back to article Ireland taxman: Apple got NO favours from us, at all, at all

Apple paying €50 corporation tax in Ireland on every €1m of profit reported – a rate of 0.005 per cent – was in compliance with local laws, the Emerald Isle’s under-fire Revenue Commissioners have claimed. The tax collectors issued a statement in the wake of the European Commission's damning verdict that tax arrangements …

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  1. djstardust

    How many more stories

    do we need on this topic?

    That's at least the third one today covering the same story. I smell clickbait from Vulture Central!

    1. Anonymous Coward
      Anonymous Coward

      Re: How many more stories

      That's at least the third one today covering the same story. I smell clickbait from Vulture Central!

      YMBNH: You Must Be New Here :)

      1. Jay 2

        Re: How many more stories

        Nah, for proper El Reg (advertised) clickbait it would mention DevOps in the title!

  2. Anonymous Coward
    Anonymous Coward

    Correction ..

    Apple has so far resisted the temptation to send The Reg a comment on the whole sorry saga for the last two decades.

    FIFY :)

    Now, what do I sign up to be considered a US mega corp and pay 0.005% tax as well? After all, if companies can be persons, the reverse must be true too and I'm quite happy to hire an Irish office to make it all legal - after all, that way I can expense my love of Guinness as well..

    I suspect the loud screeching of the US is because the EU is doing what the US isn't capable of because it would damage the more personal, er, "sponsorship" of political parties. The problem is, of course, that that game is up the moment the EU does what the US should have done, oh, about a couple of decades ago and there will be hell to pay as a consequence. Worse: once the EU manages to do this to Apple, the scene has been set to go after all the other US companies that are presently creative with tax.

    I need to check where my popcorn shares are at ..

    1. AndyS

      Re: Correction ..

      > Apple has so far resisted the temptation to send The Reg a comment on the whole sorry saga for the last two decades.

      Actually, it appears there is the occasional chink in Apple's Reg-proof armour. See this article for example (although the Reg failed to comment on Apple commenting to the Reg).

  3. Mage Silver badge

    Local Laws?

    If this was really "legal", then the law is an ass, and may be even invalid.

    1. Voland's right hand Silver badge

      Re: Local Laws?

      If this was really "legal", then the law is an ass,

      Legal as per Irish law once upon a time - maybe. Legal as per the regulations under which Ireland signed when joining the Euro and Eu VAT and taxation regulations - most likely not. The question is - how much of these regs are in writing as they supersede local law in Ireland (and all other member states except UK).

    2. Owen Sweeney

      Re: Local Laws?

      Ireland doesn't tax profits made outside the state. It's the law.

      They are being asked to collect tax on all Amazon's profits, and KEEP them. Are you ****** serious?

      1. John Brown (no body) Silver badge

        Re: Local Laws?

        "Ireland doesn't tax profits made outside the state. It's the law."

        So, all that money that Apple sends to Ireland are just donations to their Irish subsidiary? I was under the impression that one of the Irish subsidiaries owns most of the Apple IP and the income they bring in in ($$billions) is licensing fees so said Apple subsidiary is making a huge profit in Ireland. Or are we saying that all Irish companies who export don't get taxed on those profits or is it just Apple?

  4. AndyS

    So they paid €50 on every €1M profit. At 12.5% corp tax, that's €400 of profit declared as Irish.

    So the question is simple. In what country was tax on the remaining €999,600 paid, and at what rate?

    Was it paid in the country in which the sales were made? Presumably not, or there would be no point routing it through a fictional head office in Ireland. Was it paid in the US, where they are actually headquartered? Well, no. Was it paid in China, where the devices are manufactured? That would seem extremely unlikely.

    So, in the assumption that they are paying tax on only 0.004% of their non-US profits, this seems like such a cut-and-dry case of mega-corp tax avoidance/evasion that everybody with an ounce of integrity, Irish, American, Chinese, whatever, should be cheering on the EU.

    1. AMBxx Silver badge
      Boffin

      It's more to do with different ways of taxing.

      A sale in the UK is routed through Ireland. The profit isn't in the UK, so isn't taxed there.

      The sale didn't take place in Ireland, so doesn't get taxed there.

      Something like that any way/

      That's why so many companies are registered in Ireland. It's not just the low rate of CT. At 12.5%, Apple's tax would still be low, but not this low.

      It's not just Applie. There's Microsoft, SAP, Adobe and just about every other large international software company doing this.

