in the Room

    So called Intellectual Property. The USPTO is a big part of the problem. Many of the big multinationals have massive teams of patent lawyers creating both regular patents and "Design Patents" (what the UK calls Registered Designs, like the shape of the fluted coke bottle or a kettle). Companies like Starbucks and Apple assign these to an HQ at some Offshore tax friendly place (Like any British Overseas, or now even IOM or Jersey). Quite a few companies in Ireland (like Eircom aka Eir) have their HQ in Jersey.

    Companies even "patent" or Register their Franchise, Trade marks etc and then pay "royalties" to the offshore HQ.

    So it's possible that neither Apple or Ireland broke aid or tax rules. There needs to be a better definition of Intellectual Property and reform of Patents, Registered Designs etc and the possible "royalties" or this sort of legal tax evasion will continue. Apple should have been paying 10% tax, not 0.5 down to 0.005%

    I can't see how the EU can win this if it's just Apple was "clever". The rules on IP creation and so called "royalties" on it need changed on a Global basis.

    1. Doctor Syntax Silver badge

      Re: The Elephant in the Room

      "There needs to be a better definition of Intellectual Property ... Apple should have been paying 10% tax, not 0.5 down to 0.005%"

      You need a better definition of "should". The court has just said what Apple should pay. Maybe it morally ought to pay something else but the rules and legislation in place say what it should pay.

    2. LucreLout Silver badge

      Re: The Elephant in the Room

      The rules on IP creation and so called "royalties" on it need changed on a Global basis.

      Still wouldn't achieve your aims - APPL to pay the prevailing tax rate on what you perceive as its profits.

      A global flat tax would work, but it would have to be a flat tax - same rate on all income everywhere with no allowances - or it wouldn't work for the same reasons as they don't work now. If you think you can achieve such a thing then have at it, but in the mean time, everyone else will play the game that is being played, not the game that you think should be played.

      You need to look into structured finance (equities, loans, bonds etc), transfer pricing, service delivery models etc - It's a massive area of work and the only true way to stop any of it is with a global flat tax. There is no other way - the rest is just window dressing to keep socialists happy.

  6. USER100

    Great news!

    Some of that €13,000,000,000 will 'trickle down' to the poor. That's how it works... right?

    1. DS999

      Re: Great news!

      Well the €3.9 million it cost Ireland to set up the escrow account trickled down. Not to the poor though, unless the poor in question build luxury yachts of the type the bond traders who collected the €3.9 million in consultancy fees probably bought.

    2. codejunky Silver badge

      Re: Great news!

      @USER100

      "Some of that €13,000,000,000 will 'trickle down' to the poor. That's how it works... right?"

      Not if it goes into government coffers. Otherwise yes.

  7. oiseau Silver badge
    WTF?

    Obscene

    ... use of the Double Irish loophole* ultimately allowed it to pay an effective tax rate of 0.005 per cent in 2014.

    There's only one way to describe such abomination: utetrly obscene.

    O.

    1. DavCrav Silver badge

      Re: Obscene

      "There's only one way to describe such abomination: utetrly obscene."

      There's another way: wilfully corrupt. It wasn't a bug in Irish law, it was a feature. Calling it a loophole when it was desgined with exactly this effect in mind, is wrong.

      1. USER100

        Re: Obscene

        Yes, it is by design, by armies of lawyers employed by extremely wealthy people. Sorry to be such a doom-monger but the entire system of tax/law/government/media has become completely corrupt.

        Sadly, there does not appear to be any way to change it either. The political system has been bought wholesale by corporate interests. They control government policy and the media. The only 'debate' to be seen is on minority rights issues - ok, that's important, but the real, taboo (for the media) issue is the fact that we now live in an oligarchy.

  8. Anonymous Coward
    Anonymous Coward

    Corporation Tax should be 0%

    Otherwise it is the corporate equivalent of a regressive tax - the bigger you get, the less you pay.

