EU Commission vs Ireland Apple tax case judgment

26-07-2020 11:50am

blackwhite wrote: »

“Defending the indefensible”?

Yes indeed - a tax policy which helps bring jobs to Ireland is “indefensible” :rolleyes:
Stufent Union Marxism 101 right there.

The US claims that it has the right to levy taxes on all international subsidiaries of US companies - regardless of where they earn their profits and regardless of where the subsidiaries are actually registered. Irish intellectual property tax structures, combined with the Irish-US double taxation treaties give a way to defer the US taxing non-US profits.

I’ve already posted what Apples actual Global tax rate comes to - almost 17%. Yet all you could do is lie and pretend that profits were being “hidden” because you don’t understand what a consolidated set of accounts are

You may wish to take a look at how this “protecting Irish jobs” is viewed by other Eu countries

https://www.irishtimes.com/news/world/europe/europe-has-lost-apple-battle-but-the-war-is-far-from-over-1.4305485

blackwhite · 26-07-2020 2:53pm

Aegir wrote: »

You may wish to take a look at how this “protecting Irish jobs” is viewed by other Eu countries

https://www.irishtimes.com/news/world/europe/europe-has-lost-apple-battle-but-the-war-is-far-from-over-1.4305485

Other EU countries want to force an increase in our 12.5% rate. Doesn’t automatically make them right, and doesn’t automatically give them any right to so.

Other EU countries want to have the right to levy taxes based on where the end customer is located - not where the selling company is based. Taxes have never been levied that way before, so if they want to change a fundamental aspect of our corporate income taxes work then they’ll need to win a consensus to allow them to make those changes.

Of course - none of which relates to you claiming that the 2014 Finance Act helped Apple avoid taxes between 2004-2014

Keep on shifting the goalposts when you get caught spoofing on the previous point :pac:

Sam Russell · 26-07-2020 3:53pm

blackwhite wrote: »

Other EU countries want to force an increase in our 12.5% rate. Doesn’t automatically make them right, and doesn’t automatically give them any right to so.

Other EU countries want to have the right to levy taxes based on where the end customer is located - not where the selling company is based. Taxes have never been levied that way before, so if they want to change a fundamental aspect of our corporate income taxes work then they’ll need to win a consensus to allow them to make those changes.

Of course - none of which relates to you claiming that the 2014 Finance Act helped Apple avoid taxes between 2004-2014

Keep on shifting the goalposts when you get caught spoofing on the previous point :pac:

That tax is called VAT.

blackwhite · 26-07-2020 3:58pm

Sam Russell wrote: »

That tax is called VAT.

I was referring to levying corporate income taxes.

VAT - strictly speaking - is paid by the end customers, not the selling company. The company collects VAT on behalf of the local tax authorities.

Sam Russell · 26-07-2020 4:20pm

blackwhite wrote: »

I was referring to levying corporate income taxes.

VAT - strictly speaking - is paid by the end customers, not the selling company. The company collects VAT on behalf of the local tax authorities.

Yes of course. But VAT is levied by the local tax regime and is open to (limited) adjustment. The Commission have some powers over it.

How do you tax companies on their profits at the end purchaser level if they have complex structure?

For example, VW or Mercedes sell cars in Ireland - one through an owned distributor, and the other through a separate, Irish owned, distributor. The distributor sells to a dealer who sell onto the end user. So how do you work out where the corporate profits are made?

Some car companies distribute the cars through UK subsidiaries - more complexity. Do the costs of the UK company get passed onto the Irish company? Do they even show separate accounts for the Irish offshoot? Tesco do not.

Ireland would be mad not to veto such a move. We would be handing a major economic competitive advantage away for what?

26-07-2020 4:53pm

blackwhite wrote: »

Other EU countries want to force an increase in our 12.5% rate. Doesn’t automatically make them right, and doesn’t automatically give them any right to so.

Other EU countries want to have the right to levy taxes based on where the end customer is located - not where the selling company is based. Taxes have never been levied that way before, so if they want to change a fundamental aspect of our corporate income taxes work then they’ll need to win a consensus to allow them to make those changes.

Of course - none of which relates to you claiming that the 2014 Finance Act helped Apple avoid taxes between 2004-2014

Keep on shifting the goalposts when you get caught spoofing on the previous point :pac:

That’s almost poetic. I never made that claim did I? I used it as example of government action to enable these schemes, which you claim they do not do. You are just deflecting and trying to defend the indefensible.

It isn’t about the 12.5%. It’s about the various loop holes and allowances, the latest one nicely assess here. https://emmaclancy.com/2018/06/21/the-green-jersey-is-ireland-helping-apple-pay-less-than-1-tax-in-the-eu/

blackwhite · 26-07-2020 6:53pm

Aegir wrote: »

That’s almost poetic. I never made that claim did I? I used it as example of government action to enable these schemes, which you claim they do not do. You are just deflecting and trying to defend the indefensible.

It isn’t about the 12.5%. It’s about the various loop holes and allowances, the latest one nicely assess here. https://emmaclancy.com/2018/06/21/the-green-jersey-is-ireland-helping-apple-pay-less-than-1-tax-in-the-eu/

“Defending the indefensible” :rolleyes:

Stick to the soundbites if you can’t argue a point I guess

Aegir wrote: »

My understanding is that they were helping Apple to avoid paying tax and this wasn’t in doubt. The argument was that it was not offered to all companies and was therefore akin to state aid.