      According to wikipedia (https://en.wikipedia.org/wiki/Double_Irish_arrangement) this is on the way out, not sure what happens next/

      1. Snowy Silver badge
        Flame

        @AMBxx

        Transfer pricing most likely, where they buy the goods and the right to the name from the part of the company in a tax haven. The price being such that there is no profit when it is sold, so no tax to paty either.

      2. Laughing_Man

        Unfortunately, the Irish Government will spend millions to fight any ruling like this. with about 206bn in state debt and a shit load of companies playing this game, they don't see that one side of the balance sheet could make the other go away.

        1. DainB Bronze badge

          You mean they're going to spend millions to avoid getting 13bn ? That's very smart move.

          1. Anonymous Coward
            Anonymous Coward

            You mean they're going to spend millions to avoid getting 13bn? That's very smart move.

            Not so fast, I think I see where he/she may be coming from: consequences.

            If the Irish just accept this, it's the thin edge of the wedge for ALL of the tax deals they've made, I sincerely doubt Apple is the only one who got themselves an Irish Special. The result could be that the EU will pick off the rest one by one, Google, Microsoft, Facebook..

            Short term, the resulting tax payments will indeed benefit Ireland (and, of course, the EU, which will dial up the required contribution from Ireland as a result). Long term, however, it will erode Ireland's attractiveness for these companies - after all, their operations are not in Ireland so they can easily pack up and move to another place that offers a good deal, but legally. At that point, the loss may exceed the short term gain.

            Now I must admit that tax and economics are not exactly my area of expertise so I may be totally wrong, of course :).

            1. Voland's right hand Silver badge

              Long term, however, it will erode Ireland's attractiveness

              Not really. While 12% are not 0.0005%, they are still about half of the corporate rate around Europe (20-25% or thereabouts).

            2. Anonymous Coward
              Anonymous Coward

              If the Irish just accept this, it's the thin edge of the wedge for ALL of the tax deals they've made,

              Of course. That's the EU Commission's intent. Despite the French and Germans being (in their own specific ways) ardently protectionist, they jointly hate the Irish (but bizarrely not the tax haven of Luxembourg (home to one JC Juncker, IIRC), and are delighted by this. Maybe the Irish government should have abided by the first referendum on the Lisbon treaty?

              But anyway, the specifics of law, liberty and economics are simply minor, proximate issues -

              this is all part of the convergence that the EU project was intended to deliver. You either like that slow but steady erosion of national powers in favour of Brussels or you don't.

              1. WageSlave

                But isn't that the point of Europe?

                If every country does its own thing, the large Corporations cherry-pick their way through various loopholes & avoid paying tax anywhere.

                One of the values of the EU is to have a consensus amongst all member countries that can stop this kind of Globalised industrial strong-arming.

                (i.e. if you promise not to mess with our tax avoidance, we will site our offices in your country & provide lots of employment and income tax, etc.).

                So instead of demonising EU bureaucracy, shouldn't we be celebrating the EU as being one of the few entities capable of taking on the rising power of the supra-nationals like Apple, Amazon or Google?

                Is the reporting yet more populist bias against an EU office actually trying to do the right thing?

            3. DainB Bronze badge

              "If the Irish just accept this, it's the thin edge of the wedge for ALL of the tax deals they've made,"

              You mean they will be fighting hard to not be paid much more than 13 bn ? That's even smarter !

      3. Anonymous Coward
        Anonymous Coward

        Indeed, Apple is just the biggest target

        The EU knows if they can make it stick against Apple, they can go after all the other Irish arrangements that nearly every US tech company has. The money they collect from Apple will be chicken feed when they go after all those big fish, then the smaller fish.

        1. The Godfather

          Re: Indeed, Apple is just the biggest target

          No fish (or fruit) bigger than Apple...

      4. Anonymous Coward
        Anonymous Coward

        "A sale in the UK is routed through Ireland. The profit isn't in the UK, so isn't taxed there.

        The sale didn't take place in Ireland, so doesn't get taxed there./"

        An obvious assumption, very reasonable to those outside the world of dodgy finance, but a wrong assumption nevertheless. Depending on the meaning of "something like that", even that may not apply.

        The tax Apple pays in Ireland is specially negotiated with the Government and is based entirely on Apple's "operating expenses" in Ireland, not on sales revenue. Which is nice for Apple and friends, not so nice for anyone else.

        http://www.middleclasspoliticaleconomist.com/2016/07/a-bet-with-tim-worstall-on-apples-state.html

        1. Jason 24

          @AC, thanks for themiddleclasseconomist link, that pretty much hits the nail on the head;

          "In 1991, a basis for determining Apple Computer Ltd.’s (subsequently AOE’s)

          Irish branch net profit was proposed by Apple and agreed by Irish Revenue.