    1. USER100

      Re: Corporation Tax should be 0%

      But if it's 0% they don't pay any, do they?

      1. BrownishMonstr Bronze badge

        Re: Corporation Tax should be 0%

        He implied the smaller businesses will be harder affected than the big ones.

        1. USER100

          Re: Corporation Tax should be 0%

          If the tax was 0% then all businesses would pay nothing, i.e. you'd be getting rid of corporation tax altogether. So business takes out (by using natural resources, the infrastructure etc.) but doesn't put back. How is that a good idea?

          1. Diogenes

            Re: Corporation Tax should be 0%

            Who actually pays corporate tax? Does the business "magic" money out of the aether to pay its taxes, or do its customers pay the tax (built into the sale price)?

            1. hnwombat
              FAIL

              Re: Corporation Tax should be 0%

              This is a straw man (albeit one I fell for for a long time). True, the customers pay the tax in the form of price. However, the parallel also holds:

              Who actually pays individual tax? Does the individual "magic" money out of the aether to pay their taxes, or does their employer pay the tax (built into the salary)?

              It's a cycle. My income is your expense, your income is my expense.

              Y = C + I + G + (X − M) = COE + GOS + GMI + T(P & M) – S(P & M) = sum(all sales) + sum(delta(all savings))

              (note that for practical purposes, each of these sums come out slightly differently, due to measurement error and estimation. However, if they could all be measured perfectly, they would all produce the same number. The gross product can be seen as the summation of all income, the summation of all sales, or the summation of all production.

              You can't take one of those and analyze a tax based on that. A very progressive tax at all transaction points is the only fair way to cover it. Thus: VAT should be progressive (sales transaction, percentage goes up with price), individual income tax should be progressive (salary transaction), corporate income tax should be progressive (sales to profit transaction), dividends are another name for personal income, etc. etc.

              You need to study macroeconomics more closely.

              1. LucreLout Silver badge

                Re: Corporation Tax should be 0%

                It's a cycle. My income is your expense, your income is my expense.

                Not really, no.

                Y = C + I + G + (X − M)

                All you've done here is express a basic expenditure algorithm for GDP, which is not a good way to look at an economy because a lot of what is captured is worthless and a lot of value is not captured, and secondly its irrelevant to the point to which you replied.

                You can't take one of those and analyze a tax based on that. A very progressive tax at all transaction points is the only fair way to cover it.

                Taking a guess at whatever you may mean by "fair", I'd still say you're wrong. Transactions don't have to occur to diminish value in one place and increase it in another - If company A and company B both own shares of company C (and nobody else does) their value is linked to whatever declarations company C makes about the value of its assets. No transactions required.

                "Fair" is a horrendous word to use when trying to objectively define anything, same as ethics, because everyone has different views on what is fair or ethical. Life isn't like the movies - the "bad guy" doesn't know he's "bad", and lots of people who think they're the "good guy", aren't.

                You need to study macroeconomics more closely.

                And you need to understand the relationship between the dismal science and reality is tenuous at best. Macro economics is to the economy what astrology is to astronomy.

        2. USER100

          Re: Corporation Tax should be 0%

          Corporation Tax is not a regressive tax, it's a tax on profit.

          VAT is a regressive tax because it taxes rich and poor for the same amount whatever the product is, e.g. a millionaire will pay the same VAT on a washing machine as will someone who can barely afford a washing machine.

          The argument has been made that that's fair, as everyone pays the same amount, but £30 VAT to a poor person is a significant percentage of their weekly income, whereas it's small change to a wealthy person.

          1. oiseau Silver badge
            FAIL

            Re: Corporation Tax should be 0%

            VAT is a regressive tax because it taxes rich and poor for the same amount ...

            Indeed ...

            And the rich usualy have a way (through their business or companies) to recover all or most of the VAT they pay as they also charge/apply VAT on their businesses' invoices/billing.

            O.

      2. LucreLout Silver badge

        Re: Corporation Tax should be 0%

        But if it's 0% they don't pay any, do they?

