EU orders Ireland to recover "unpaid" tax from Apple

[Suff]

Nice. The headlines are reporting it as €13bn. They seem to have forgotten that it also includes a decade of interest which may push up the cost by quite some margin, as all tax interest is compounded by the day.

Checking the Irish unpaid interest rates and using only the lower rate and using a base value of 1.3bn, I get a figure of €16bn with interest over the decade they can claw back.

I expect both Apple and the Irish government to fight this tooth and nail. But they're going to lose because Ireland, like every other "State" in the EU, does not have control over it's own tax deals. Brussels controls that.

Ireland knows that €16bn today could cost them €100bn in the next decade. The EU wants a quick fix so they can get some of their money back from Ireland. Regardless of cost or damage to the Irish economy in the future.

One of the great benefits of being in the EU....

[Suff]

An interesting analysis of the situation from the [url]Irish Examiner[/url].

I particularly liked the last line of the article.

So who will win?


Easier to answer who will lose. The taxpayer currently tops the list. Put it this way, Apple’s next product isn’t likely to be the iPaid.

The article states that Apple employs 5,500 people in Ireland. Now these are "head office" people. They are not lowly workers or menial staff for the most part. My experience of RBS is that 5,500 people at this level cost, with infrastructure costs, about £80m a month to maintain. Yes it could be half that but let's just assume they are well paid for what they do.

So that's€1.1bn in direct funds into the economy on which the Irish Government can levy taxes and social funds up to, potentially, 50%. Over and above that they get a small % on the entire sales of all Apple products in the EU.

If Ireland do this, then it won't just be Apple that go, Microsoft, Intel and others are doing similar deals.

Talk about getting the punt gun out and killing all the golden geese in one go. If Ireland let the EU do this, they will suffer a lot of pain. Even the US, who has criticised Apple for the taxes it pays, has warned the EU they are interfering with international law in a dangerous way.

[Workingman]

Hang on. If you are Irish you cannot walk in and 'negotiate' how much tax you will pay.

Taxes fund what a government can provide in services, infrastructure etc.. In effect the Irish people have been subsidising the profits of a huge multi-national company for very little in return. The EU is right to go after them. Time also to start on the likes of Google, Amazon, Microsoft, Starbuck's, facebook and so on. These US multi-nationals are ripping the world off to make money for themselves and the US markets.

[Suff]

I wouldn't call a billion a year into the economy "little" also I wouldn't call what they are paying in taxes on their "Entire" EU income, nothing either.

When it comes down to mulitnationals, they not only "can'" negotiate what they are going to pay in taxes, but they are obligated to by their shareholders. Many of whom are insurance firms who pay the pensions of the masses.... A fact Governments cheerfully like to forget.

This is the whole problem with trying to equate Corporation Tax for companies who are global in scope, with individuals who expect to get medical and pension services from their host country.

For those tax revenues that Apple pays to Ireland what are they going to get? Pray tell? Apart from more taxes?

Ireland has made a very good income out of being a low tax, low cost, home for Multinational tech businesses. The lingual benefits, ease of access to world markets and relaxed taxation regime have created a very lucrative and growing business in Ireland. For instance Microsoft Office365 hubs are also in Ireland rather than the UK.

For those who are in doubt as to what happens when investment, business and focus in a single sector goes away, they might want to read the Wiki Page on Silion Glen, especially the first and last paragraphs of the Today section. Many of those areas were hit by up to 50% unemployment due to mine closures and I have up front and personal experience of that as I unemployed emerging from college in exactly that area during the decline. It took all of my skill, knowledge and dogged determination to get a job other than veg chopping and packaging for supermarkets.

For those who want to go on a crusade, like my BIL and SIL who totally believed in the witch hunt of Philip Greene, I say the same thing I said to them. The total witch hunt of Philip Greene for 11,000 jobs and £200m in pension funds scuppered the deal for TATA Steel selling off the British Steel business. 46,000 people's jobs and half a billion in unsubscribed pension funds impacting not only those future pensions but tens of thousands of people who are currently receiving their pensions today.

