The European Union will accuse Apple of taking illegal aid from the Irish state through sweetheart tax deals over two decades, the Financial Times reported on Monday.
A European Commission investigation into Apple’s tax affairs in Ireland, where it has a rate of less than 2%, has found that the company benefited from illegal state aid, the newspaper reported, citing sources close to the matter.
Nail these corporate criminals.
Funny how politicians make laws to benefit themselves and then are upset that others take advantage of them.
The government is not run by one person and it’s not an invariant through time.
There are shady politicians, yes. There are also many more who genuinely believe they’re helping society in their own way. However, they are not always experts and often can be misled by lobbyists – usually because they’re not being told the full story.
And while I don’t necessarily agree with their point of view, I have a hard time believing most politicians are just out there trying to screw us over and make themselves rich. But I guess it helps having a wide range of parties to choose from, each defending the interests of their voters/supporters as they may easily lose them to a similar party.
Edited 2014-09-29 14:10 UTC
I worked as an EU projects manager for close to twenty years. Every country, every region, every local authority and every municipality tries to twist and avoid EU regulations in order to gain advantage. The same goes for all private companies, trade associations or sectoral associations. There is a small army of specialists that work on doing that on a permanent basis, I know because I was one of them.
When I rigorously campaigned and lobbied for the adoption of a particular formulae, or some interpretation of some EU regulation, for the distribution of some EU funding I always argued that it made logical sense and was fair but it was always designed to benefit the region I worked for. That’s the game everyone plays.
Amongst EU professionals, both inside and outside the EU institutions, state aid was a never ending topic of debate, discussion and manoeuvre because all countries, regions, municipalities work all the time to attract investment and bolster local businesses through inducements, subsidies and concessions. The EU’s blanket block of state aid is designed to create a level playing field across the EU. Everybody working professionally to promote their country’s, region’s or municipality’s interests very much wants a level playing field – for everyone else. And so when one encountered an accusation from the EU of illegal state aid in response to some initiative the response is always to engage in a massively tedious but politically necessary forensic struggle over the interpretations of the regulations. Sometimes the EU wins, sometimes it does not. The last twenty years is littered by thousands of such complaints and struggles over whether some initiative was or was not illegal under the terms of the EU’s state aid regulations. Most countries, regions and municipalities have been accused at some time of breaking the regulations and giving illegal state aid, almost all the large EU companies have also been accused (there was a big case involving Airbus recently).
All this is just normal and inevitable, it’s part of the political game in the EU, a game dictated by the nature of the EU project. I don’t think it’s good or bad, it just is. The efforts by the EU create a level playing field by blocking state aid is a good thing but attempts by the professional, charged with promoting their country or region, to manoeuvre around the regulations is also perfectly understandable and OK, that’s what pros do and and to not do so would be incompetent and inexcusable.
Talking about this as a criminal matter is juvenile and shows a shocking lack of understanding about the real world of politics and about how the EU and it’s component political institutions actually work. I can assure you that right now there are thousands of paid professionals looking at the Irish case for clues about how best to shape their own local offerings and inducements in a way that avoids similar problems. The game never ends. Now I am retired I don’t miss it but I do remember the times I won with a great deal of fondness.
Well, the EU will possibly call it “illegal”, so are you saying the EU doesn’t know how the EU works?
You can call it exploiting a legal loophole or you can call it criminal tax evasion. The line is fine one. But if you don’t even paying the lowest available income tax tarif I’d say you should be fined twice that amount.
http://en.wikipedia.org/wiki/Double_Irish_arrangement#Dutch_sandwic…
You should, you know, read the article. There is no ‘legal loophole’ being exploited here.
In this case Apple *negotiated* this agreement (which is public knowledge) with the Irish government; the EU is saying the agreement itself is invalid under EU law, no one is being sneaky here.
Of course they are exploiting a legal loophole. The only question is: is it really legal to use it or not? And because european law > irish law and not paying taxes anywhere isn’t what tax laws are for the legality of this constructions is rather questionable.
Sometimes the things you say show you to be an incredibly naive person.
The EU often does not, in fact, know how the EU works because the EU is an organization composing many entities and individuals, based on a series of incredibly complex rules, which are interpreted on an ongoing basis by numerous individuals and entities, often to their own benefit.
