back to article Apple might have to pay that €13B EU tax bill after all

Apple managed to escape a whopping €13 billion ($13.9 billion) tax bill in the European Union a few years ago, though now the advocate general of the Court of Justice of the EU (CJEU) is asking judges to take another look.  According [PDF] to the CJEU's Advocate General Giovanni Pitruzzella, a 2020 ruling that absolved Apple …

  1. elsergiovolador Silver badge

    Simple

    This is really simple stuff. Any expenses that are not legitimate business expenses should be taxed.

    It's interesting how governments and their tax officers "struggle" with this.

    We even have "Diverted Profit Tax", that for some magical reason is discretionary, as if the big corporations' books were like a garlic to the tax man.

    We don't even know how much tax big corporations should be paying. The numbers presented to the public could as well be pulled from the rusty trombone.

    1. Alumoi Silver badge

      Re: Simple

      Big corps already own a lot of goverment (officials). Why should they pay taxes like serfs do?

    2. Anonymous Cowpilot

      Re: Simple

      Taxed in what jurisdiction though? For multinationals its not easy to say "where" a profit was made. If a web store based in luxembourg sells a phone made in china to a us specification running software written in poland by an engineer working for a german subcontractor - who generated the profit?

      I agree the laws need fixing, but unless countries with preferential tax laws like ireland come into line its not that simple to solve. Companies just declare that the "profit making" parts of rhe supply chain are in the low tax counties and everything else is a loss making subsidiary.

      1. elsergiovolador Silver badge

        Re: Simple

        No, it's actually quite straightforward. A web store in Luxembourg purchases phones from China for a cost of X and sells them for Y. The profit from this sale, (Y-X), is realised in Luxembourg. Similarly, the Chinese company manufacturing these phones buys materials and incurs costs totalling X, then sells the phones for Y, thus their profit (Y-X) is generated and taxed in China. A US company might purchase specifications from a German firm for Y; the German company's production cost is X, and they pay Z to a Polish engineer, who then pays personal tax in Poland if they are a resident there. The German company declares and pays tax on the profits made from the sale to the US company. If the Chinese company purchases these specifications from the US firm, this expense is included in their cost (X), and the US company would pay tax on the profits from selling these specifications. The reason large corporations often avoid paying taxes is not due to the complexity of the system, but rather a result of corruption and a lack of enforcement.

        Companies just declare that the "profit making" parts of rhe supply chain are in the low tax counties and everything else is a loss making subsidiary.

        It should be easy for the tax man to deal with that using existing laws, but it is even easier to find an excuse to do nothing.

        1. Roland6 Silver badge

          Re: Simple

          >” No, it's actually quite straightforward.”

          In the examples you gave, it should be, because each entity is a separate business entity. However, once the companies are part of the same multinational, games can be played….

          So that Chinese manufacturing company changes from profit making to a pure cost operation, because it is more tax efficient to have the profit declared somewhere else…

          Likewise that Luxembourg web store is just a customer order processor, who pays some other entity for the privilege of selling to the EU and thus also doesn’t generate a profit…

          1. Anonymous Coward
            Anonymous Coward

            Re: Simple

            then you tax the head office location. The trick is making sure - by international agreements - that there are no stupidly low tax rate countries where the head office can be, or pretend to be.

            1. CowHorseFrog Silver badge

              Re: Simple

              This can be solved by introducing sales tax to replace income tax for companies.

            2. MarkTriumphant

              Re: Simple

              That doesn't help at all. The company that I work for is headquartered in Liechtenstein, purely for tax reasons. It's shit.

          2. elsergiovolador Silver badge

            Re: Simple

            The examples cited indeed reveal the stark reality of how multinational corporations manipulate their internal structures, not for legitimate business purposes, but purely to lower their tax bills. This manipulation, whilst often cloaked in the guise of business strategy, is transparently aimed at tax evasion.

            Take the scenario where a Chinese manufacturing company shifts from being profit-making to a pure cost centre. This isn't a reflection of genuine business evolution but a calculated move to declare profits in more tax-efficient jurisdictions. Similarly, the Luxembourg web store transforming into just a customer order processor is another manoeuvre to escape tax liabilities. These are not complex business strategies - they are straightforward tax evasion tactics.

            Contrary to what some might argue, our existing tax laws are equipped to handle these scenarios. For instance, anti-avoidance rules and transfer pricing guidelines are designed precisely to counter such profit shifting. The real issue lies in the enforcement of these laws. The tax authorities, either due to corrupt practices, insufficient resources, or a lack of political will, fail to clamp down on these transparently artificial arrangements.

            If applied with diligence and integrity, the current legal framework can effectively address these tax evasion methods. It's not about the inadequacy of the law but the failure to enforce it rigorously. By allowing these practices to continue unchecked, we're not just losing out on tax revenue - we're also endorsing a system that privileges the wealthy and powerful, eroding public trust in the fairness and integrity of our tax system.

            1. Anonymous Coward
              Anonymous Coward

              Re: Simple

              "If applied with diligence and integrity, the current legal framework can effectively address these tax evasion methods."

              I agree with you 100%, other than that I'm afraid it's "should" not "can". What you say is entirely right in principle, but when it comes to the detail the rules you refer to simply aren't as watertight as we might like.