Add the fact that there is no way in hell that the UK government, in law, can get anything from Philip Greene, and we've now got 57,000 jobs at risk and nearly 3/4 of a £billion in unsubscribed pension funds.

Way to go MP's on a mission to "right the wrongs of the world" as they see it.

Sometimes it just makes me want to spit.

[Kaz]

Hang on. If you are Irish you cannot walk in and 'negotiate' how much tax you will pay.

Taxes fund what a government can provide in services, infrastructure etc.. In effect the Irish people have been subsidising the profits of a huge multi-national company for very little in return. The EU is right to go after them. Time also to start on the likes of Google, Amazon, Microsoft, Starbuck's, facebook and so on. These US multi-nationals are ripping the world off to make money for themselves and the US markets.

Hear, hear!!!!!!!

[cromwell]

The multi nationals are being allowed to rip nations off. This business about "our headquarters is in Ireland / Luxemburg so that's where we pay our tax" is an EU foul up. They should pay the most tax in the EU where they do the most business, end of.

I don't understand this one though. The EU wants to fine Apple £13 billion, but the Irish government don't want them to????

[Suff]

Yep you are right.

Let's lose Ireland 30, 000 jobs and €10 billion in inward investment. That will do them loads of good. I lived 40,000 jobs lost in a 5 million population in Scotland in an economy nearly 3 times the size of Ireland.

It caused total devastation for a decade, drove drug and alcohol abuse to EU heights.

Were the Scots talking about how hard they were going to tax these multinationals? Like hell they were, they were trying to do a deal on taxes but because the UK is so big and London is so rich they were blocked and Wales and Ireland won.

Believe it or not Slovenia is currently sitting there rubbing their hands an presenting their own "illegal" tax deals to Apple, Intel and Microsoft. Slovenia is currently emerging as the EMEA support centre for Multinationals. Slovenia has no EU bail out and still has half a decade of positive EU support before they start to shut it down.

Why not treat a Multinational like a shop down the road? They've no other choice right?

As the Irish newspaper alluded to, the only beneficiaries of this tax raid would be the rich EU economies who bailed them out. Not one cent piece would be seen by the Irish people.

The cost?

A lost decade for the Irish economy, devastation to a generation of Irish workers and Ireland slipping back into Greece status because that paltry few billions won't really touch the debt mountain, but the lost gdp will make Ireland struggle to meet the interest payments on the rest of the bailout.

Wonderful idea.

[Osc]

Also, if Apple cough up, the Irish government will not be able to spend that money because Apple will appeal, and if they win, the money will have to be given back. Can't see Apple coughing up anyway.

[Suff]

The money is being put into Escrow right now. Even though the appeal is in progress.

The crazy thing here is that the Irish government never asked for this tax, never wanted it and are, themselves, appealing this ruling.

If any country is entitled to these taxes it's the US because this is where the IP was created and where the company that sells it is based. But the US, funnily enough, respects international tax treaties even if they don't like it.

The EU commissioner has also invited all the other countries in the EU to join in Apple bashing to see if they can grab a chunk of cash. Can't see many of them taking it up myself.

Also the competition commissioner is going after Google next. By the time they've finished the only European country with a trade deal with the US will be the UK. Not that this bothers me over much.

[Workingman]

If any country is entitled to these taxes it's the US because this is where the IP was created and where the company that sells it is based.

What! If that became SOP every company would be based in the Caymans where some bookkeeping exercise would probably show they made a loss. Even with profits companies would only pay Caymen corp tax... to the Caymens. Out of the window would go the eminently sensible and ultra fair principle of companies paying taxes in the countries where they physically make the profits.

The other thing is that Apple is not being fined, it is being told to pay back-taxes from the illegal deal, under EU rules, that it made with Ireland. Ireland sets its own general corporation tax rates, as it is allowed to do. What it is not allowed to do is set a rate to benefit one company over the others. If Ireland so desperately wanted Apple in Ireland it should have lowered the general rate to meet what Apple wanted, but then its overall income would probably have been trashed.

And if Apple does not like working to EU rules it could opt out of trading in the EU. Other smartphones are available.