Here’s your original quote. When called out on the lie about “helping” your response was to reference the 2014 Finance Act.

So either you think that the 2014 Finance Act was helping Apple between 2004-2014, or you were just throwing in a healthy dose of whataboutery

We get it - you don’t like ireland using our tax regime to bring jobs into the country. Unfortunately for you and for the rest who would prefer we had remained an economic backwater, the EU Courts don’t agree with you

PeadarCo · 26-07-2020 7:32pm

Sam Russell wrote: »

Some car companies distribute the cars through UK subsidiaries - more complexity. Do the costs of the UK company get passed onto the Irish company? Do they even show separate accounts for the Irish offshoot? Tesco do not.

Tesco probably do pay corporation tax in Ireland. They may not have a separate legal entity operating in Ireland but they will have an Irish branch and the profits of the Irish branch are taxable in Ireland in principle in line with the Irish UK tax treaty.

This is something to remember tax is complex and ever changing(each new budget changes different laws relating to tax) and you also have to consider how in interacts with different inter country tax treaties and EU law. It's a complicated area which the media has a tenancy to do a horrible job of explaining. An example of that is a few years ago the indo ran a headline along the lines of "the EU band transfer pricing" which is ridiculous. Transfer pricing issues occur even within group companies based in the same jurisdiction. Tax may not even be the dominant factor around how a company manages it's transfer pricing. Internal politics around renumeration and internal targets can play just as big a role if not more depending on the situation.

What all this means there is massive potential for unintended consequences and certain commentators instead of trying to understand the complexity just call corruption, fraud, state aid(in the case of the EU commission) etc.

paul71 · 26-07-2020 7:37pm

[PHP][/PHP]

Aegir wrote: »

Big deal. I gave it the wrong name.

Is an apple an orange? Yes it is a very big deal because no-one can discern what you are trying to say.

26-07-2020 7:54pm

blackwhite wrote: »

Here’s your original quote. When called out on the lie about “helping” your response was to reference the 2014 Finance Act.

So either you think that the 2014 Finance Act was helping Apple between 2004-2014, or you were just throwing in a healthy dose of whataboutery

We get it - you don’t like Ireland using our tax regime to bring jobs into the country. Unfortunately for you and for the rest who would prefer we had remained an economic backwater, the EU Courts don’t agree with you

I don't particularly like any country that knowingly colludes with mulitnationals with the sole intention of helping them avoid paying taxes. Ireland, Luxembourg and the Netherlands are three very obvious culprits in this.

I understand why it was done originally, Ireland needed to attract foreign investment, but it has now reached a point where the Mulitnationals say jump and the Irish government asks not only how high, but for how long as well.

You know this, but are going to great lengths to deny it actually happened, to the extent you make Bertie sound credible.

Double Irish, Single Malt or the latest, made possible by the 2015 finance act, CAIA.

to try and deny that the Government or Revenue were involved in helping set up these structures is farcical, hence my example of the 2014 finance act.

paul71 · 26-07-2020 8:06pm

Aegir wrote: »

I don't particularly like any country that knowingly colludes with mulitnationals with the sole intention of helping them avoid paying taxes. Ireland, Luxembourg and the Netherlands are three very obvious culprits in this.

I understand why it was done originally, Ireland needed to attract foreign investment, but it has now reached a point where the Mulitnationals say jump and the Irish government asks not only how high, but for how long as well.

You know this, but are going to great lengths to deny it actually happened, to the extent you make Bertie sound credible.

Double Irish, Single Malt or the latest, made possible by the 2015 finance act, CAIA.

to try and deny that the Government or Revenue were involved in helping set up these structures is farcical, hence my example of the 2014 finance act.

Ireland does not colude. We have a low corporate tax to compete. In the US individual states do the same with state corporation tax. It is not the responsibilty of Ireland to decide if the US should change its rule on taxation of profits not yet repatriated to the US, that is the responsibilty of the US.

Multinational companies in Ireland are taxed the same way as Irish companies and there are no sweetheart deals outside the tax code. The proposed electronic tax is simply a tax grab by other EU countries on revenues of companies who do their work in Ireland with Irish resident workforces and IMO that is a pandoras box that manufacturing countries like France and Germany should be very careful about opening least we (Ireland and other consumers of French/German product) start looking at BMW, Renault and wine producing corporation taxes.

relax carry on · 26-07-2020 11:00pm

Aegir wrote: »

to try and deny that the Government or Revenue were involved in helping set up these structures is farcical, hence my example of the 2014 finance act.

There are 101 sections to FA 2014. Please pick the section in the act you are using to back up your assertion. International taxation and group structures drive me spare but I can at least follow what you are trying to get across if you chose a section of an Act for us to review.

26-07-2020 11:02pm

paul71 wrote: »

Ireland does not colude. We have a low corporate tax to compete. In the US individual states do the same with state corporation tax. It is not the responsibilty of Ireland to decide if the US should change its rule on taxation of profits not yet repatriated to the US, that is the responsibilty of the US.