              I work for a government department, which has a list of legal powers that are remarkable in their extent and scope. Unfortunately, they aren't comprehensive, often aren't precise, and mostly pre-date current business models by a very long time. Any doubt, or potential for the language of the regulations to be interpreted in multiple ways will be exploited. Not by individual IR35 contractors, or SMEs, or even most high street names, but by the big multi-nationals (mostly Yank). The department I work for is cautious about taking these big corporations to court - where the law is imprecise there's the very real possibility the department might lose - potentially setting an unwelcome precedent, and almost certainly copping the legal fees for their fabulously expensive law firm. And bear in mind the big tech firms will pay for the best law firms in the world, in the public sector we're dependent upon in-house lawyers on quite frankly laughable salaries, or the firm that won the department's legal services bid on "best value" rules. To be fair, our legal panel does include top law firms - but they know which side their bread is buttered, and the Department for XXXXX spends nothing like Apple, Google, Ebay, Amazon or the like - you decide whether that would have an impact on how a legal case would pan out in court.

              The obvious solution would be a complete re-draft of the entire UK tax code of 10,000 pages plus into the circa 350 pages of Hong Kong's (before reunification) and for the rules to be carefully worded to offer no exclusions, no doubt, no chink for lawyers to exploit. But given that government (UK or most other nations) is incapable of addressing the genuinely pressing problems of state, or the key concerns of citizens, what's the chances of them sorting out tax rules? The UK government have been too busy passing rules mandating the microchipping of domestic cats, ensuring that company reports are full of garbage about modern slavery or carbon reporting, or passing the cretinously conceived Online Safety Bill, and endless amounts of crap legislation to deliver net zero.

              1. elsergiovolador Silver badge

                Re: Simple

                You have some valid points, but:

                The department I work for is cautious about taking these big corporations to court - where the law is imprecise there's the very real possibility the department might lose - potentially setting an unwelcome precedent, and almost certainly copping the legal fees for their fabulously expensive law firm.

                As you mentioned IR35, HMRC has no problem dragging small business through courts for years and then losing and making a mess of case law. I don't think you are correct here.

                I stand by my point.

                The UK government have been too busy passing rules mandating the microchipping of domestic cats, ensuring that company reports are full of garbage about modern slavery or carbon reporting, or passing the cretinously conceived Online Safety Bill, and endless amounts of crap legislation to deliver net zero.

                That is another symptom of corruption in the system. Create controversy, so that people don't talk about how big corporations are _allowed_ to avoid paying taxes.

                1. Lurko

                  Re: Simple

                  "As you mentioned IR35, HMRC has no problem dragging small business through courts for years and then losing and making a mess of case law. I don't think you are correct here. I stand by my point."

                  I'll stand by my point. Government are keen to avoid showdowns with big corporations. As a rule, prosecute an SME and lose, typically no precedent is set. Prosecute a globocorp, and they'll take it all the way to the High Court and the Supreme Court, and there's every chance of a precedent being set.

                  Also, the SME typically isn't represented by a top London law firm or chambers with a very large legal team in support.

                  Yes, government can and do lose legal cases: What I'm saying is that they're very careful about how they'll lose to. Look at how HMRC had sweetheart arrangements with various big tech outfits, agreed over dinner with HMRC mandarins.

              2. RPF

                Re: Simple

                Hong Kong's tax code is amazingly simple, isn't it? Also, Hong Kong government is very rich. Sceptics might think our tax code is labyrinthine for a reason.

                1. CowHorseFrog Silver badge

                  Re: Simple

                  ...and HK is a shithole, the streets are literally dirty and the people are nothing more than slaves that live in a concrete jungle and have no lives.

            2. DJO Silver badge

              Re: Simple

              Some way of looking down the line seems to be needed.

              So if (for example) the Ireland office gets money from the Luxembourg operation and the money was not taxed in Luxembourg, the tax becomes liable in Ireland. If it's not taxed in Ireland the liability gets transferred up the line (at the highest rate on the line).

              Also if forensic accountants are needed to unravel accounts then it's a fair assumption that they are deliberately obtuse so the organisation concerned should pay the full fee for said accountants even if they turn out to be paying all due tax. This is needed because most tax authorities just don't have the expertise or budget to decode complex accounts, how do you think Trump got away with it for so long.

          3. Peter Gathercole Silver badge

            Re: Simple @Roland6

            Multinational corporations do not act like you say they do.

            They have to set up operating entities for each tax jurisdiction they operate in, so in the example originally quoted, there would be an operating company in China, one in the US, and on for the EU (the EU pretty much operates as a single market, so I believe only needs to operate in one country, and can sell to the rest of the EU, with only VAT and differing corporate tax rates being wrinkles).

            So the Chinese organisation needs to apply Chinese tax rules, and the US organisation the US tax rules.

            There may be a single holding company in the US (or sometimes outside of the major tax jurisdictions), and they may engage in profit extraction from their subsidiaries using various trademark and IP licensing deals (Starbucks were a prime example of this), and the aim is to make the higher tax jurisdictions make minor or no profits, and then the holding company in the lowest tax juristiction declares all of the profits.

