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.
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.
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.
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.
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.
Henry Temple, 3rd Viscount Palmerston noted to the House of Commons in 1848 that
Nicked by that C*** Henry Kissinger
Matheson promise a corporation tax rate of only 2.5% using their special ‘structures’, bless em .
of the International division of the Revenue Department.
IMHO, part of the problem, part of the big system that has led to gross unfairness, morally and probably unjustly, in the Irish Taxation mess that is present.
He did a Morning Ireland interview at the end of last week on RTE Radio 1 where he played out the political line on behalf of TPTB of which he is clearly a part as the Apple story was breaking.
irishtimes.com/business/tech … -1.2774804
One to watch out for if you come across him.
2pack. What a fucking wonderfully inept and inappropriate use of the word.
Apart from the smiling in the meetings as the ladies and lads from Mephistopheles explained how things work here…
It’s not unheard of for senior Revenue to retire and then work for the top tax consultants…
I think the recruiters in those practices will be watching out
Here is an interesting list of current high tech players in Ireland…
The really interesting number is revenue per employee.
You have to go down to number 12 before you find Intel, who actual do something substantive in Ireland. Their revenue per employee is around $500K… which is not bad. Any company whose Irish operation has a revenue per employee much above that is a tax scam operation. Which is almost all of them.
Bear in mind that MS et al also have brass plate operations in Ireland whose revenue is often greater than that of the “official” subsidiary. In MS’s case before they hid it in embarrassment by making it a private company it had at least twice the revenue of the “ligit” subsidiary.
Its tax shells all the way down…
I see we’re on the Brian Lucey twitter now Ted
brian lucey @brianmlucey 4h4 hours ago
Ok, I know , its Saturday evening. But please, do read this thread on #AppleTax viewtopic.php?f=4&t=66347 …
Really quite excellent
24 retweets 28 likes
@brianmlucey @WhelanKarl “Excellent”? Christ, it’s awful. It’s a weird mix of facts, quasi facts, and complete bollox.
Retweet 1 Likes 2 Andy BMJF James
11:24 PM - 3 Sep 2016
1 retweet 2 likes
Urlofcork Tweet text
@OwenCallan @brianmlucey @WhelanKarl Does anyone want to name Observer35
Add photos or video
brian lucey @brianmlucey 16m16 minutes ago @OwenCallan @WhelanKarl aka the pin. The nuggets though...
Wait, did Brian Lucey’s just imply the Pin was a mix of facts, quasi facts and complete bollox??
I guess Brian has learned his lesson from endorsing complete bollox he read on the interwebs. e.g. his Eircode screed, the deposits are an asset brainfart
No, that was Owen Callan.
It’s not a bad description of the Pin, except he missed out opinions, wild rants and tinfoilhattery.