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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Sat Sep 03, 2016 7:41 am 
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observer35 wrote:
There is a rumor that Apple's Dublin tax advisors got written assurances from the State over the years (FF and FG), that it was happy with Apple's Irish resident / non Irish resident tax scam.


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.

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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Sat Sep 03, 2016 9:29 am 
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Property Magnate

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Interesting...
http://m.rte.ie/news/2016/0902/813591-santander-apple/

More detailed than many an RTE article.


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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Sat Sep 03, 2016 9:51 am 
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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


Last edited by satechi on Sat Sep 03, 2016 9:53 am, edited 2 times in total.

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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Sat Sep 03, 2016 9:52 am 
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Joined: Apr 30, 2013
Posts: 1648
grumpy wrote:
observer35 wrote:
There is a rumor that Apple's Dublin tax advisors got written assurances from the State over the years (FF and FG), that it was happy with Apple's Irish resident / non Irish resident tax scam.


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.

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.


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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Sat Sep 03, 2016 10:05 am 
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Too Big to Fail

Joined: Mar 2, 2007
Posts: 4180
grumpy wrote:
observer35 wrote:
There is a rumor that Apple's Dublin tax advisors got written assurances from the State over the years (FF and FG), that it was happy with Apple's Irish resident / non Irish resident tax scam.


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.



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


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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Sat Sep 03, 2016 10:08 am 
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Too Big to Fail

Joined: Feb 21, 2008
Posts: 4435
FTBer wrote:
Interesting...
http://m.rte.ie/news/2016/0902/813591-santander-apple/

More detailed than many an RTE article.


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.


Last edited by jmc on Sat Sep 03, 2016 10:11 am, edited 1 time in total.

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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Sat Sep 03, 2016 10:10 am 
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FTBer wrote:
Interesting...
http://m.rte.ie/news/2016/0902/813591-santander-apple/

More detailed than many an RTE article.

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(r)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.


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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Sat Sep 03, 2016 10:17 am 
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Too Big to Fail

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Posts: 4180
observer35 wrote:
Pill wrote:
Quote:
but Apple illegally re-charged its Apple Ireland IP to EU states (from a stateless residence with whom the EU has no tax treaty)


Don't follow, the absence of a tax treaty would render the invoices from the stateless entity not tax deductible in the various EU states - is that what you mean? :?

Yes - and particularly so in the case of re-charging inter-group intangible items like IP.

i.e.

If you are a German company, and in your tax return, you have a large intangible inter-group cost item with an Isle of Man entity, that is not to work unless the German Revenue grant you a particular exemption (which can happen). That is the big flaw of Apple's Irish structure. Apple have been "implying" to the German Revenue that Apple Ireland was Irish resident (there are standard EU agreements that cover IP royalty charges within the EU). In reality, while Apple Ireland was located in Ireland (in the offices of Matheson) is was not Irish resident (according to Irish Revenue). It was not resident anywhere. That is a big (big) no no with the German Revenue (and all other EU Revenues), and there could be even greater financial consequences for Apple than the €19bn fine.


* * * * * *

This is the reason why all the US MNCs need to be "resident" in Ireland.
This is material mistake that Apple made, but it was too greedy (or its tax advisors too stupid).
Apple wanted the EU TP system (to avoid EU taxes), but also wanted to avoid all Irish taxes.
That is what Margrethe Vestager shows (and why Apple are paranoid on report confidentiality).
When this gets digested, Apple are going to have a change of heart over the €19bn fine.




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?


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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Sat Sep 03, 2016 10:17 am 
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Joined: Sep 13, 2007
Posts: 31919
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FTBer wrote:
Interesting...
http://m.rte.ie/news/2016/0902/813591-santander-apple/

More detailed than many an RTE article.

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

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 Post subject: Re: Apple, Ireland, EU, Tax Avoidance, Margrethe Vestager, C
PostPosted: Sat Sep 03, 2016 10:31 am 
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Under CAB Investigation

Joined: Apr 30, 2013
Posts: 1648
Pill wrote:
observer35 wrote:
Pill wrote:
Quote:
but Apple illegally re-charged its Apple Ireland IP to EU states (from a stateless residence with whom the EU has no tax treaty)


Don't follow, the absence of a tax treaty would render the invoices from the stateless entity not tax deductible in the various EU states - is that what you mean? :?

Yes - and particularly so in the case of re-charging inter-group intangible items like IP.

i.e.

If you are a German company, and in your tax return, you have a large intangible inter-group cost item with an Isle of Man entity, that is not to work unless the German Revenue grant you a particular exemption (which can happen). That is the big flaw of Apple's Irish structure. Apple have been "implying" to the German Revenue that Apple Ireland was Irish resident (there are standard EU agreements that cover IP royalty charges within the EU). In reality, while Apple Ireland was located in Ireland (in the offices of Matheson) is was not Irish resident (according to Irish Revenue). It was not resident anywhere. That is a big (big) no no with the German Revenue (and all other EU Revenues), and there could be even greater financial consequences for Apple than the €19bn fine.


* * * * * *

This is the reason why all the US MNCs need to be "resident" in Ireland.
This is material mistake that Apple made, but it was too greedy (or its tax advisors too stupid).
Apple wanted the EU TP system (to avoid EU taxes), but also wanted to avoid all Irish taxes.
That is what Margrethe Vestager shows (and why Apple are paranoid on report confidentiality).
When this gets digested, Apple are going to have a change of heart over the €19bn fine.




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?

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).

Image

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).


Last edited by observer35 on Sat Sep 03, 2016 1:49 pm, edited 1 time in total.

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