            The EU is a bit tricky, because all of the countries in the EU can be sold to from just one because of the Single Market rules. But not all of the corporation tax or VAT rules are harmonized, so there is scope for companies to engage in profit shifting between EU countries, which is exactly what Apple is being accused of, and just declaring profits in Ireland. And IIRC, the Irish Government is complicit. They apparently did not implement corporation tax rules and rates as the EU would have liked, to encourage companies trading in the EU to set up head offices in Ireland, so never charged Apple in the first place. What the EU said was that this 'different' approach to tax on profits was against EU tax directives, so ordered the Irish government to amend the tax bill issued to Apple, but the Irish Government said they were quite happy with the then situation thank-you-very-much, so the EU engaged the European courts to try to enforce a change.

            These arguments will continue until the EU harmonizes all of their tax rules across the entire single market. Then you will just have to deal with global profit extraction.

        2. DS999 Silver badge
          Stop

          It is not straightforward at all

          Let's take your example of a web store in Luxembourg purchasing phones from China, not the more fraught case of Apple selling its own phones.

          If the website is actually located in Germany are the sales taking place in Luxembourg or or in Germany? Does the customer location figure into it, if you have customers inside the EU, as well as in the UK and maybe a few people in the US where are the sales taking place? What if when the US people buying them access that web store's website, that web store is actually located in the US (if it is Amazon it is quite possible that people in the US hit a US website and people in the EU hit a German or whatever website) So are those sales to US customers taking place in the US?

          There would be a lot of other products on their web store's site, they don't just sell phones from one company in China. They are paying someone to maintain that web store, backend inventory system, sales system that handles credit/debit including international conversions, etc. If the company that does that for them is a US company does that "cost" get attached only to the products they sell to customers in the US? How do they allocate those costs to different product lines?

          You like to pretend it is all "money coming in is X, money going out is Y, taxable profit is Z" but that's only the case for the most simplistic of companies that have a physical location and no online presence - like a restaurant or a gift shop. Once you operate across tax authority borders every place wants a cut of the action and that simple XYZ equation goes out the window. It is in the gaps between those where companies might be able to take advantage, or might have to fight to avoid being taxed for the same penny of profit in more than one location.

          1. Vic Not 20

            Re: It is not straightforward at all

            Exactly. Accounting for profit itself is not even straightforward or unambiguous - there are different competing standards (UK, US, "International") that all "recognise" profits at different stages and in different ways, layered on top of which we then have tax codes that governments are using to compete for inward investment. Pretending that this is an easy problem to fix is, I am afraid, oversimplifying. That is not to say that is is not an important problem for governments to address, it just means that solutions to war, hunger and - dare I say - the climate crisis are all likely to be achieved long before we have unanimous agreement globally on how to tax multination companies.

      2. gedw99

        Re: Simple

        Pillar 1 and pillar 2 will put an end to these tax avoidance.games.

        It comes in in 2024 and applies globally.

        Taxes based on where the item is sold to , not based on where the company is based.

        And a minimum tax of 15%

        I mit will be interesting the difference it makes to government revenue and social security for people.

      3. IceC0ld

        Re: Simple

        whatever happened to the 'threatened' taxed where the CLICK is made ?

        so if I, UK resident, click the product into my inbox, the tax will be paid into the UK, and for all those lining up to add, but that adds complexity, and who is going to police it ........

        the country where the click made the purchase is where the tax is paid, simple, and if it causes the big boys to lose some of their tax avoidance scams, then so much the better

        1. Anonymous Cowpilot

          Re: Simple

          Ah, I like this. Now you have simplified tax minimization to just using a VPN to change your location to one where there is no tax.

  2. Roland6 Silver badge

    The mistake the EU made..

    Was to try and directly interact with Apple, it should have simply told Ireland its arrangement breeched its agreement with the EU and hence they owed the EU these additional monies every year until they can show their arrangements satisfy Irelands agreements with the EU…

    1. katrinab Silver badge
      Meh

      Re: The mistake the EU made..

      The EU is saying that the Irish Government should be receiving more money than it did.

      Given that the Irish Government is already foregoing money it should have, I'm not sure how this would work.

      If you were to make Irish politicians personally responsible for it, that might help concentrate minds a bit more.

      1. elsergiovolador Silver badge

        Re: The mistake the EU made..

        Irish need to get their *organic matter* together.

        They put individuals to prison for tax evasion and at the same time look away when big corporations do it involving likely magnitude more money.

        LOL

        1. Kristian Walsh Silver badge

          Re: The mistake the EU made..

          Everything Apple did in Ireland was legal in Ireland and cleared by the EU too.

          The decision was based on an Apple that was barely breaking even but which employed thousands of people in Ireland. The Irish Revenue commisioners, like everyone else, could not predict how huge Apple's profits would become during the term of that agreement

          This is why Ireland opposed the EU here: Apple was just one company that availed of this scheme, which was cleared and approved by the European Commission at the time. Accepting that it was retrospectively illegal for Apple would mean potentially revisiting all other recipients, most of whom don't have Apple's cash.

          Ireland's argument was that the EU couldn't say "that's fine" to a member state, but then go back on that decision when it turned out to be expensive for them. The principle at stake is the right of member states to set their own taxation policy.

          Incidentally, Ireland is raising its corporation tax rate to 15%... but only for high profit companies (over €100 million a year). Small businesses will still pay the existing 12.5%, as they always have. That's the opposite of what happens elsewhere, where the big boys get better rates than the small companies.

