EU comes down hard on Apple and Ireland.

22 Replies to “EU comes down hard on Apple and Ireland.”

1. This from a continent that produces and invents almost nothing. Not a single inspiring thing happens in the EU, much like Canada.

2. I get the feeling some Irish might be tempted to say SCREW EU.

3. Time for IREXIT. The UK economy is in overdrive since the BREXIT vote. Might be a good time for a new European Economic Union without political control from the children of Nazis. On BREXIT – leave already!

4. Sometimes you just can’t cheer for any side.

5. This situation is actually a feature of the lack of coherency of US tax law. It is not surprising that Frau Merkle’s EU tax Gestapo want a big chunk of the action now that Brexit will be cutting off that fat cow from the EU tax Dairy.
   An intelligent tax move by the US would be to seriously reduce or better still eliminate corporate taxes altogether and the EU would have to follow if they wanted any corporate headquarters. Aside from energizing the US economy, it might accelerate the starvation of the EU beast into oblivion. Canada would have to comply and that would likely result in Quebec being weaned from the teats of whats left of the “have” provinces (BC and Sask).

6. No, John, this is not about the coherency of US tax law. It’s about the incoherency of the entire EU financial structure. Europe has a common market and a common currency, but its fiscal policies are set by national governments. Meaning that the Irish can set whatever tax rates they like. Ireland has taken advantage of this by dropping its taxes well below the rest of the EU. So it’s getting all the boodle, and the rest are furious about it.
   It’s even more foolish to imagine that the US drops its corporate tax rate to zero. In case you haven’t noticed, the US has a budget-busting deficit for the past eight years. It’s now in little better shape than the EU nations, but it’s papered over by the high US dollar.
   Some of the rest of you seem to have difficulty understanding just what’s going on here. In effect, Ireland is functioning as a tax haven WITHIN the EU. Its advantage exists BECAUSE it’s a member of the EU. Pull an IREXIT and all its advantages disappear, and Ireland’s back to growing sheep, making beer and otherwise scratching fleas. That’s why the EU is going after Apple; because they can’t go after Ireland for its minimal tax rates.
   The only meaningful long term solution for either the EU or the US is cut spending and eliminate deficits. That way everyone can reduce corporate tax rates and eliminate the kind of shoddy tax brokerage that Apple is engaged in.
   Jamie has it right; there are no good guys in this bunfight.

7. The next step would be sanctions, first against the company that refuses to pay the penalty and second to the country that has set itself up as a low tax (haven) regime. If Apple declines to pay then the EU will call its bluff and begin limiting sales of its products. Increasingly there is nowhere to hide from governments that want more of our tax dollars to improve our lives.

8. Perfect!

9. John, how is this due to a lack of coherency of US tax law? US tax laws allow for a foreign tax credit for taxes paid to a foreign country. It’s pretty cut and dried how this tax credit works. This has nothing to do with the US, it has everything to do with the EU and Ireland. Ireland keeps it’s corporate tax rate low in order to attract corporate headquarters. The plan has worked remarkably well for Ireland’s economy. When Ireland began lowering their corporate tax rate from it’s peak of 50% in 1987, the unemployment rate was 17%. As the corporate tax rate continued to drop year over year, so did the unemployment rate. In 2003, the tax rate hit it’s lowest point and has since remained fixed, at 12.5%. The unemployment rate in 2003 also hit it’s lowest point at 4.5%, where it remained solid until the global recession of 2008. Interestingly, while that corporate tax rate continued to drop year after year, revenue from the corporate tax continued to climb year over year. Again, the global recession of 2008 interrupted this pattern, but it again continues to climb and unemployment continues to fall from it’s temporary spike in the 2008-2011 period.

10. Bit of a 40 day fast on a hill to chase the EU snakes out of Ireland might work again.

11. Exactly, although, APPLE has also been the target of US statists, who view APPLE’s Irish strategy as US tax avoidance, for those BEEEELIONS.
    Yup, hard to cheer for anyone here, asteroid anyone?