Multinational companies in Ireland are taxed the same way as Irish companies and there are no sweetheart deals outside the tax code. The proposed electronic tax is simply a tax grab by other EU countries on revenues of companies who do their work in Ireland with Irish resident workforces and IMO that is a pandoras box that manufacturing countries like France and Germany should be very careful about opening least we (Ireland and other consumers of French/German product) start looking at BMW, Renault and wine producing corporation taxes.

No sweetheart deals, which was why Apple doesn't have to repay the $13bn, or at least the court ruled that the commission had not proven it.

Any company can use the loopholes that have been created it probably doesn't make sense for the Irish craft distillery mentioned earlier to employ solicitors in Dublin, Jersey, Amsterdam and Bermuda to make it happen though. This is why the court found in Apple's favour. It wasn't state aid that gave them an unfair advantage, anyone could avail of these loopholes.

fair play to the lads in Cork though, they must be flat out making all those iphones, airpods, apple watches etc etc etc for the european market. Its amazing what 6,000 Cork lads can make compared to the 350,000 Foxconn employees.

paul71 · 26-07-2020 11:21pm

Aegir wrote: »

No sweetheart deals, which was why Apple doesn't have to repay the $13bn, or at least the court ruled that the commission had not proven it.

Any company can use the loopholes that have been created it probably doesn't make sense for the Irish craft distillery mentioned earlier to employ solicitors in Dublin, Jersey, Amsterdam and Bermuda to make it happen though. This is why the court found in Apple's favour. It wasn't state aid that gave them an unfair advantage, anyone could avail of these loopholes.

fair play to the lads in Cork though, they must be flat out making all those iphones, airpods, apple watches etc etc etc for the european market. Its amazing what 6,000 Cork lads can make compared to the 350,000 Foxconn employees.

So you believe the corporation tax should be levied in Twaiwan on European profits.

26-07-2020 11:21pm

relax carry on wrote: »

There are 101 sections to FA 2014. Please pick the section in the act you are using to back up your assertion. International taxation and group structures drive me spare but I can at least follow what you are trying to get across if you chose a section of an Act for us to review.

The intangible assets bit, the one that allows companies to claim depreciation on 100% of its IP. Or is it 80%? Sorry it was supposed to be, until Noonan changed it to 100% after lobbying from the American Chamber of commerce in Ireland.

Now it’s 80% again, now that huge amounts of IP were transferred to Ireland prompting a 26% increase in our GDP.

26-07-2020 11:22pm

paul71 wrote: »

So you believe the corporation tax should be levied in Twaiwan on European profits.

I believe Ireland should close all its loop holes so that corporation tax is actually paid.

Robert McGrath · 26-07-2020 11:42pm

Aegir wrote: »

No sweetheart deals, which was why Apple doesn't have to repay the $13bn, or at least the court ruled that the commission had not proven it.

Any company can use the loopholes that have been created it probably doesn't make sense for the Irish craft distillery mentioned earlier to employ solicitors in Dublin, Jersey, Amsterdam and Bermuda to make it happen though. This is why the court found in Apple's favour. It wasn't state aid that gave them an unfair advantage, anyone could avail of these loopholes.

fair play to the lads in Cork though, they must be flat out making all those iphones, airpods, apple watches etc etc etc for the european market. Its amazing what 6,000 Cork lads can make compared to the 350,000 Foxconn employees.

You realise that your last paragraph above actually puts you on the side of Apple and the Irish govt in the recent case?

It was the European Commission that was claiming that Apple’s global profits should be taxed in Ireland.

Apple and Ireland said that this is nonsensical. The court agreed

I and many others on this thread seem willing to engage and debate with you on this topic, but you’re going to have to make your case a bit clearer, to be honest

Robert McGrath · 26-07-2020 11:50pm

Aegir wrote: »

I believe Ireland should close all its loop holes so that corporation tax is actually paid.

Define a “loophole”.

You seem quite agitated about the fact that Irish companies can claim capital allowances on the cost of purchasing intangible assets like IP.

A business can write off the cost of buying a car or a computer or a printer against their taxable profits over a few years. The reason is that these are assets that perform a function in their business and are therefore a legitimate deduction over a number of years. The same applies to the purchase of IP. Why shouldn’t it? In the modern economy, purchashing IP is the same as purcashing industrial equipment 100 years ago.

That’s not a loophole

blanch152 · 26-07-2020 11:55pm

Aegir wrote: »

I believe Ireland should close all its loop holes so that corporation tax is actually paid.

Given that we are seeing record amount of corporation tax being collected in Ireland, and the per capita take is among this highest in the world, do you not think we have already done that?

blackwhite · 27-07-2020 9:31am

Aegir wrote: »

I believe Ireland should close all its loop holes so that corporation tax is actually paid.

But the US multinationals pay approx. €7billion a year in Corporation tax in Ireland - why lie and pretend they aren't paying any taxes?

Yet again - populist soundbites that aren't grounded in reality and are easily proven to be lies. Yet you sling insults about other people's credibility :rolleyes:

https://twitter.com/seamuscoffey/status/1283686559636533249?s=20

https://twitter.com/seamuscoffey/status/1283678758491181056?s=20

27-07-2020 10:53am

Robert McGrath wrote: »

Define a “loophole”.

You seem quite agitated about the fact that Irish companies can claim capital allowances on the cost of purchasing intangible assets like IP.

