Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, CCCTB


Buried in the TCA somewhere is a section which sets out that if something the revenue write to you is incorrect, the letter has no standing.

Revenue providing assurances to a specific company would be fairly unique in of itself.



More detailed than many an RTE article.


So what is to stop our politicians bringing corporate tax down to 6% (after all they are claiming corporate tax take doubled in last few years) and give all sorts of discounts that drop the rate to almost zero for “research and development” or “hiring unemployed” as they do in likes of France?

I think after this any goodwill between our gombeen and EU has been demolited


As I understand it, the assurances are not from the Revenue, they are from the State.

I believe some other major MNCs have equivalent assurances. There are at least two other very large “stateless” IPs floating out there (who are probably bunking in one of the few Dublin EU tax avoidance IP “youth hostels” like 70 Sir John Rogersons Quay). As per my post above, the “stateless” IP tax structure is going to be attacked by various EU Revenues (who now realise it violates the EU TP rules). I think the “stateless” IP tax structure is going to turn out to be very bad tax advice indeed (certainly not worthy of Best Irish Tax Advisor award).

On reflection, it is understandable that Apple would have asked for such written State assurances. If a major MNC is going to use Ireland to “wash” it’s EU profits of all tax liabilities, which will require big investment in Ireland (small vs. scale of EU taxes being washed), then a big risk is that a future Irish Government (i.e. SF type) would dis-own this structure and all hell breaks loose. Once you commit, moving €50bn of IP around is not easy. However, if Apple had used a senior non-Irish EU competition lawyer, they would have advised them to burn it.

I believe that this is yet another reason why Apple will drop its appeal (per above), as such written assurances from the State are really helpful proof that Apple got a “sweetheart deal”. It is possible that the EU Commission knows about these assurances from their audit 18 months ago. Such letters are often used to nail EU anti-competition cases. Again, better advised, Apple should not have asked for them. However, this could all be rumour.

I would expect that there is a lot of “shredding” going on in Dublin over the weekend.

Margrethe Vestager’s 130 page report is going to be a bombshell. If Hillary Clinton does not win the US election, you could see substantive prosecution by the US IRS (and US FBI) on MNCs in Ireland (US executives have been criminally presumed for lessor US tax violations). Regardless, I suspect that we are going to see the various offices of Apple (and some other Irish MNCs) raided across the EU by local revenue commissioners building their cases against IP fraud.


Buried or whatever, it’s self assessment, so Revenue comfort letters/assurances/opinions are always pretty worthless? :confused:


Very interesting article. As you said very unusual for RTE which usually deals in trite generalities.

What I took from the article is that if the Commission findings had been against Google, Facebook or MS and their tax arrangement in Ireland then the companies would eventually prevail on appeal. But the key problem for Apple is the fact HQ was not tax resident anywhere. That is a circle than cannot be squared. Anywhere. In any jurisdiction. Even if HQ had ultimately been tax resident on Norfolk Island it would have given them a legal fig leaf. Although a very small one. But still far better than the legal position they currently find themselves in. The null tax resident HQ was just Apple playing silly buggers. A step too far.

Apples best legal strategy for now is to drag the legal war out for years and years and eventually the Commission in its current form will eventually go away. This legal strategy worked really well for IBM in the anti-trust case brought against them in 1969 to break them up. Thirteen years later, in 1982, the case against IBM was dismissed when it seems IBM’s chief defense counsel in the anti-trust case was made head of the Federal Anti-Trust division. For some reason he saw no merit in the case.

Thats how you win big court cases like this.


The Santander case was one that many EU countries had no issue with (for various reasons). That is why it failed on appeal. The ECJ is not some independent group of wise men. It is a politically driven body that enforces the will of the main EU partners. Apple is an outsider to the EU (hence the monumentally ironic “political crap” statement from Tim C®ook, when a phone call to Washington couldn’t make it go away.) and their reaction so far only proves this further. The RTE Samtander case study should be put on the shelf beside last weeks “it will only be a couple of hundred million fine according to well informed sources”.

Ironically, while Apple (and a few other MNCs in Ireland) are going to nailed by both US and EU tax authorities for using badly advised tax structures to try and take the complete p**s out of Europe (going for 0.005% rates), the future is fine for Ireland. More compliant MNCs will be a tax bonanza to Ireland (plus payment of back taxes).

HOWEVER, if all of this revokes the CCCTB debate (now the British veto is gone), then, as mentioned earlier, that would be very bad for us. Even if our tax rate was 0%, we would be toxic to MNCs, who would want to re-locate cost base to offset higher tax EU locations.


Observer35, are you sue about this? I’m no tax expert and certainly not on IP TP, etc. However,in Ireland and Luxembourg as examples only, invoices are tax deductible for CT purposes, irrespective of whether or not they come from tax treaty countries, no? Italy, AFAIK, has a black list…

However, perhaps its the IP TP aspect where I must admit my knowledge/experience is poor?


It’s a good article alright. I wonder could it be argued that the treatment of IP is also selective?


Yes. There is a reason why the MNCs have HQs in Ireland (and Holland and Luxemboug), instead of doing it all directly from the Cayman Islands (i.e. the ultimate end location for the cash). To make EU TP rules work for IP re-charges, you must be resident in the EU. The rules are extensive and very helpful. There are cases where IP can be re-charged from outside the EU but it requires more sign-off and scrutiny from each individual local EU tax authority. However their guide will be the appropriate tax treaty. A “stateless” company cannot have a tax treaty with the EU. Therefore it cannot re-charge IP across the EU. I would guess that the local EU tax authorities didn’t realise that Apple Ireland was “stateless” (and there will be questions around whether this was their own mistake, or whether they were misled).