In this case one such entity, the Irish government, believes that it made a legal agreement with Apple. Other EU members do not agree with that and have attempted to resolve the matter with Ireland and were rebuffed.
The EU is now going after Apple because it’s an easier – and more populist – path to achieve the POLITICAL result it’s trying to achieve. The law, in this case, is being used to try to bring about POLITICAL change.
This type of gamesmanship happens ALL THE TIME in every modern democracy – in the US we have a cupcake maker going to the supreme court ( with the aid of a political party of course ) against a state government to determine freedom of speech rules.
The “it happens every time” is not a valid argument to absolve these criminals from any wrongdoing. Just because it happens all the time does not make it any less criminal. That is a very odd way of thinking about the word “criminal”, since the definition of that word has nothing to say about how often the behaviour in question occurs.
Edited 2014-09-29 16:34 UTC
You skipped the entire rationale and continue to just repeat your assertions like so much dogma.
The point is, Apple ( as well as a bunch of other companies ) went to the Irish government, did a deal with the full support of Irish law, and went on with their business.
The EU thinks the Irish government didn’t have the right to make such a deal under EU law. The EU should have challenged Ireland through the supremacy doctrine but that would be hugely unpopular because it’s success would directly translate to loss of jobs in Ireland.
So, instead, they are going after Apple, which is likely to quietly settle ( thereby forcing other companies to settle ) rather than fight a protracted battle with the EU.
In this way, the EU gets a more favorable tax policy in Ireland without directly and visibly pissing off the Irish people.
There are no criminals here Thom, it’s all political gamesmanship.
The EU asserts those deals are in violation of EU law. Ireland is an EU member state. This means both Apple and Ireland are in violation of EU law – making them *tadaa* criminals. Whether or not this “happens all the time” or is “normal” does, in no way, negate the fact that it *violates the law*.
Your argument basically comes down to this: it’s okay to break the law, as long as other companies do it too. That won’t get you far in a court of law.
1) The EU has asserted that a law has been violated. The question of whether the law was actually violated has yet to be established.
2) You are not a ‘criminal’ until you’ve been found guilty of a violation of criminal law.
3) In the EU criminal law is not the same as tax law or corporate law, and so even if anyone is found guilty of something here – which no one will, because this is all about politics – there will be no criminals.
Also, as you are clearly engaging in defamation ( you are calling an entity a ‘criminal’ even though due process has yet to begin ) you are in violation of a number of EU laws. By your rationale you would now be considered a ‘criminal’.
Edited 2014-09-29 17:57 UTC
And yet, I am free to call someone a criminal if I believe the prosecuting party has merit – heck, I can call everyone a criminal. It’s called freedom of speech. Read up on it.
It’s kind of like how Apple fans were calling Samsung “thieves” and stated they were “stealing” and committing “theft” long, long, long before any due process had even started. Sound familiar?
Cute. Now let’s look at the definition of “crime” (from Wikipedia):
“In ordinary language, the term crime denotes an unlawful act punishable by a state.[1] The term crime does not, in modern criminal law, have any simple and universally accepted definition,[2] though statutory definitions have been provided for certain purposes.[3] The most popular view is that crime is a category created by law (i.e. something is a crime if applicable law says that it is).[2] One proposed definition is that a crime, also called an offence or a criminal offence, is an act harmful not only to some individual, but also to the community or the state (a public wrong). Such acts are forbidden and punishable by law.”
Cute, but idiotic. It takes a lot more for a remark to overrule freedom of speech and expression. But sure – it’s not like I’m expecting people like you to even *entertain* the thought that *any* action undertaken by Apple is less than Pure Holiness.
Edited 2014-09-29 18:28 UTC
Only regarding the defamation aspect: there are limits to freedom of speech, of course.
If we can pretend Wikipedia is a good source: http://en.wikipedia.org/wiki/Defamation#Proving_libel outlines what is necessary to prove libel.
So I don’t imagine you did too much damage with your statement, but it does fall at least within the parameters for the US (only taking it as an example).
Your now justifying your assertions on the basis that I have a preference for Apple hardware. Are the other people who are saying the same thing in these comments likewise guilty?
Just for the record, I would be saying the same thing if the company was Intel ( huge Irish presence ), Facebook or Google.