12. It is interesting that the EU is going after taxes it says Apple owes retroactively. Apple played by the rules as they were stated, now the EU wants to change those rules after the fact. Were I the Irish I would say, “Goodbye, we’re joining the UK Free trade area.”
    At this point I suspect there are a fair number of countries in the EU who are thinking about doing exactly the same thing. Yes to fully free trade, no to all the rest of the idiocy which has become the EU.
    The fact that countries are lining up to do free trade deals with the UK is making the EUrocrats crazy. Which can only be seen as a good thing.

13. The EUSSR sucks even worse than prog-run Apple.

14. How do Ireland and Apple have an “EU-Illegal” tax deal for 20 frickin’ years???

15. US corporate tax rates are grossly noncompetitive. Corporate taxes create and maintain capital distortions and inefficiencies and passed on to customers or employees in lost opportunity. government revenue collection from corporate taxes enjoy high transaction costs, etc.etc.etc.

16. Excellent analysis, cgh.

17. The case is being deliberately misrepresented by the US government.
    Basically, any EU country can set whatever tax rates it wants. It just has to stay solvent.
    However, those tax rates have to apply to everyone.
    Apple came along and said “You can have 0.5% of our EU profits, or nothing, which do you want?”.
    Ireland took the bribe.
    Effectively, they had a special tax rate, just for Apple. That is a big no-no.
    The EU is telling Apple that they have to pay back tax to Ireland, because they have been under-taxed.
    The EU doesn’t get this money, Ireland does.
    Ireland doesn’t want it, because that wrecks its little tax avoidance scheme for US companies, and the kick-back it has been getting for hosting it. These schemes are all that has kept Ireland afloat for the last few years. When all of the US companies shit down their tax avoidance offices there, Ireland will no longer be able to skim off a small percentage of the huge EU profits of these companies.
    The US is unhappy because if Apple does end up paying its taxes, it can deduct those foreign taxes from its US tax bill.
    Tough. The US has been getting more tax revenue at the expense of Ireland/EU where it wasn’t paid in the first place.

18. Thank you, Oz.
    No, Phillip, that’s not a big no-no. Various governments in Canada and the US give tax holidays all the time to encourage investment. What we have here is a regulator trying to make law rather than having legislators doing it. Apple was not doing anything illegal; that’s what their entire tax department is all about. They know the law and they followed it.
    Aside from the EU’s attempt at piracy, the real issue here is that Apple has some $240 billion stranded overseas because of the absurdly high US corporate tax rate preventing it from coming home, paying taxes and providing dividends to US investors.

19. chg: It is a big no-no under EU rules.
    The idea is a level playing field. No government subsidies for favored companies.
    Ireland broke the rule. Apple broke the rule.
    Luckily for Apple, all thjey have been asked to do is pay the tax they avoided. So far, no penalty payments.
    What the US does in favoring different companies is their business (I notice they never give me tax breaks though).

20. Ireland will fight this out with the EU. Apple is in Ireland but doesn’t manufacture there. There alot of high tech US companies manufacturing in Ireland in pharma, medical devices and electronics.
    If the tax advantage goes away so do alot of high paying Irish jobs and the associated personal income tax revenue for the government.

21. The EU OWNS Ireland now and has for many years after it made the “Deal with the Devil”.
    But so what Ireland is now filled with a bunch of leftist retards who would rather pay for their Islamic enslavement than defend itself.
    Good riddance, in a few hundred years it’ll be a true “Emerald Island” full of straw huts and quint little fishing villages all over again.

22. And. … GE has paid -0- corporate taxes right here in the good ol’ USA. GE, who feeds at the public taxpayer trough more piggishly than most US corporations. GE, who is in bed with the Democrats, and is fond of the Clinton Foundation. NO Taxes. Some call it “loopholes”, others say it is legitimate write-offs and write-downs. If GE wasn’t lining the pockets of Democrat politicians … they might be chosen for a thorough IRS audit. Although any audit by a Democrap-friendly IRS would probably be useless.
    So … Apple simply made the mistake of not showering the EU ministers with “gifts”. That’s all the Socialists want … is for everyone to pay tribute to them. Once THEY get paid … they will go on strewing the people