The Irish Revenue’s own statement that Apple’s main “Irish” operation was stateless is the final nail in the coffin here (and why Apple moved their operation “onshore” in 2015, because of which we will pay €380m in additional annual EU levies).


Thanks Obserer35 for that clarification.

BTW, excellent stuff from you.


This bit jumped out…



Observer35, I also really laughed hard when before the ruling I heard the media spinning out the line of “it’ll only be a couple of hundred million fine according to well informed sources”.

A bit like the Sect110 scandal, the message was: Move along. Nothing to see here.
Well, that wasn’t true, and everyone knew it.

No matter who “the well informed sources” in Gubbernment were, they were probably as useful as asking the local blowhard down the pub…
… which is really the origin, I feel, of many of our politicians.
That or “the canny local teacher” who seemed smart to all the other local gombeens as he propelled himself through the parish with a wink & a nudge.


Thanks Pill

You will also understand from this why Theresa May is going to have to invoke article 50 quite soon, and what her #1 goal will be - to keep Britain inside the EU TP system. As I pointed out on my first post on this thread, without being inside the EU TP system (or a customised version of it), you are not only useless to MNCs, but you are toxic. MNCs will be forced to leave London to re-base in a EU country, where they can get full tax relief on their London costs.

George Osborne was well on his way to making London a Dublin Mk 2. The Brits are used to financial engineering (IOM, Jersey Trusts, PM using BVI) and have bigger hungrier law and tax firms in London. It was the ultimate irony after decades of whining about the EU, an arch-Tory like Osborne (proclaimed Thatcher devotee), suddenly “saw the light” and wanted to remain.

However, as we will see from Margrethe Vestager’s report, the EU now realise the trick going on with US MNCs avoiding all EU taxes. The UK have little chance of getting full access to the EU TP system. Best case is that they will get a separate tax treaty bristling with protections around IP re-charging (a draft of the CCCTB initiative), which will kill London as an EU TP hub.

The final “spin” that London will still be the hub, but with smaller local EU offices for pass-porting into the EU is a fantasy - London will be toxic for MNCs are they won’t be able to offset costs (and in addition, the main reason to have “jobs” in an EU TP hub like Ireland or the UK is to bolster the “economic” justification behind the IP; when your ability to charge out the IP goes, so does the justification for the jobs). I would say that Vestager’s report was a shock in Whitehall.


Damn right Pill. Outstanding work by Observer.

Let me broach another angle on this . You may have noticed that Apple/Facebook/Amazon ( which contains Dropbox/Netflix)/Google and Microsoft are frantically building Datacenters in Ireland these days.

There a lacuna in EU VAT rules which allow a country to charge ‘collection fees’ to another. EG a transaction out of an Irish DC to another VAT Jurisdiction will result in a payment to Ireland and that other country both, until 2018 at least I think and probably thereafter it becomes permanent.

The Irish Vat take is proof of domicile in Ireland for economic activity purposes as I understand. iTunes was based in Luxembourg unlike other Apple activities as Luxembourg VAT is only 15% but I hear it is in Dublin nowadays. While a Luxembourg consumer will still pay 15% VAT on an itunes transaction in an Irish DC I think the Revenue keeps a % of that 15% and not all of it goes to Luxembourg and the Revenue is an agent of every other EU revenue in terms of ensuring the forwarding of the monies collected…minus its own cut. OTOH we pay 23% to iTunes since 2015, not 15% to the Lux Revenue as was the case.

I’m sure VAT will rest a tad, on occasion, on its way out. :slight_smile:

Someone else might have more on this VAT agreement and the minute details, all EU transactions on Google Play, Facebook and iTunes will be handled in/from Ireland by late 2017, not sure about Netflix. … vices.html


A question that no Irish media have asked, AFAIK: why did the cabinet need to agree to lodge an appeal by the end of the day yesterday? The full EC ruling isn’t even available yet.
Is there a good reason, or is it because Tim Cook told Enda Kenny to do itty Friday?


Because Microsoft Facebook Google and Amazon expect the Irish Government to protect them too. Think of all the children Mantissa. :slight_smile:

It was the US Senate wot nabbed Apple, the EU Commission merely clarified some aspects of what they found out in reaching their decision.


When the IRS gets their teeth into this, sooner or later, the really interesting question is when will the IRS start using some of the laws passed back in the 1960’s and 1970’s against tax shelter vehicles, extensively prosecuted at the time, which all became moot post 1982/86. In Apples case pretty much every single last bit of i.p was created in Cupertino. Its not like they have the wriggle room that MS and Google have with their international dev centers. Even though all the important stuff is still done in Redmond and Mountain View. Given some of the case law from back in the 1970’s regarding professional services companies trying to reassign income to third party low tax structures if the IRS ever decided to prosecute the offshoring of i.p then Apple really are toast. There are double penalties on that kind of stuff so that few hundred billion offshored would very quickly disappear in penalties and fines.

This show is going to run and run…


Absolutely this show will run and run.

How many times have we been frightened by electoral candidates in the US promising to deal with offshore profits? Yet when Apple get threatened by the EU, the White House weighs in.

Nothing changes.

Henry Temple, 3rd Viscount Palmerston noted to the House of Commons in 1848 that … Palmerston

Nicked by that C*** Henry Kissinger


Matheson promise a corporation tax rate of only 2.5% using their special ‘structures’, bless em .

From > … h_2013.pdf