Apple Loses Ireland Tax Case
Arjun Kharpal (ruling, Hacker News):
Europe’s top court ruled against Apple on Tuesday in the tech giant’s 10-year court battle over its tax affairs in Ireland. The case stems back to 2016 when the European Commission ordered Ireland to recover up to 13 billion euros ($14.4 billion) in back taxes from Apple.
[…]
Apple said in a filing on Tuesday that it will incur a one-time income tax charge of about $10 billion in its fourth fiscal quarter ending Sept. 28, 2024.
Charlotte Edwards and Theo Leggett (via John Gruber):
The original decision covered the period from 1991 to 2014, and related to the way in which profits generated by two Apple subsidiaries based in Ireland were treated for tax purposes.
Those tax arrangements were deemed to be illegal because other companies were not able to obtain the same advantages.
[…]
Apple said in a statement: "This case has never been about how much tax we pay, but which government we are required to pay it to. We always pay all the taxes we owe wherever we operate and there has never been a special deal.
I think first part is misleading because if Apple had been paying a different government it would have been paying more in taxes. That was the entire reason behind setting up the tax shelter. However, as I’ve written before, I think it is accurate to say that Apple didn’t get a special deal. Other companies could have done the same thing, if they had the resources and motivation to set up such a tax avoidance scheme.
The Irish government has argued that Apple should not have to repay the back taxes, deeming that its loss was worth it to make the country an attractive home for large companies.
[…]
Although corporation tax rates for businesses are set nationally, and are not subject to the EU’s jurisdiction, the trade bloc does have extensive powers to regulate state aid and in this case, it argued that by applying very low tax rates to Apple, Ireland was granting it an unfair subsidy.
Ireland ‘didn’t want the money’ because the government thought it might risk future Apple investment in the country (Apple was, at the time, planning a huge new datacenter here. Apple later scrapped those plans because protests lead to delays)
The Irish taxpayers sure as hell want the money.
Yes, it’s a bucketload of money. No, it’s not to be “paid”, its been in escrow all this time. And yes, it accumulated due to Ireland’s very deliberate setup as a tax haven for tech companies, which brought them a lot of investment that would otherwise not have been done in the EU.
Ireland is actually harming the rest of the EU with its actions, since requiring Apple to pay similar taxes to everyone else might have helped EU competitors to the large US tech firms survive.
And it disadvantaged other European countries, which is why the EU said that it went against Ireland’s agreement in joining the Common Market.
Previously:
- No Apple Intelligence or iPhone Mirroring in EU at Launch
- The Paradise Papers
- Apple, Ireland, and the EU
Update (2024-09-11): ensignavenger:
I read through the first part of the ruling to get a better idea of what happened. Apparently, Apple wrote to the Irish tax authorities, and said “this is how we plan to calculate our taxes” and the Irish tax authority said “okay, no problem, that works for us” and the EU commission investigated some years later, and said “wait, was that method of calculating taxes available to all Irish companies?
[It] feels odd that Ireland has now essentially gotten all the benefits of offering this illegal deal by having Apple do business there and now also gets all the back taxes that Apple probably wouldn’t have paid to Ireland if they hadn’t gotten the deal.
Update (2024-09-19): Timothy Taylor (via Hacker News):
I wrote a decade ago about the Double Irish Dutch Sandwich, a strategy for corporations to evade taxes that was widespread and large-scale enough to come to the attention of the International Monetary Fund.
[…]
However, a combination of Irish tax reforms in 2015 and changes in the US Tax Cuts and Jobs Act of 2017 made this strategy ineffective: “Consequently, Irish companies began paying royalties directly to American parent companies instead of routing them through tax havens.”
9 Comments RSS · Twitter · Mastodon
I love that Gruber used the phrase "hostile to successful companies" in his post.
"Punishing success" is the first accusation that gets hurled anytime anyone anywhere dares suggest that we make ultra-wealthy corporations and individuals pay their fair share of taxes.
Of course, if I was Socialist Emperor of Earth, I would require all governments to have similar tax rates, regulations, minimum wages, etc so that corporations can no longer pit governments against each other on who can give them the best deal.
[It] feels odd that Ireland has now essentially gotten all the benefits of offering this illegal deal by having Apple do business there and now also gets all the back taxes that Apple probably wouldn’t have paid to Ireland if they hadn’t gotten the deal.
Arguably Apple benefited more than Ireland: had they had to pay this tax when they had less market-share, it would have constrained their development, and would have made it harder for them to beat their competitors. Now they can monetize the might of their large market-share (e.g. with tariffs on third parties such as App Developers), which makes it easy to pay. Even if Apple had known that this would be the final outcome, they probably would have chosen this path, rather than incorporating in an EU country known for not playing these taxation games, say France or Germany.
Wow, that's over 10% of the Irish governments 2024 spending paid for by Apple via this decision.
The Irish government should say thanks and invest this into a sovereign wealth fund or other initiative to actually help its people long term. Doing so would make better use of Apple's cash than what Apple does by incrementally improving the iPhone, creating a headset that nobody wants or spending $10 billion on a now cancelled car project.
Tax breaks for big companies basing themselves in your particular region are pretty common the world over
We all know that if it wasn't allowed then other 'under the table' incentives would come into play.
"We all know that if it wasn't allowed then other 'under the table' incentives would come into play."
This is really not how corruption works.
Also that whole "Well if they can't do wrong in one way they will just do wrong in another way so just let them do wrong" line of argumentation is so mind-numbingly stupid.
Give us the reasons @niall why you think Apple should pay less tax than other companies. Why should Ireland get to join a trade union and then undermine it?
@Kristoffer Please point out where I said Apple should pay less tax than other companies - a pretty stupid accusation if I can borrow your phrase.
I was supporting Ireland in enabling a deal to be done in order to get a big investment in their region - as all countries and states do.
A little light reading (UK based) - basically all major companies used methods to reduce their tax bills (of course)
https://www.taxwatchuk.org/seven-large-tech-groups-estimated-to-have-dodged-2bn-in-uk-tax-in-2021/
Great, you answered my first question. I'm surprised to be honest.
Do you think Ireland should be allowed to undermine the business opportunities of other countries in the trade union they are part of?