          According to that ruling, the net profit attributable to the AOE branch would be

          calculated as 65% of operating expenses up to an annual amount of USD [60-

          70] million and 20% of operating expenses in excess of USD [60-70] million. "

          From page 9

          So if you're a fictitious headquarters with minimal overheads then everything becomes profit, and your profit as calculated by the government is in no way related to your sales.

          1. Anonymous Coward
            Anonymous Coward

            "thanks for themiddleclasseconomist link"

            Thank *you* for taking the trouble to read it (and thanks to middleclasseconomist for writing it).

            Share and enjoy.

            Not so much thanks to the very many people here and elsewhere who are making what seem like perfectly reasonable (to them) *assumptions* about what's happening here. Sadly those assumptions are frequently wrong, because what's a perfectly reasonable thing to do for corporate tax lawyers etc bears no connection with what normal people in the real world see as reasonable, as you have just noticed in this case.

    2. uncle sjohie

      The money (sales income) was funneled to a mailbox company, where, according to the summary of the verdict I read, no taxes were paid at all.

    3. Snowy Silver badge
      Holmes

      Was "taxed" just not any of them places

      Some tax haven where the tax rate is 0% is where they paid the tax.

    4. Anonymous Coward
      Anonymous Coward

      " In what country was tax on the remaining €999,600 paid, and at what rate? ... Was it paid in the US, where they are actually headquartered? "

      The money in question hasn't gone back to the USA, it's still overseas, and here's how:

      Apple USA regularly issues billions of dollars of bonds (ie borrows loadsamoney) to avoid repatriating Apple income from abroad back to the USA, because if it goes back to the USA they get taxed on some of it.

      Please don't ask what happens when Apple's borrowings eventually need to be repaid, e.g. by bringing the overseas money back into the USA, as the presence of unbelievers may cause the experiment to fail, as it often does when spoon benders (or their corporate finance equivalent) are challenged.

      Ongoing for several years. Reported in the FT (paywall) and various other places, even the Daily Mail.

      Tim Worstall (formerly of these parts) has had a few articles on the subject in Forbes too.

      FT (2013): e.g. http://www.ft.com/cms/s/0/2ac24238-b25c-11e2-8540-00144feabdc0.html

      "Apple will avoid a potential tax bill of up to $9bn by using the proceeds from its $17bn blockbuster bond issue to pay shareholders rather than bringing back cash from abroad.

      The technology group would have paid as much as 35 per cent in tax to bring that amount of cash back into the US, according to lawyers and accountants.

      Apple, which has $100bn worth of offshore cash compared with just $45bn in the US, last month announced it would partly fund a record-breaking $55bn share buyback programme by using money raised in the corporate bond market.

      [continues]"

      Daily Mail (2016): http://www.dailymail.co.uk/news/article-3451420/Apple-s-latest-tax-avoidance-ruse-Tech-giant-issues-12bn-bonds-doesn-t-money-low-tax-offshore-havens-pay-dividends.html

      "[...]

      The money will be held outside of the US and will be used to pay dividends and buy back shares from foreign investors.

      But as the cash does not flow back to America, Apple will avoid paying the 35 per cent US corporation tax.

      Apple has used this tactic before and the bond issue is its **fifth such debt offering in three years.**

      The company now has a total of £37billion in long term debt despite being the second most valuable firm in the world.

      According to Moody's credit agency, Apple avoided paying £6.3 billion in taxes in 2012 alone using this strategy.

      [...]"

    5. Anonymous Coward
      Anonymous Coward

      So they paid €50 on every €1M profit. At 12.5% corp tax, that's €400 of profit declared as Irish.

      So the question is simple. In what country was tax on the remaining €999,600 paid, and at what rate?

      I don't think you understand numbers.

      they paid €50 tax on every €1M profit.

      If they had been taxed at 12.5% corporate rate, then they would have paid €125,000 tax on every €1 M profit.

      Where does your magic €400 come from?

      1. Invidious Aardvark

        He's pointing out that, if they've paid €50 tax per €1M profit, this means that for each €1M of profit only €400 was declared as Irish profit (since 50 is 12.5% of 400). Hence the question about the remaining €999,600.

        So it's not a magic 400, I think you just don't understand numbers...

  5. Yet Another Anonymous coward Silver badge

    See the needfor US tax reform

    If congress would simply lower the rate to 0.004% companies wouldn't be motivated to do this sort of thing

    1. Version 1.0 Silver badge

      Re: See the needfor US tax reform

      The US is upset about this judgement because the US allows companies to deduct foreign taxes - so if Apple pays the EU then they will deduct the payment from their US tax bill and probably end up getting a credit.