A business can write off the cost of buying a car or a computer or a printer against their taxable profits over a few years. The reason is that these are assets that perform a function in their business and are therefore a legitimate deduction over a number of years. The same applies to the purchase of IP. Why shouldn’t it? In the modern economy, purchashing IP is the same as purcashing industrial equipment 100 years ago.

That’s not a loophole

I agree with that to an extent, but the issue with intangible assets is that they are just that, intangible.

A company can decide that it's IP is worth €300bn, sell them to themselves from effectively nowhere and then use that to offset tax. It is effectively an open door for companies to exploit, as we are seeing happening right now.

Sam Russell · 27-07-2020 11:29am

Aegir wrote: »

I agree with that to an extent, but the issue with intangible assets is that they are just that, intangible.

A company can decide that it's IP is worth €300bn, sell them to themselves from effectively nowhere and then use that to offset tax. It is effectively an open door for companies to exploit, as we are seeing happening right now.

IP is a difficult asset to value, but it does not come from nowhere.

If I have a company that has a good level of business - say a cafe that has a regular footfall, then it has a valuable element of goodwill. Now no company will take that onto its balance sheet as it is then counted as profit and therefore tax. However, if that company is sold to another company, it includes that as an asset, and the purchaser writes it down as an asset. The selling company now is liable for tax on it as a profit.

Where did the IP that Apple had transferred to Ireland come from?

Robert McGrath · 27-07-2020 1:50pm

Aegir wrote: »

A company can decide that it's IP is worth €300bn, sell them to themselves from effectively nowhere and then use that to offset tax. It is effectively an open door for companies to exploit, as we are seeing happening right now.

And that’s where transfer pricing and arms length and market value rules come in. To counteract exactly that.

And if one subsidiary of the group sells the IP to another subsidiary for €300bn, then there should be a taxable profit of some kind in the selling company. The profit doesn’t just disappear

moon2 · 27-07-2020 4:19pm

Robert McGrath wrote: »

And that’s where transfer pricing and arms length and market value rules come in. To counteract exactly that.

And if one subsidiary of the group sells the IP to another subsidiary for €300bn, then there should be a taxable profit of some kind in the selling company. The profit doesn’t just disappear

You've hit the nail on the head there. The jurisdiction that profit is realised in may result in a substantially lower amount owed, or a princely sum of Zero being owed.

By leasing 'IP' between different entities of the same company you can convert 300B of profit in your country of operation into whatever small number you feel like, and then realise the remainder in a tax haven.

You may eventually have to pay repatriation tax if the money is brought into a country but in the meantime the money is safe and, essentially, untaxed.

Apple borrowed 17B back in 2013 as it was cheaper than repatriating cash. It's kind of crazy that it was more profitable to borrow 17B than it is to repatriate some of the 150B in cash they had at the time.

Robert McGrath · 27-07-2020 5:45pm

moon2 wrote: »

You've hit the nail on the head there. The jurisdiction that profit is realised in may result in a substantially lower amount owed, or a princely sum of Zero being owed.

By leasing 'IP' between different entities of the same company you can convert 300B of profit in your country of operation into whatever small number you feel like, and then realise the remainder in a tax haven.

You may eventually have to pay repatriation tax if the money is brought into a country but in the meantime the money is safe and, essentially, untaxed.

Apple borrowed 17B back in 2013 as it was cheaper than repatriating cash. It's kind of crazy that it was more profitable to borrow 17B than it is to repatriate some of the 150B in cash they had at the time.

And all of the above is because of problems with the US tax system which we can’t control.

Seamus Coffey has a good article in today’s Examiner showing how the US is the real tax haven

moon2 · 27-07-2020 7:31pm

Robert McGrath wrote: »

And all of the above is because of problems with the US tax system which we can’t control.

Seamus Coffey has a good article in today’s Examiner showing how the US is the real tax haven

100% agree. I just wanted to call this out as Aegir is correct in this aspect. It is a "loophole" which companies actively take advantage of.

It is not a "loophole" of Ireland's creation though, nor can it be solved with some tweaks to Ireland's tax code.

Sam Russell · 27-07-2020 7:42pm

Robert McGrath wrote: »

And all of the above is because of problems with the US tax system which we can’t control.

Seamus Coffey has a good article in today’s Examiner showing how the US is the real tax haven

I think you need to add the British Overseas Territories like the Cayman Islands, Bermuda, British Virgin Island, etc., and do not forget the Channel Islands and the Isle of Mann.

They facilitate a huge amount of tax avoidance and tax evasion.

The US tax code just makes it worthwhile.

McGiver · 30-07-2020 1:44am

Anyone who claims that Irish governments did not deliberately create a tax haven using loopholes and trickery etc is either lying, deluded or ignorant. This is NOT creative accounting, it's a deliberate large scale parasitic scam. It is perfectly legal in Irish law of course but that's because it's designed like that and legislatively arranged.

This was done systematically and knowingly by the Irish governments for decades.

Ireland is a part of a global tax evasion nexus where Bahamas/Virgin Islands/Jersey are linked with Ireland and Netherlands or Luxembourg.

All leading expert academics on tax havens as well as NGOs dealing with the topic consider Ireland as a tax haven and an OFC. In fact, Ireland is the leading global tax haven, at least in BEPS, and made a couple of world records in profit shifting in last several years.