          The USA is a major contributor to profit shifting, but it's always been easier for US governments to point fingers than to close the loopholes in their own tax code that allow the likes of Apple to incorporate a subsidiary nowhere.

          1. Snowy Silver badge
            Holmes

            Re: The mistake the EU made..

            I'm sure with some clever bookkeeping Apple will not make enough in Ireland to pay this new tax.

          2. elsergiovolador Silver badge

            Re: The mistake the EU made..

            Apple that was barely breaking even

            Sure :-) Poor Apple...

            The decision was based on an Apple that was barely breaking even but which employed thousands of people in Ireland.

            If any business employing people could get such a deal. But I guess they don't have some "magic powers" Apple has.

            After how many employees hired company can stop paying taxes? Thousands?

            Could small business group together and get same deal? After all together they hire thousands as well.

            It all smells of brown envelopes and lazy tax man.

            1. Kristian Walsh Silver badge

              Re: The mistake the EU made..

              There are two facets to this case, and you have them confused. Not surprising as you seem to be guided mainly by a dislike of Apple. Well, I’m not a fan of Apple either, but I do try to keep to the facts when I argue, and I suspect I know a lot more about the nature of Apple’s presence in Ireland in the 1990s than you do.

              The first part of this case concerns the granting of a lower corporate tax rate to Apple. This was not a special deal for Apple; it was a a programme operated by Ireland in the 1990s which Apple and other exporting manufacturers took advantage of. The costing for that was based on company profits growing less quickly than headcount (something that was true in the 1990s), so any corporation tax foregone would be recouped in higher payroll taxes. That scheme was approved by the European Commission, and again the setting of tax rates is the prerogative of member states: so long as a member-state doesn’t intentionally under-run its exchequer, or remove VAT (a share of which is the primary funding mechanism for the EU itself), then that state can tap its revenue sources however it wishes.

              The second part of the case is the creation of companies with no legal domicile. That hinges on a ruling sought by Apple from the Irish Revenue Commissioners about the legal status of certain subsidiary companies in Irish tax law. Those companies earned income from Apple’s IP, which was mostly developed in the USA. Under Irish law, the companies were not subject to tax, because they were headquartered in the USA. Now, let me explain the part that gets left out of these discussions: because of a loophole in US company law, the USA did not tax the income of those companies either, because they were incorporated in Ireland. The US tax authorities were aware of this; they were told so by the Irish tax authorities. The European Commission also knew of this arrangement at the time, and one can only suppose that, like their Irish counterparts, they expected the USA to tax the Apple companies (the revenues booked to those companies would be hard to argue as belonging to the European operations anyway, which were largely manufacturing, finance and logistics).

              So in 2013, when Tim Cook had to explain why Apple, now a huge money-making business, paid so little tax in the USA, and he described this licencing company, the US government’s first reaction was not to change its laws to close the loophole and then tax the profits of the US-headquartered IP company, but instead to claim that Ireland was a tax haven, and then allow the situation to continue. However, this reawakened a long-running intra-EU argument about corporation taxes, particularly from France (headline tax rate: 33%, effective tax take after schemes and allowances: 8.5%) about the low tax rate in Ireland (headline tax rate:12.5%, effective tax take: 11%), and so the case began.

              The Irish Revenue gave the judgement that the Apple subsidiary companies were okay based on the argument that the US would be able to tax the revenues there... it’s not really Ireland’s fault that the US has not acted to tax this kind of structure, and it suggests that there are too many people with too much to lose for the US to do this. Ireland, meanwhile, no longer allows that kind of company structure, but laws don’t apply retrospectively. It’s up to the US to tighten its tax law and claim that money.. why they don’t is a question that Americans can ask their elected representatives.

              As for Ireland, its argument has always been that it made its actions clear all along, and that it could only make its risk assessment on the scale of Apple’s profits at the time, not now, and that a precedent that would allow the Commission to retroactively retract permissions whenever it decides that it doesn’t like the result of those permissions is unjust.

              But you can imagine a shady conspiracy if you want. (Let me assure you, though, the Irish taxman is anything but lazy: simple rules leave no place to hide)

              1. anothercynic Silver badge

                Re: The mistake the EU made..

                Bingo, well said, Kristian.

                That's exactly it. And also, in the nineties, if you as an individual worked as a contractor to a US company but weren't resident in the US, the US authorities didn't do what you would expect (i.e. do a PAYE-style tax demand on what you earned), but at the same time, if the country you were resident in expected tax paid at source (i.e. in the US), you effectively worked tax-free until you repatriated your money to the country you were resident in. The US authorities went "not our problem", and your country of residence went "actually, it is, please sort it".

                Now the EU goes *retrospectively* "actually, Ireland, it's your problem". Ireland has resolved a lot of these loopholes, but the US continues to ignore the ones it has (like the Delaware corporation problem, the Nevada corporation problem, and the tax domicile of nowhere problem) because it benefits the US and its corporations. The Netherlands has a similar attitude to the US because their view is that getting pennies on the pound in tax is still better than nothing per pound, and they've been rather lax/lazy in fixing the 'Stigting' problem that's traditionally been part of the double Irish Dutch sandwich and vice versa.