      It's all stupid - taxes these days are not about "paying" taxes - instead it's all about avoiding taxes which is very easy if you are very rich and virtually impossible if you are not.

      1. MonkeyCee

        Re: See the needfor US tax reform

        But the reason the EU is sticking t's beak in is that the US also allows corporations to defer paying taxes until..... well, until they feel like it.

        Since there have been previous tax holidays, allowing corps to pay their deferred taxes at a lower rate, then "proper tax planning" means the corps will hold of paying tax until they can get the maximum discount.

        The EU feels that this is bollocks, and that taxes should be paid relatively promptly, based on where the profits are booked. They have called out the US Treasury department on this issue, and as rightly observed, any tax paid outside of the US will count as a tax credit for the US profits.

        It's also cheaper to pay lawyers to string this out, while sitting on a big arse pile of cash. Hell, the interest alone is probably covering lawyer fees and associated bribes.

        I'm not quite sure how various Irish/Dutch/Luxembourg tax laws have survived so long, since they are clearly being used to avoid taxes. It's all well and good that double taxation is avoided, but it's (relatively) simple to claim that back, but if your laws designed to avoid double tax result in no tax, then it's clearly taking the piss.

        Combined with some spectacularly lax oversight of the arrangement by the Irish, such as having billions be transferred to a company that isn't actually based in *any* country, it's been clear for 20+ years that Ireland has been bending over backwards to accommodate this arrangement. No idea why either, since it's not like Ireland makes very much on this arrangement.

        As for playing bullshit with tax for personal reasons, my understanding is that with a trust* or two in play, and making loans that are never paid back, it's possible for Jo Public to pretty much avoid taxes too.

        I think the only way actual tax reform would occur is if the majority of taxpayers (ie people with incomes from selling their labor) starting doing the same tricks as the major wealth holders. Once every man and his dog has a personal and family trust set up, and an offshore stash pot, then the abuses by the big players might get addressed. More likely is that the rules on wages/salary will be re-interpreted, and some new form of trust will be created, to ensure that nasty things like NI, income tax and death duties are paid by the plebs, not the "proper" types who run this joint.

        * trusts usually pay some tax, AFAIK 10% every 10 years, or a bit less than 1% pa.

        1. Yet Another Anonymous coward Silver badge

          Re: See the needfor US tax reform

          >I'm not quite sure how various Irish/Dutch/Luxembourg tax laws have survived so long, since they are clearly being used to avoid taxes

          Because they are good for Ireland/Luxemburg etc. They wouldn't had a chance of attracting these corporations simply based on their home market so they make it tax free and score on visits/lawyers/hotel rooms etc.

          The real problem is going to come when other countries decide to compete. Romania decides that if you open a brass plaque office in it's capital it will approve any drug for Eu use with no questions. Greece decides that for 500euro it will give any refugee an Eu passport and a flight to Germany?

          1. Anonymous Coward
            Anonymous Coward

            Re: See the needfor US tax reform

            The real problem is going to come when other countries decide to compete.....Greece decides that for 500euro it will give any refugee an Eu passport and a flight to Germany?

            That'd do bloody wonders for the otherwise intractable issues of Greece's insolvent economy.

            Too late now, but you could have patented the idea and taken a cut if you hadn't blabbed in public. And you could have streamlined the model, by having a bidding platform (over an app, natch) whereby the number of passports is restricted (but not much), people smugglers have to pay you, in advance, and report their subsequent successful end to end transfer rate on the app. The transparency ensures fair(ish) play, and better safety, the people smugglers do the collections, and the auction and slightly limited volumes ensure higher prices.

        2. Anonymous Coward
          Anonymous Coward

          @MonkeyCee

          No, you're 100% wrong. The EU's interest has ZERO to do with the US allowing companies to avoid paying interest. The US is pretty much alone in the world in taxing US companies on worldwide income. Most countries only tax companies on money they earn within their borders.

          What the EU cares about is Ireland making special deals that disadvantage the rest of the EU. If Apple et al has a great deal that's against EU law, it hurts other countries as Ireland gets the benefit.

          1. Anonymous C0ward

            Re: @MonkeyCee

            Well then they should be paying all that tax in America.

      2. Baldy50

        Re: See the needfor US tax reform

        But does it annoy you as an individual paying say 20% tax and a multi billion dollar company not when their employees are?

        It's quite possible the employees of Apple pay more globally than they do!

        Then there's the wealthy shareholders probably having the dividends going straight into a offshore tax haven and paying little or no tax either?

        Stinks.