One important symptom of tax havens is inflated GDP and hugely disproportionate held assets value compared to the GDP. Ireland has both symptoms (as a corporate tax haven and lately an emerging OFC too). In fact Irish GDP is so inflated (as is the Luxembourg GDP surprise surprise) that the EU, the IMF, and the Irish government don't use Irish GDP as an indicator anymore and use modified GNI instead. EU average is GDP = GNI. Irish GDP = 160+% of GNI.

And before you start with the OECD - there's no country which fulfills OECD criteria for a tax haven.

Corporate tax rate of 12.5% is completely irrelevant in this discussion. Effective rate of 12.5% would be perfectly fine and still the most competitive rate in Europe, no issue with that. What counts is the effective tax rate of 0.25% or so which is even openly advertised by the IFC and related entities in some of their materials.

And arguing that this scam is bringing jobs to Ireland like there's no other way - how do other normal (as in not tax havens) countries bring jobs to their countries? Germany, Sweden, Finland, Austria. By good governance, good regulations, good labour market, good infrastructure, good educated workforce, by finding niches, by R&D etc.

Don't tell me that the only way for Ireland to attract jobs is by organising a global scale tax evasion. If that's the case then Ireland needs to seriously reconsider its long term strategy. This is a lazy way of doing things and it may backfire - Ireland is totally reliant on US corporates for tax receipts and employment, has essentially no serious industry of its own (non US owned), has a quite poor infrastructure (given its world class level of GDP, pun intended), no serious R&D in terms of patents (not linked to the US MNCs), very small local exporter base (10 times fewer companies than Denmark - the same population) - this is all a very unhealthy and imbalanced structure of the economy. If the US MNCs pull out then good luck...

McGiver · 30-07-2020 1:50am

moon2 wrote:

It is not a "loophole" of Ireland's creation though, nor can it be solved with some tweaks to Ireland's tax code.

No? So leprechauns created the loopholes? Of course it is. And it's deliberate.

Also some of the "creative" instruments are invisible to Revenue (I.e. They can't inspect or see them) due to the legislation deliberately made them falling into the scope of secrecy under the 1940s Central Bank act.

PeadarCo · 30-07-2020 11:52am

McGiver wrote: »

No? So leprechauns created the loopholes? Of course it is. And it's deliberate.

Also some of the "creative" instruments are invisible to Revenue (I.e. They can't inspect or see them) due to the legislation deliberately made them falling into the scope of secrecy under the 1940s Central Bank act.

I'll be honest this sounds like conspiracy theory nonsense.

If all this is secret how do the multinationals find out about this stuff? How do tax advisers, lawyers and accountants, the Revenue, the Court system etc know about this legislation. How is it possible for them to read the relevant legislation(required to create and enforce the relevant tax structures)? How does the Dail that sits in public formulate and pass these laws in secret, especially as most laws relating to tax are passed during the annual budget the time of the year outside elections that the Dail receives most attention? What have TD's not released the text of these law's to the public? Remember we have communists sitting in the Dail as TD's people who would only be too happy to release the information? Why are they so quiet? What specific part of the 1940's Central Bank Act(does this act even actually exist?) enables all these laws to be a secret? Again 1940's Ireland was very insular both cultural and economicly. The focus on FDI didn't start until the 1960's.

If you are going to make an extraordinary claim you need extraordinary evidence.

blanch152 · 30-07-2020 12:09pm

PeadarCo wrote: »

I'll be honest this sounds like conspiracy theory nonsense.

If all this is secret how do the multinationals find out about this stuff? How do tax advisers, lawyers and accountants, the Revenue, the Court system etc know about this legislation. How is it possible for them to read the relevant legislation(required to create and enforce the relevant tax structures)? How does the Dail that sits in public formulate and pass these laws in secret, especially as most laws relating to tax are passed during the annual budget the time of the year outside elections that the Dail receives most attention? What have TD's not released the text of these law's to the public? Remember we have communists sitting in the Dail as TD's people who would only be too happy to release the information? Why are they so quiet? What specific part of the 1940's Central Bank Act(does this act even actually exist?) enables all these laws to be a secret? Again 1940's Ireland was very insular both cultural and economicly. The focus on FDI didn't start until the 1960's.

If you are going to make an extraordinary claim you need extraordinary evidence.

The reference to the 1940s Central Bank Act is particularly strange as that Act is now unrecognisable from its original form, given the large number of amendments that have been made. This is the Law Reform Commission updated version of the Act:

https://www.lawreform.ie/_fileupload/RevisedActs/WithAnnotations/HTML/EN_ACT_1942_0022.htm

This is the original Act:

http://www.irishstatutebook.ie/eli/1942/act/22/enacted/en/html

There is a huge difference.

Sam Russell · 30-07-2020 12:21pm

McGiver wrote: »

Anyone who claims that Irish governments did not deliberately create a tax haven using loopholes and trickery etc is either lying, deluded or ignorant. This is NOT creative accounting, it's a deliberate large scale parasitic scam. It is perfectly legal in Irish law of course but that's because it's designed like that and legislatively arranged.

This was done systematically and knowingly by the Irish governments for decades.

Ireland is a part of a global tax evasion nexus where Bahamas/Virgin Islands/Jersey are linked with Ireland and Netherlands or Luxembourg.

All leading expert academics on tax havens as well as NGOs dealing with the topic consider Ireland as a tax haven and an OFC. In fact, Ireland is the leading global tax haven, at least in BEPS, and made a couple of world records in profit shifting in last several years.