      2. John Brown (no body) Silver badge

        Re: The mistake the EU made..

        "Given that the Irish Government is already foregoing money it should have, I'm not sure how this would work."

        The Irish Government wasn't foregoing money it should have. It was "buying" high paid tech jobs to boost the economy. Except they may or may not have broken EU laws in the process.

    2. abend0c4 Silver badge

      Re: The mistake the EU made..

      AFAIK, it isn't trying directly to interact with Apple and would not have a legal basis for doing so.

      It's the Irish government that is (allegedly) in potential breach of EU state-aid rules by essentially handing out a subsidy, in the form of tax breaks, to Apple (and other companies) to secure their location in Ireland. In the event of the case being reopened and the original decision being reversed, Apple would be due to pay back taxes to the Irish government, not to the EU.

    3. DS999 Silver badge

      Re: The mistake the EU made..

      They did tell Ireland their arrangement was a breach, and Ireland fought back. And they won, so now someone wants to try to fight that battle again. The EU can't just decide the agreement is illegal, they have to prove it under EU law. When they tried before, they lost, so not sure why they expect a different outcome this time other than maybe getting a different judge/judges.

      Sure they might have changed the law since the last decision went against them, but that won't affect taxes owed or not owed under the previous law.

      Apple has basically been a spectator to this, with the money sitting in escrow for at least half a decade now. I don't think they are even a party to the case, it is between the EU and Ireland.

  3. Anonymous Coward
    Anonymous Coward

    If criminal law was determined like tax law the prisons would be empty

    We seem have have sorted most issues regarding criminals saying not me guv. We should be easily able to solve the other's not my tax gov.

    1. elsergiovolador Silver badge

      Re: If criminal law was determined like tax law the prisons would be empty

      *criminal*: Look, we built this school here and we are hiring thousands of dealers, so they are not dependent on benefits and coppers have something to do!

      *judge*: Aight, off you go mate! Just don't get caught again!

  4. Groo The Wanderer Silver badge

    How come when they're caught, all companies ever do is claim they "misunderstood" and "made a mistake", with the government going along with it, but not one single board member or CEO has EVER been held to task for the malfeasance of the business?

    1. elsergiovolador Silver badge

      In the UK all you have to say is that you did it *inadvertently* and you can get away with anything.

      1. dinsdale54

        Or an 'error of judgement' :)

        TBF this is actually largely how tax law works. If you are found liable for a tax bill, the govt just wants the money. If you pay up, you generally are in the clear (apart from little people doing their tax returns obviously)

        The important bit is not to keep evading tax after being investigated, that's when they throw the book at you. See Lester Piggott / Bernie Ecclestone. In Bernie's case, it was more of a leaflet they thew at him, in exchange for another £650 million.

  5. Dacarlo

    £13B ?

    No worries. That'll be covered by raising the price 1% on their M3 stock. And the fanbois will pay cheerfully.

  6. Anonymous Coward
    Anonymous Coward

    Dutch sandwich ?

    The BBC - in a rare moment of making television rather than agenda following - did a program about how it's done

    https://www.bbc.co.uk/programmes/b06ygl19

    Currently unavailable officially, but well worth the search.

    There are a lot of nameplates involved.

    1. Kristian Walsh Silver badge

      Re: Dutch sandwich ?

      That system no longer exists. The Dutch and Irish governments closed their various parts of it in the late 2010s. The US is still lagging in addressing its part in facilitating base erosion and profit shifting by US companies, but in fairness, there was a tax-cheat in the Oval Office at the time. Trump’s answer to this problem was not much different to that of previous administrations: a tax amnesty, allowing companies to finally on-shore that money, at a special rate of tax. No penalties, no charges.

      ... and it’s that practice of the USA repeatedly giving tax amnesties for this kind of thing that makes it attractive for companies to do it: after all, it’s no use having billions of dollars in a stateless company, because for as long as it’s in there, you can’t do anything with it. Until this practice is shown to have a risk of a heavy financial penalty, then corporations will keep doing it.

      1. DS999 Silver badge

        Re: Dutch sandwich ?

        There was a tax amnesty but ALSO a permanently lower rate for profits US companies make overseas. So there is no longer much incentive for US companies to pile up cash overseas due to not wanting to pay taxes on it when it comes home, because it is getting taxed even if they don't bring it home - at 13% IIRC.

        US companies will still want to minimize their taxes paid overseas, it only makes sense to not care about those taxes if they are taxed at a rate lower than the US charges for foreign earnings because foreign taxes paid are a credit on US taxes owed. So if a company must pay 10% taxes in country X it doesn't benefit them to finagle a way to pay 5% taxes - because they will pay a total of 13% of that money regardless.

        But it DOES still make sense if you're paying taxes in country Y at 20% to do whatever you can to transfer that tax liability to country X where you'd pay only 10% (13% total), or any other country where it is below the 13% threshold. And since the tax rate for profits earned in the US is currently 21%, if country Z is charging 25% and it isn't possible to transfer that liability to another foreign country it makes sense to transfer it to the US if that can be done.

        While the "Dutch sandwich" may no longer exist, no doubt there are armies of highly paid tax attorneys combing through tax laws all over the world to find the next one.

    2. anothercynic Silver badge

      Re: Dutch sandwich ?