        Yes.

        The company will either issue dividends, which are taxed, or increase in value, which is taxed upon death or disposal. Somewhere down the line all companies are owned by people, and it's usually easier just to tax them.

        I live in the UK. I have shares in companies in many countries around the world, who if we're being honest, don't give a fig about healthcare/education/transport etc in the UK, but I do because I live here. Taxing the company just means somewhere else gets the revenue that would have accrued to me in my taxable jurisdiction.

        Put another way, how many people do you really think live in the Cook Islands, or Delaware, or Lichtenstein? And how many legal entities? See what I mean...

  9. Anonymous Coward
    Anonymous Coward

    Corporation Tax should be 0%

    Otherwise it is the corporate equivalent of regressive taxation - the bigger you get, the less you pay.

    1. Anonymous Coward
      Anonymous Coward

      Re: Corporation Tax should be 0%

      Yes....because being idealogically correct about taxation for companies is more important than the country having money to spend on services and infrastructure for its citizens.

  10. Recaf
    Facepalm

    All about jobs? Unlikely!

    "The country's position is probably that the jobs brought by these companies are more valuable than added taxation."

    No, it's more likely because 0.005% of Apple's entire European profit is still a lot of money to a small country like Ireland, and a lot better than the 0% it would get if Apple was based anywhere else.

    1. Doctor Syntax Silver badge

      Re: All about jobs? Unlikely!

      This simple fact seems so hard for so many to understand. When there's an international market in corporate taxation - as there is for multinationals - countries with small economies are at a distinct advantage.

  11. Anonymous Coward
    Anonymous Coward

    Two things

    1. Double Irish loophole sounds like a sex act.

    2. How the hell does it cost €3.9m to set up an escrow agreement. Where PWC involved?

    1. Chairman of the Bored Silver badge

      Re: Two things

      1) Quite right, sounds fun!

      2) No, PWC not involved. They won't give you a single PowerPoint for only 3.9e6

    2. LucreLout Silver badge

      Re: Two things

      How the hell does it cost €3.9m to set up an escrow agreement.

      Typical fees incurred in global tax arbitrage range from about 5% of principal to about 10% depending on the complexity of the arrangement. If all taxes were 10% you'd find all money was taxed, because avoiding it would not be worth the effort. Global tax collected would rise and more evenly geographically.

      I have a map in my office of nations drawn to the scale of the revenue taxed there divided by its population. It looks nothing like the map on your wall.

  12. Marketing Hack Silver badge
    Go

    A victory for the little man!!

    I'm sure that some low-level guy at Apple is going to rack up some lucrative overtime wheeling that 11.6 billion Euros back into Apple's Scrooge McDuck-ian treasure vault!

    (The powers-that-be really need to fix the transfer pricing mechanism that allows Apple and others to siphon their revenues into low-tax jurisdictions because their corporate arms in those same jurisdictions conveniently hold the IP for the other national arms.)

    1. DryBones

      Re: A victory for the little man!!

      Well, they could always change the laws so that obvious holding companies are just attached directly to the mothership, and be like ok pay us. Any degree of company separation that gets laughter when mentioned at the local pub should be amended to 0, and thus taxed directly.

    2. NeilPost Bronze badge

      Re: A victory for the little man!!

      In that other well known tax haven Jersey.

      https://www.theguardian.com/news/2017/nov/06/apple-secretly-moved-jersey-ireland-tax-row-paradise-papers

  13. T. F. M. Reader

    "the jobs brought by these companies are more valuable than added taxation."

    Or, conceivably, the taxes paid by the relatively affluent employees and by all the local goods and services providers who get both the company's and the well-remunerated employees' custom more than offset the tax revenue "lost" due to the low corporate tax rate. I do not know for a fact how it works out for the Irish government coffers, but if this is the case then the "hey, don't forget that taxes support healthcare and what not" argument in another paragraph of the article may lose any relevance as well.

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