One important symptom of tax havens is inflated GDP and hugely disproportionate held assets value compared to the GDP. Ireland has both symptoms (as a corporate tax haven and lately an emerging OFC too). In fact Irish GDP is so inflated (as is the Luxembourg GDP surprise surprise) that the EU, the IMF, and the Irish government don't use Irish GDP as an indicator anymore and use modified GNI instead. EU average is GDP = GNI. Irish GDP = 160+% of GNI.

And before you start with the OECD - there's no country which fulfills OECD criteria for a tax haven.

Corporate tax rate of 12.5% is completely irrelevant in this discussion. Effective rate of 12.5% would be perfectly fine and still the most competitive rate in Europe, no issue with that. What counts is the effective tax rate of 0.25% or so which is even openly advertised by the IFC and related entities in some of their materials.

And arguing that this scam is bringing jobs to Ireland like there's no other way - how do other normal (as in not tax havens) countries bring jobs to their countries? Germany, Sweden, Finland, Austria. By good governance, good regulations, good labour market, good infrastructure, good educated workforce, by finding niches, by R&D etc.

Don't tell me that the only way for Ireland to attract jobs is by organising a global scale tax evasion. If that's the case then Ireland needs to seriously reconsider its long term strategy. This is a lazy way of doing things and it may backfire - Ireland is totally reliant on US corporates for tax receipts and employment, has essentially no serious industry of its own (non US owned), has a quite poor infrastructure (given its world class level of GDP, pun intended), no serious R&D in terms of patents (not linked to the US MNCs), very small local exporter base (10 times fewer companies than Denmark - the same population) - this is all a very unhealthy and imbalanced structure of the economy. If the US MNCs pull out then good luck...

I think you need to look at the history of how we had our hospitals built by the Irish Hospital Sweepstakes - a lottery that operated by allowing Americans to buy lottery tickets illegally (under US law) in the USA and have them secretly posted to Ireland to be included in the draw. Many hospitals were built with the proceeds.

Or how Shannon Airports started the duty free shops that allowed travellers to purchase goods free of tax and duty as long as they exported them in their hand baggage. That helped grow the airport.

Shannon also started the tax free industrial estates in Shannon that allowed foreign manufacturers to operate outside the Irish domestic tax structures. That allowed many Irish nationals to get managerial experience they would not have gained any other way.

It was the natural development of these structures that has ended up with the 12.5% corporation tax rate. Further lobbying by MNC ended up with the various tax loopholes such as the treatment of IP.

We did not have our own currency, nor did we have a manufacturing base. All we had was poor agriculture, that was little more than subsistence farming. We were a third world* country.

Other tax havens imitated our structures.

*Actually, we were always a third world country because we are not aligned with the Western Alliance (USA and others) nor were we aligned with the USSR. That definition is now historical as the USSR is no more.

CrabRevolution · 30-07-2020 3:42pm

PeadarCo wrote: »

I'll be honest this sounds like conspiracy theory nonsense.

If all this is secret how do the multinationals find out about this stuff? How do tax advisers, lawyers and accountants, the Revenue, the Court system etc know about this legislation. How is it possible for them to read the relevant legislation(required to create and enforce the relevant tax structures)? How does the Dail that sits in public formulate and pass these laws in secret, especially as most laws relating to tax are passed during the annual budget the time of the year outside elections that the Dail receives most attention? What have TD's not released the text of these law's to the public? Remember we have communists sitting in the Dail as TD's people who would only be too happy to release the information? Why are they so quiet? What specific part of the 1940's Central Bank Act(does this act even actually exist?) enables all these laws to be a secret? Again 1940's Ireland was very insular both cultural and economicly. The focus on FDI didn't start until the 1960's.

If you are going to make an extraordinary claim you need extraordinary evidence.

Sounds a bit far fetched alright. So an Irish citizen (including TDs) has no access to these secret laws, but John Google from the USA does somehow get access to them so he can structure his company's Irish dealings accordingly?

Geuze · 30-07-2020 5:55pm

McGiver wrote: »

No? So leprechauns created the loopholes? Of course it is. And it's deliberate.

Also some of the "creative" instruments are invisible to Revenue (I.e. They can't inspect or see them) due to the legislation deliberately made them falling into the scope of secrecy under the 1940s Central Bank act.

Secret?

AFAIK, Apple and Revenue met, and a decision was made about how much of ASI's profit was attributable to the Irish branch, and how much stays with the parent company.

Revenue would have approved of the %split.

McGiver · 30-07-2020 8:53pm

PeadarCo wrote:

I'll be honest this sounds like conspiracy theory nonsense.

There is no conspiracy at all. These are facts. Find some academic research on tax havens. Ireland is a clear cut case. I know you folks don't like to hear it but everyone else knows. No need to be ashamed of that but the usual zealous defence and talks about creative accounting are poor, just admit the reality. Is it some sort of national taboo or what? Ireland is a global tax haven and now also becoming a leading OFC. End of story.