      Double Irish Dutch sandwich and Double Dutch Irish sandwich are no longer possible, mostly because the Irish government fixed their side.

      1. Lurko

        Re: Dutch sandwich ?

        And? Large corporations move on to the next dodgy practice.

        From Apple's perspective, at least at the the moment it's Cum-Ex which doesn't appear to implicate them. But my point (and I've made it a good few times before) is that financial services, big tech, and lawyers are ALWAYS up to some form of no-good. Mis-selling, money laundering, tax evasion, market manipulation, dodgy debt syndication, pyramid selling, etc.

        If at any point in time it seems that law firms, financial services and big tech companies are abiding by the law and there's no news, all that actually means is that nobody has spotted the latest huge fraud.

        1. anothercynic Silver badge

          Re: Dutch sandwich ?

          Cum-Ex is dodgy whichever way you swing it, and various EU countries have pointed this out. It's caught quite a few companies in Germany because they also thought they were clever.

          And yes, unfortunately, without a proper root-and-branch review of tax laws in all jurisdictions across the planet, there will always be loopholes between jurisdictions that can be exploited. And it's not just large companies... small companies can also take advantage of these things, provided they have tax lawyers that make it viable.

          And it's tax avoidance, not tax evasion. At least not until the scheme is declared illegal, at which point the former becomes the latter if you continue with it.

  7. Anonymous Coward
    Anonymous Coward

    Even simpler - Ireland is MNC tax evasion central, and not much else

    There is a simply reason why the GDP numbers for Ireland make no sense. Because at least one third of the Irish "economy" is little more than the movement of MNC tax evasion money. Which is why the GNP number is such a small fraction of the GDP number. Unlike every legitimate western economy where they are about the same.

    When you actually breakdown the CSO economic numbers and try to make it fit any plausible econometric model you are left with a very large MNC tax evasion sector (some $10B's p.a "Irish subsidiaries" have 10 employees), domestic consumption from government expenditure based on the low corporation tax on the MNC and a national debt that is 120%+ of GNP/GNI, and a domestic economy that is basically Ryan Air and little else. Take away the predatory corporation tax rates and you are left with an economy smaller per capita than Portugal.

    And that's why the Irish government has spent most of the last twenty years first ignoring Apples silly bugger tax domicile set up and then refused to collect the $14B in tax. Because without the MNC tax evasion sector there basally is no Irish economy and has nt been since the late 1990's.

    Then there is the $trillions (yes trillions) p.a that is funneled through the ISFC in Dublin. Which is for international financial institutions what the special corporation tax treatment is for MNC's. Its not just the big US, French, German, Belgian banks that push all their very dodgy financial transactions / instruments through Dublin. The Anglo Irish Bank collapse in 2008 was a straight money laundering operation that had $40B in "deposits" walk out the door in less than 2 years. Which caused it to collapse due to depositor flight

    But that's another story.

    1. Kristian Walsh Silver badge

      Re: Even simpler - Ireland is MNC tax evasion central, and not much else

      In fairness, I can see why you posted that anonymously... imagine if someone you knew saw it.

      1. Anonymous Coward
        Anonymous Coward

        Re: Even simpler - Ireland is MNC tax evasion central, and not much else..thats your comback?..

        So typically Irish. If you are actually Irish and not some Plastic Paddy. How dare I mention in public what is actually going on.

        Dont mention the Leprechaun economics. Dont mention all the scandals and very illegal things the Irish government has been complicit with over the decade. Dont mention the most popular political party murdered thousands, tortured hundreds and has run the drug trade in Dublin and elsewhere since the 1970's. etc etc. Dont "Talk Down The Country". Because the Irish are the Most Oppressed People Ever.

        Why anonymous here? What does it matter to you. Would you be happier if I met you at The Spire and told you to your face? Everything I said here I have said many times before to Irish people, in Ireland. The reaction is interesting. Most quietly agree. Because I know where all the bodies are buried. Literally sometimes. Some become truculent then quiet and then start the What About'ery. Those Irish who left Ireland all agree with me. Every last one of them over the decades. Because they eventually see through the BS that passes for Acceptable Opinions in Ireland.

        So you have absolutely no idea how the Irish economy works then. Everything I mentioned has been covered in the Irish media over the decades. Try Michael Hennigans Finfacts website if you want all the facts and figures in one place going back almost 20 years by this stage. Or the very detailed stories in the Irish Business Post in its glory days.

        Or even better. Look at the CSO numbers for the last few years. Now compare with Finland and Denmark. Ireland has little or no economy apart from the MNC tax evasion sector. My favorite was SanDisk before they were acquired. The Irish operation had close to $4B in "revenue" and around 20 employees. And then there was the MS brass-plate operation in Fitzwilliam Sq that had $14B in "revenue" and 8 employees. And so on..

        A cute hoor economy for a cute hoor country.

        1. Kristian Walsh Silver badge

          Re: Even simpler - Ireland is MNC tax evasion central, and not much else..thats your comback?..

          Yes, I’m Irish, in that I was born here and have lived nearly all of my life here barring a couple of short jobs abroad. I am speaking from long experience. I believe it is you who do not understand how the Irish economy works, because what you posted bears no relation to how things actually work, and where the money comes from. It’s like you have a preconceived view about Ireland, that it’s all a scam, and then you cherry-pick figures to try to support that conclusion, while ignoring the overwhelming volume of data that directly contradicts that preconceived notion.

