The Apple tax case and the direction of the EU

The future doesn't look good for the USA then, highest corporate tax in the world.

How it actually works in practice is vastly different. There is an entire industry of people in the US working diligently to help avoid companies paying tax.

Americans per se don't pay a great deal of tax, and so they can't actually afford their immense defence spending AND large social programs.

If you want to talk about taxation, look at the Nordic countries.
 
But 12.5% is one of lowest corp taxes in Europe and considerably less than the 35% they would pay in the US and still they aren't satisfied. One has to assume that Ireland has several hundred companies on similar schemes to make it financially worthwhile as well as the risk of incurring the wrath of the EU and US.

More than likely there are several companies at it.

It is not that dissimilar from all these dubious companies working out of the Cayman islands. They do it, because the government lets them.
 

Goweresque

Member
Location
North Wilts
But 12.5% is one of lowest corp taxes in Europe and considerably less than the 35% they would pay in the US and still they aren't satisfied. One has to assume that Ireland has several hundred companies on similar schemes to make it financially worthwhile as well as the risk of incurring the wrath of the EU and US.

They don't pay any corporation tax at US rates unless they actually send the money back to the US. Thats why they've got this massive amount of cash parked in the Cayman Islands (or whichever offshore banking location they use). Foreign earnings of US corporations aren't taxed until the money comes back to the US, and because US corporation tax rates are so high by global standards (35% as you say) many US companies just leave their non-US earnings outside the US, hoping one day someone will reduce the rate (which is what Trump has suggested, and its a decent idea) so its worth while bringing them home.

To some extent it doesn't matter to Apple what tax they pay in Europe, or Ireland, because if they ever want to take the cash back into the US they'll get a tax credit for foreign taxes paid. Thats why the US is so p*ssed off - effectively if Apple pay Ireland €13bn in tax, thats €13bn that the US will never see in taxes from Apple. The US have no problem with the Irish situation - as things stand if Apple ever decide to repatriate their non-US earnings the US taxman gets 35%. If the EU have taken 12.5% off first, thats lost to the US, they'd only get 22.5%.

This case is Apple, Ireland and the US govt vs the EU Commission. I'd put my money on the former, because the US control the world banking system, and can make life very difficult for pretty much any country in the world if they want to. If the ECJ finds against Ireland and Apple, the US won't sit back and just take it.
 

Muck Spreader

Member
Livestock Farmer
Location
Limousin
They don't pay any corporation tax at US rates unless they actually send the money back to the US. Thats why they've got this massive amount of cash parked in the Cayman Islands (or whichever offshore banking location they use). Foreign earnings of US corporations aren't taxed until the money comes back to the US, and because US corporation tax rates are so high by global standards (35% as you say) many US companies just leave their non-US earnings outside the US, hoping one day someone will reduce the rate (which is what Trump has suggested, and its a decent idea) so its worth while bringing them home.

To some extent it doesn't matter to Apple what tax they pay in Europe, or Ireland, because if they ever want to take the cash back into the US they'll get a tax credit for foreign taxes paid. Thats why the US is so p*ssed off - effectively if Apple pay Ireland €13bn in tax, thats €13bn that the US will never see in taxes from Apple. The US have no problem with the Irish situation - as things stand if Apple ever decide to repatriate their non-US earnings the US taxman gets 35%. If the EU have taken 12.5% off first, thats lost to the US, they'd only get 22.5%.

This case is Apple, Ireland and the US govt vs the EU Commission. I'd put my money on the former, because the US control the world banking system, and can make life very difficult for pretty much any country in the world if they want to. If the ECJ finds against Ireland and Apple, the US won't sit back and just take it.

As I see it, what the EU is unhappy about is that the Irish gov has effectively given state aid and preferential treatment to these selected companies. If the Irish gov had given this preferential rate of 0.005% to all companies registered in Ireland the EU would effectively not have a case. Trying to prevent companies gaining competitive advantage within the EU by these methods was very much one cornerstone of the EEC being replaced by the EU. How many UK manufactures over the years blamed their poor performance on other European countries for unfairly subsidising or giving tax breaks their national industries.
 

Goweresque

Member
Location
North Wilts
As I see it, what the EU is unhappy about is that the Irish gov has effectively given state aid and preferential treatment to these selected companies. If the Irish gov had given this preferential rate of 0.005% to all companies registered in Ireland the EU would effectively not have a case. Trying to prevent companies gaining competitive advantage within the EU by these methods was very much one cornerstone of the EEC being replaced by the EU. How many UK manufactures over the years blamed their poor performance on other European countries for unfairly subsidising or giving tax breaks their national industries.

If this was about state aid, where have the EU Commission been for the last 30 years when countries like France,Italy, Spain, Belgium (to name but a few) have been shovelling taxpayers cash at various individual companies and specific sectors dominated by home producers? All the deals that national airlines around Europe repeatedly got from their governments to 'restructure' and 'rationalise'? No-where to be seen thats where.

The EU have chosen this case very carefully - it involves a small EU country, who don't have the political clout of a larger one, it involves a non-EU company, so not going to get much sympathy. And on it is riding a massive point of law principle - can the EU over-ride individual countries democratically elected parliaments when it comes to tax, on the basis of state aid rules? If they get their ruling you can bet your bottom dollar they'll be using it pretty frequently in other cases.

The EU have form on this - they took Ireland to the ECJ many years ago when the Irish proposed a 10% corporation tax rate for financial companies (in order to try and make Dublin a financial centre). The ECJ said they couldn't make it specific to financial companies only. So the Irish brought in the 12.5% rate for all companies at that point, to thwart the EU Commission. And they've been gunning for the Irish 12.5% rate ever since, and if they get this ruling, the next thing will be to say that the 12.5% rate is unfair state aid to all companies in Ireland, and should be raised to an EU mandated minimum level. And having got the legal principle established that a low tax rate for one company is unfair state aid, its less of a jump to make the same ruling about low rates for all companies.

Salami slicing - its how the EU gets what it wants.
 
How it actually works in practice is vastly different. There is an entire industry of people in the US working diligently to help avoid companies paying tax.

Americans per se don't pay a great deal of tax, and so they can't actually afford their immense defence spending AND large social programs.

If you want to talk about taxation, look at the Nordic countries.
Oh yes and the corporate lawyers that have THE highest charge out rates are those that work in tax.
 

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