You can start here and read all the papers:
https://en.m.wikipedia.org/wiki/Ireland_as_a_tax_haven#Leaders_in_tax_haven_research

On the L-AIQIFs:
Unlike the Section 110 SPV, the L–QIAIFs are not required to file public accounts (this was how the Section 110 tax abuses were uncovered), but file confidential accounts with the Central Bank of Ireland, that are protected under the 1942 Central Bank Secrecy Act

PeadarCo · 30-07-2020 10:30pm

McGiver wrote: »

There is no conspiracy at all. These are facts. Find some academic research on tax havens. Ireland is a clear cut case. I know you folks don't like to hear it but everyone else knows. No need to be ashamed of that but the usual zealous defence and talks about creative accounting are poor, just admit the reality. Is it some sort of national taboo or what? Ireland is a global tax haven and now also becoming a leading OFC. End of story.

You can start here and read all the papers:
https://en.m.wikipedia.org/wiki/Ireland_as_a_tax_haven#Leaders_in_tax_haven_research

On the L-AIQIFs:
Unlike the Section 110 SPV, the L–QIAIFs are not required to file public accounts (this was how the Section 110 tax abuses were uncovered), but file confidential accounts with the Central Bank of Ireland, that are protected under the 1942 Central Bank Secrecy Act

Here's another question for you. Do you actually understand what you've linked to? Can you explain yourself without linking to a Wikipedia page of how these investment funds operate.

What you are talking about here are very specialised investment funds are to say they are tax free is incorrect. They are subject to a number of taxes or at least Irish tax resident investors are.

From reading the stuff in the what you've linked to the reason the Funds aren't taxable is because the investors in the Funds are or at least the Irish residents investors are subject to taxable on any distributions made by the relevant funds.

Also it looks like again from reading some of the link's that the funds are still subject to capital gains tax.

The structure you are talking about is highly highly specialised. To compare them to more typical companies/organisations is incorrect like Apple, Facebook, Google etc are not investment funds. It is incorrect to say investing in the Funds is tax free for Irish residents. Again remember one of arguements over Apple and multinationals in general is where profits are taxable ie normally only the profits made by the Irish branch/subsidiary are taxable in Ireland for a multi national assuming of course its HQ is not in Ireland.

The funds you have linked to are complicated. However just because something is complicated does not mean its suddenly a conspiracy. And honestly doubt from your posts I don't know if you actually understand how the entities you link to work. Because they are taxable in Ireland or least some of their gains and distributions are which is not unusual or news. Its important to remember limited companies are different to investment funds. They are set up for different reasons and follow different tax rules. The same as how a sole traders, partnerships and limited company are all different legally and attract different tax treatments.

To describe Ireland as tax haven because it does not tax non resident investors on distributions is stretching things. You do understand some of money made by the sub funds may not even have been generated in Ireland. And again similar to the Apple case it relys heavily on US laws.

McGiver · 31-07-2020 12:50am

PeadarCo wrote:

Here's another question for you. Do you actually understand what you've linked to? Can you explain yourself without linking to a Wikipedia page of how these investment funds operate.

Meh. You're going straw man. And you're mixing two things.

L-AIQAIs are OFC stuff. The Apple case is related to BEPS, which is a corporate tax haven stuff. BEPS highly distorts Irish GDP to such a level that it can't be used as an indicator (including Revenue and Oireachtas).

A very good paper on the BEPS topic is here, enjoy the reading.
http://gabriel-zucman.eu/files/TWZ2020.pdf

5.4 Estimates of Profits Shifted to Tax Havens
In total, we find that more than $616 billion in profits were shifted to tax havens in 2015, close to 40% of multinational profits ($616 billion out of $1.7 trillion). We present our estimate of the amount of profits shifted into each tax haven in the bottom panel of Table 2.
Ireland appears as the number one shifting destination, accounting for more than $100 billion alone. Singapore, the Netherlands, Caribbean tax havens, and Switzerland come next. We stress that due to the complex structures used by multinationals and to the data limitations discussed in Section 4.2, allocating the shifted profits to specific jurisdictions involves a margin of error (for instance, the frontier between Ireland and Bermuda is not always clear). This uncertainty, however, does not affect our estimate of the global amount of profits shifted offshore.

PeadarCo · 31-07-2020 7:20am

McGiver wrote: »

Meh. You're going straw man. And you're mixing two things.

L-AIQAIs are OFC stuff. The Apple case is related to BEPS, which is a corporate tax haven stuff. BEPS highly distorts Irish GDP to such a level that it can't be used as an indicator (including Revenue and Oireachtas).

A very good paper on the BEPS topic is here, enjoy the reading.
http://gabriel-zucman.eu/files/TWZ2020.pdf

I am confused you've gone from talking about investment funds to talking about profit sharing between different companies.

The paper you have linked to doesn't really say anything new. Yes Ireland takes in a relatively high amount of corporation tax and my guess is the amount has gotten even higher. This reliance is a well known and highlighted problem but that means raising taxes on other areas ie income tax etc. Yes multinationals distort Irish GDP it Benn well known for a long time.

Even the paper itself I have issues with as it uses headline tax rates. Ie refering to Ireland having an 50% corporation tax rate in the 1980's and then a few words later mentions the current tax rate of 12.5%. While not being completely fimilar with the tax rate changes Ireland did not make such a big drop when it came to the effective tax rate. Its was not as simple as the paper implies. It also ignores the massive changes in the Irish economy that have resulted in a higher tax take.

The issue with some of the data is that it looks at at % of employees. This is something the US government has clamped down resulting in more employees being moved in Ireland since 2015.