          When you made the ridiculous assertion that there’s no economy in Ireland outside of multinational profit-shifting, that was such obvious bullshit that it needed a rebuttal. Every indicator of real-world economic activity contradicts you, but I suppose you think they’re cooked figures or something... but then what the hell are all the million or so people who’ve moved here since the 1990s doing for a living? The big problems with the Irish economy are capacity problems: a lack of housing and other infrastructure. You don’t need all those people if all you’re doing is filling in tax forms. Also, how do you explain the consistent trade surplus in goods (not services, profits, licences or other intangibles, but physical products) for the last forty years? Forty years of positive trade adds up. For contrast, have a look at the UK, which decided decades ago that it doesn’t need a positive balance of trade, and look how that has sucked the life out of everywhere except London.

          American companies set up in Ireland for a few reason, but it comes down to a predictable and low tax rate (that you don’t have to lobby for - France and Germany will give better deals, but you have to go begging to politicians for them), but also these: we speak English, it’s easy to do business here, government policy doesn’t oscillate wildly between extremes every time there’s an election, there’s a well-educated workforce, and the country is within the EU single market. Even when the UK was in the Single Market it lacked at least two of those factors. The 12.5% tax rate is really not the primary driver - there’s places elsewhere that charge less corporation tax, but you don’t see companies flocking to Hungary, do you? Ireland has introduced an additional 2.5% profit levy for high-profit companies (which will make us one of the few countries whose effective corporation tax rate is higher than the headline one), but there’s still no stampede for the door. Apple, the biggest loser from this move, is expanding its presence here, despite the very real prospect of its dodgy funnels being closed by the Americans soon.

          Speaking of, your assumption that every holding or licensing company is a tax-dodge is pretty naïve - yes, you can use them to evade tax (SanDisk) but most (like the Microsoft subsidiary) are used to better separate revenue and cost-centres. I worked at a small company that owned a holding company to manage its IP licencing: this is a normal corporate structure, and it’s not in any way unique to Ireland.

          You are, of course free to believe whatever you want, but I am free to call out bullshit when I see it.

          1. Anonymous Coward
            Anonymous Coward

            Re: Even simpler - Ireland is MNC tax evasion central, and not much else..clueless..

            So you dont know how Ireland works then. Sound like just one of the local conformist sheep. Sure everything is just grand.

            I not only know Ireland far longer than you do and at a much higher level it seems but have worked in the very heart of high-tech in the US for many decades at a senior level. Like knowing my way around Sand Hill Rd and C-Suite level back-stabbing politics. So I know exactly why the US corps are in Ireland and exactly how their Treasury depts play the rules. It's exactly for the reasons I stated.

            If the Irish tax regime was the same as some cantons in Switzerland and the local authorities were just as willing to look the other way at obvious tax evasions (I've got Revenue Commissioners stories going back to the early 1980's) every last US MNC's (bar maybe Intel and Dell) would be out the door in the morning.

            Thats real world. Not the fantasy world you live in. You sound like a very typical Irish small time operation in what is a very small pond. And I've seen so many of those over the last five decades. In my world you live in what is little more than a glorified Fresno. Local Silicon Valley reference.

            What's so funny about your delusions of knowledge about the Irish economy is that I once spent a very pleasant afternoon a few years ago in a cafe on Dawson St walking a senor researcher from RTE's premier current affairs programme through pretty much all I mentioned here as a backgrounder to how the private equity etc "Vulture Funds" were structured and operated. Part of the background was how the various tech companies and especially pharma companies structured their operations in Ireland. Like no high value product dev being done in Ireland etc but most of the value added part of the i.p and recognized revenue been funnels through the Irish shell companies. None of this was new to him. Just the actual details and numbers. Next was the various financial engineering instruments used by both MNC and IFSC shells to raise and move cash. The guy knew what a repo and reverse repo etc was so that made it a lot easier. He had done economics at UCD. Then it was the Bubble and the Crash. And the IMF Bailout etc. Which lead to the Vulture Funds..

            Which is a subject of its own. Especially the why it came about. Most of NAMA's book being sold to the bottom feeders. Due to the utter dysfunction of the Irish legal system. I've got sleazy lawyer stories from a whole bunch of countries but Irish solicitors and barristers, whoa. Cute hoor hog heaven.

            You sound like just another of those oh so smug types with their air of "I know what is really going on" that seems to be a fixture of the bars of all Southside golf clubs. Yet to a man they have nt a f*cking clue whats going on. Or what will happen next. I remember one really funny conversion in the summer of 2007 with one of these people explaining how the Irish property bubble was going to collapse. And why it would bring the Irish economy down with it. Oh no it wont happen they said. Its going to be a soft landing. And anyway, what would you know. I know whats really going on.

            Yeah. Sure. They were just another rugby school gobshite from D6..

            And you are the same. You really have no idea what the Irish economy really is, how its structured, or that the MNC are only in the county for tax evasion purposes. Or at least that has been the story since the late 1990's .From the 1970's to about the mid 1990's there was an air of legitimacy to most MNC operations but during the first Dot Com Bubble everyone started just playing silly buggers and by 2002 almost all of them were just pure Potemkin operations. And as long as the IRS is fine with that it will remain. But it just needs one unfavorable IRS opinion and poof. Which almost happened a decade ago.