  6. Roger Greenwood

    They may not pay much tax . . .

    . . but I bet they tip well.

  7. Anonymous Coward
    Anonymous Coward

    Irish politicians will need to fight this ruling...

    ... because otherwise they will have to explain to their citizens why they declined to get a far larger share of those money, I mean, something alike 1-2%, at least.... <G>.

    1. paulf
      Holmes

      Re: Irish politicians will need to fight this ruling...

      It's also worth noting Ireland asked the EU for a €90bn bailout in 2010. Would that have been necessary if the big multinationals like Apple were paying tax at the published rate everyone else had to pay?

      Unfortunately companies like Apple (I know there are others who do this, but Apple is the subject here) always use the same defence; that they've paid all the taxes due by law, carefully sidestepping the fact they're wealthy enough to exploit a loophole most workers and small companies cannot.

      I wonder how Irish tax payers feel knowing they were, in effect, subsidising one of the biggest and richest companies on the planet? That's what happened when the Irish state decided to accept lower tax revenue by offering a special deal to one company that one assumes wasn't available to most others.

      1. AndyS

        Re: Irish politicians will need to fight this ruling...

        > Would that have been necessary if the big multinationals like Apple were paying tax at the published rate everyone else had to pay?

        Those multinationals wouldn't be in Ireland if they were paying tax at the published rate. That's why they're there.

        Ireland still benefits from having them - corporation tax isn't the only way a company benefits its host country (employment, income tax, etc). If they didn't cut these illegal deals, those companies would go somewhere else (as they likely might now anyway), and Ireland will be poorer for it.

        1. Anonymous Coward
          Anonymous Coward

          Re: Irish politicians will need to fight this ruling...

          Those multinationals wouldn't be in Ireland if they were paying tax at the published rate. That's why they're there.

          Actually, the tax discounts are icing on the cake. Predictability, fair property rights, reliable rule of law, a good (?) balance of employee and employer power, acceptable location....

          Giving something away to secure inward investment is the rule of the day. Walking away from even a quarter of the €13bn was a foolhardy mistake, and because this is egregious, there's stuff all chance of the Irish government winning in the longer term. They might see off the Apple challenge, but the EU can just ram through new regulations (as opposed to directives) and Ireland's model is doomed. Don't expect the same rules to apply to Luxembourg...

          1. Yet Another Anonymous coward Silver badge

            Re: Irish politicians will need to fight this ruling...

            >Predictability, fair property rights, reliable rule of law, a good (?) balance of employee and employer power, acceptable location....

            And you couldn't get those in Britain or Germany ?

            The nice thing about being a big multinational in a small country is that you can ensure that their regulations are "business friendly". Like the way Eire's data protection office is staffed by a single intern who works every other tuesday.

        2. John Brown (no body) Silver badge

          Re: Irish politicians will need to fight this ruling...

          "Ireland still benefits from having them - corporation tax isn't the only way a company benefits its host country"

          From what we are seeing in the various reports, all the Apple profits appear to be a held by an Irish company represented by a sheet of A4 paper which has "I am Apple" printed on it. No employees, no costs and no taxes to pay.

  8. John Lilburne

    We all shook our heads and tutted ...

    ... when Greece needed a bailout because bar owners weren't paying all their taxes, and the government wasn't collecting. I think lazy, cheating Southern Europeans was the refrain. Now we nod, smile, and say well done that a company that should have been paying billions to a bailout country wasn't.

  9. Anonymous Coward
    Anonymous Coward

    0.005% tax rate?

    Someone in the finance/corp-tax/legal departments in Cupertino are going to get a slap for handing over any of those fruity profits.

    1. Yet Another Anonymous coward Silver badge

      Re: 0.005% tax rate?

      The rate was selected by a very fair process.

      Jobs checked his pockets, threw what spare change he found at their feet and said "dance my little taxmen" - if they hadn't done such a cute riverdance they wouldn't have got even that.

  10. allthecoolshortnamesweretaken
    Coffee/keyboard

    "Apple has so far resisted the temptation to send The Reg a comment ..."

    Thank you, Paul - that made my day; it really has (see icon).

  11. James 47

    Ireland's stance is really simple

    It could not create jobs at the time. No government can create jobs without a private sector to pay for it. So they took the view that having jobs was better than having no jobs, and the jobs created around other companies doing business with Apple, etc, even if the multinationals took the piss.

    There's no point in having a 20 - 30% corporation tax rate if there are no companies there to pay that; something the EU doesn't seem to get.

  12. NanoMeter

    Block Apple

    Apple should be forbidden to sell their products in EU until they pay the €13 billion.

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