My other big criticism of the paper is that it doesn't explain how. It calls countries like Ireland a tax haven because of few well known numbers but saying Ireland has a relatively high corporation tax haul does not make Ireland suddenly a tax haven. One big thing to note is to a large degree the headline corporation tax rate can be irrelevant depending on other allowances and deductions built into the tax code or other elements. Apple being a good example the US tax code allowed a company not to resident anywhere which was something they took advantage of.

In short the paper you have linked is nothing new and calling Ireland a tax haven does not make Ireland a tax haven unless you can go through the Irish tax code and start pointing at specific points there. I think as mentioned in previous posts for US companies it's US laws that bring down the tax rate of the company. Ie not need to repatriate profits under US law. You can't go calling Ireland a tax haven because we don't dictate the US tax code.

StackSteevens · 25-09-2020 1:18pm

So the EU Commission has opted to appeal the General Court's verdict at the last moment.

The appeal hearing will take years and the cynic in me suspects that this is merely a face saving, kick the can down the road gambit by Von Der Leyden and Vestager.

Sam Russell · 25-09-2020 6:01pm

StackSteevens wrote: »

So the EU Commission has opted to appeal the General Court's verdict at the last moment.

The appeal hearing will take years and the cynic in me suspects that this is merely a face saving, kick the can down the road gambit by Von Der Leyden and Vestager.

This, I suspect, is a start at trying to get Corporate taxation into a Commission competence so they can dictate the ground rules re taxation. They have a small level in the application of VAT but just on what has to be charged VAT but not on the actual rate. [there are minimum level].

They cannot submit new evidence (if they follow normal rules for appeals) and the decision they are appealing leaves little room on a point of law.

The part of this is that the Commission was making the tax as shareable among all member states which I cannot see how tax due to Ireland, according to the case, can be shared out. Is there any such tax within he EU?

Robert McGrath · 26-09-2020 1:52pm

StackSteevens wrote: »

So the EU Commission has opted to appeal the General Court's verdict at the last moment.

The appeal hearing will take years and the cynic in me suspects that this is merely a face saving, kick the can down the road gambit by Von Der Leyden and Vestager.

I get the impression from tax commentators on twitter that this is indeed the case. There’s been such huge political investment in this case by the Commission that they can’t just give up now, even if the chances of a successful appeal are slim

StackSteevens · 27-09-2020 9:06pm

Robert McGrath wrote: »

I get the impression from tax commentators on twitter that this is indeed the case. There’s been such huge political investment in this case by the Commission that they can’t just give up now, even if the chances of a successful appeal are slim

That's about it. Hell hath no fury like a female Commissioner scorned - even though she's moved on from her old job.

The shallowness of the Commission's stance is well set out in this article:-

https://www.irishexaminer.com/opinion/columnists/arid-40055570.html

It's such a shame that Phil Hogan wasn't still around to argue/fight Ireland's corner.

For all her talents, the New Girl wasn't really in a position to take on the Commission Heavyweights - especially given that Vestager's good pal, Von Der Leyden, had selected her as Commissioner only a couple of weeks ago!

Sam Russell · 27-09-2020 9:18pm

StackSteevens wrote: »

That's about it. Hell hath no fury like a female Commissioner scorned - even though she's moved on from her old job.

The shallowness of the Commission's stance is well set out in this article:-

https://www.irishexaminer.com/opinion/columnists/arid-40055570.html

It's such a shame that Phil Hogan wasn't still around to argue/fight Ireland's corner.

For all her talents, the New Girl wasn't really in a position to take on the Commission Heavyweights - especially given that Vestager's good pal, Von Der Leyden, had selected her as Commissioner only a couple of weeks ago!

Especially as she is not yet Commissioner, so there is not much she can do at the moment. I think Von der Leyden has a high opinion of McGuinness as well.

StackSteevens · 28-09-2020 10:39am

Sam Russell wrote: »

Especially as she is not yet Commissioner, so there is not much she can do at the moment. I think Von der Leyden has a high opinion of McGuinness as well.

As have I.

My point is/was that it's a pity we hadn't someone of Hogan's standing to kick Vesthager around when she acted the diva.

Sam Russell · 28-09-2020 10:52am

StackSteevens wrote: »

As have I.

My point is/was that it's a pity we hadn't someone of Hogan's standing to kick Vesthager around when she acted the diva.

Didn't work first time around, did it?

It is cases like this that give the EU commission a bad reputation, and allows the likes of malevolent journalist to make up fake stories. Now who would do that?

StackSteevens · 28-09-2020 1:50pm

Sam Russell wrote: »

Didn't work first time around, did it?

It is cases like this that give the EU commission a bad reputation, and allows the likes of malevolent journalist to make up fake stories. Now who would do that?

No one springs immediately to mind.

Although the Daily Telegraph used to have a young, very ambitious, blond journalist - ex-Etonian I think - who might have!

Sam Russell · 28-09-2020 2:09pm

StackSteevens wrote: »

No one springs immediately to mind.

Although the Daily Telegraph used to have a young, very ambitious, blond journalist - ex-Etonian I think - who might have!

If it is the guy I am thinking of, I think he still writes for them - the same mixture of half truths, non-truths, and lies. Some things never change.

EU Commission vs Ireland Apple tax case judgment

Comments