            Read the CSO stats. The fine print. You might learn something about the Irish economy. Because you really dont know anything.

            1. Kristian Walsh Silver badge

              Re: Even simpler - Ireland is MNC tax evasion central, and not much else..clueless..

              Hmm. I’ll try again. You asserted that Ireland has no economy outside of multinationals shifting their profits. I called you out on that obvious bullshit claim, and you are back with no real rebuttal beyond “my dick is big”.

              I don’t claim to know “what’s really going on” - all that I said was that your assertions were not supported by facts: I know only enough to see that what you claimed is not consistent with reality. As it happens, the only person who has claimed knowledge of any deep truth here is you, and you have done it repeatedly in the post above: first when you describe me as a “conformist sheep”, then when you boast about knowing the “real world” of VCs and lobbying, then again when you refer to my “delusions of knowledge”. Next, we hear about all the things you knew about how the world “really” works and that I have “no idea” of same. For extra points, you basically end by telling me to do my own research by looking for “the fine print”, without so much as a hint about which figures would prove your point. But, taking your lead, I started at the top of the list of business sector reports on cso.ie, and opened the Domestic Milk Intake report for September 2023. The figure is indeed down 1.9% YoY, but I don’t see the point you’re trying to make...

              I doubt it was your intention, but you’ve hit a lot of the warning-signs of the inveterate bullshitter or deranged conspiracy theorist there. But if you’re as close to the VC game as you say, that’s an occupational hazard, I guess.

              Your reminiscences about being the voice in the desert before the property crash are pretty much irrelevant, unless you’re using an instance of being correct as a distraction from your original nonsensical assertions... or are you trying to impress me that you knew someone in the media here? Big deal, it’s a small country. And look, you really weren’t some kind of lone prophet there... everyone I knew (and I do mean every single person) was of the opinion that the property game was a house of cards, and that it was going to screw the country in the end. That included two people who bought into the whole escalator of bullshit because they needed somewhere to live.

              Oh, and on that particular anecdote, your attempt at a personal attack is so far off the mark that it’s funny. If you wanted an ad-hominem, perhaps you could skip the rugby-club bullshit and go with “council-house vermin” instead.. I’d still get a laugh, but at least you’d be flailing comically in the right area

  8. chivo243 Silver badge
    Windows

    25mil for shoddy hiring practices

    Have Cook’s maid check the couch after a party…. She can keep anything over 25mil…

  9. chuckufarley Silver badge
    Coat

    Is it just me...

    ...Or is anyone else amazed by exponential power of raising interest rates?

  10. Anonymous Coward
    Anonymous Coward

    PO'd beyond belief

    Irish taxpayer here.

    I pay an effective rate of 50% tax because I am self-employed and earn just over the median wage.

    The corporate tax take is down substantially I saw a 45% number which is a large portion of the total tax take.

    So in the next budget we will cut supports to the needy and still have a trillion dollar company owe $10 billion+.

    Because thats a just society.

    I wonder what Antartica's tax system is like?

    1. Kristian Walsh Silver badge

      Re: PO'd beyond belief

      “I pay an effective rate of 50% tax because I am self-employed and earn just over the median wage.”

      No, you don’t... it’s more like 27%

      Assuming you come out with €60,000 profit after all input costs and deductions (that’s the median for the IT sector), that you make no private pension contributions and that you are unmarried, you will pay €15,900 a year in all taxes. That is an effective tax rate of 26.5% (PAYE+PRSI+USC).

      If you earned the national median across all sectors, which is €46,000, then your effective rate falls to 20.1%

      Yes, your marginal rate of tax might be 52%, but that only applies to a small portion of you income, and tax-credits reduce the amount you pay. The effect of tax credits makes the marginal meaningless unless you’re earning well into six figures (the effective rate is still 36% at 100k, but 46% at 250k - but at this level of profit, if you’re self-employed you should be operating a limited company).

  11. Potemkine! Silver badge

    When you know the mess on how big corps works, their inefficiency, the lack of reactivity, the lack of proper customer service, one can wonder how they succeed to compete with SMEs, which can be much more efficient on all these points. The answer is simple: most of SMEs pay their fair share of taxes, big corps don't. The latter know how to avoid to pay taxes. And that won't change for long, because of corruption. If our dear leaders were beginning to be serious to avoid tax avoidance by big corps, who would hire them for a position of convenience with a very high salary after they leave / are ejected ?

  12. CowHorseFrog Silver badge

    Never understood how Irelands tax rates are allowed by Brussels. There should be a uniform minimum across the EU, because Ireland is basically stealing tax revenue from the rest of EU and yet the other states allow it.

    1. Kristian Walsh Silver badge

      Ireland’s effective rate is around 11.5%, and will increase to about 14% next year; that’s higher than the effective rate in some of the big EU states that complain about Ireland’s rates.

      But the difference is that every Irish company is charged 12.5% on its profits, and high-profit companies (>€100 M) pay an additional 2.5% levy from this year onward. Go to France (perennial complainer about “tax theft”), and the effective rate is pretty much the same, but there, a small plumber has to pay 33%, while big guys like Suez or EDF get a much better deal.

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