Are you simply unable to accept that a random article referencing political gamesmanship in Ireland has nothing to do with your personal ‘their all criminals’ agenda?
Edited 2014-09-29 19:56 UTC
lolwoot?
First, I’m not calling an entity criminal, but a practice. In general, only individuals can commit crimes as you can’t put an abstraction like a company behind bars. Second, it’s not a statement of individual guilt according to some criminal law (which the EU doesn’t even have) but a moral judgment.
The average effective tax rate in OECD countries is somewhere around 25%. If Apple, Microsoft, Google and many other multinational companies are to greedy to even pay half of that rate as Ireland an other tax havens offers them but pay nothing, zilch, nada – that’s antisocial behavior which amounts to a crime against society.
PS: also that’s no defamation because I didn’t state wrong defaming facts and even if I did, there are no EU laws against defamation so I’d be interested to hear which laws I could have violated.
Edited 2014-09-29 20:21 UTC
Oh dear we seem to be dealing with people of breathtaking political naivety and political ignorance. To state the obvious – the EU is a huge ramshackle, Byzantive system of deals (some official some unofficial), compromises, and blind eyes. The name of the game is to keep the show on the road.
Nobody in the EU wants to provoke unnecessary fights or conflicts, everybody wants a compromise and a deal and the ‘law’ is actually a set of loose guidelines, often ignored and at best only broadly obeyed. Everybody in the EU, from member nation states to the smallest municipality break the EU rules, break the EU law, all the time.
Remember we are dealing here with an organisation, the European Commission, whose auditors have refused to sign the annual accounts because of inexplicable errors for twenty years in a row!
The issue of Irish Corporation Tax rates has been a difficult political hot potato for a long time. Most other member states want the Irish to raise Corporation Tax, the Irish refuse. Taking on the Irish government in a direct fight is too difficult and too risky. So the EU bureaucracy organises a flanking movement. It’s just politics.
Would you vote for a political party that campaigned on a platform of not trying to attract local inward investment? In order to attract investment some sort of incentive or inducement has to be offered to counter all the other areas seeking inward investment and offering incentives or inducements. The EU says no state aid to industry. What constitutes state aid? Cheap publicly funded super high bandwidth? Publicly subsidised local apprentice schemes? Publicly subsidised business buildings and infrastructure? Tax breaks? Who knows, there is no clear yes/no answer, just the endless shades of grey of the democratic process.
On a technical note. Breaking the law does not turn you into a ‘criminal’. If you park illegally or breach local planning regulations, or fail to submit your tax returns on time you are breaking the law but to argue that that means you are in the same ‘criminal’ category as people who rob banks or deal in illegal drugs is just plainly silly. If you took that asinine position on the issue of breaches of EU regulations (which take the form of laws) then the entire political class, elected and professional, of the European Union are criminals.
An assertion is not a legal finding of guilt! they “may” have violated EU law. Or they “may not” have violated EU law.
You should be angry at the politicians that put this into place. You have to expect companies to do what they can within the law. If they violate the law prosecute them. If not, and what they do is legal then throw the politicians out and vote new ones in.
So if I’ve got this right.
In the US, corporations can be considered people.
In the EU, sovereign nations can be considered criminals?
Last I checked the mere accusation of criminality does not actually make one a criminal.
Besides the fact that being criminal says nothing to it’s moral or economic status.
some UN or probably, preferably world-bank or inter-bank agreed “corporate constitution” needs to be implemented so that a MINIMUM corporate tax rate on earnings not profits needs to be agreed upon, that has to be implemented EVERYWHERE (or the country can’t join in the rest of international finance basically).
i’d go for 8-10 percent. but even getting agreement on 5 percent [*again – of takings, not profit] will be hard enough to get through.
Don’t you think that would force companies truly on the edge of profitability to go under?
Perhaps maybe. That’s why I would want a panel of respected economists to come up with a proposal of sensible numbers not me.
Other than the principle of having no super super low virtually-no-corporate-tax havens, I feel it must be easier to track a companies ‘takings’ that it’s ‘profits’, so go after that instead for best transparency. Maybe the number ‘lowest allowable’ number needs to be pretty low there though?? 2-5% might be a more realistic ballpark. But like I said – I ain’t no economist, just a guy with an opinion.
How is this nailing corporate criminals when it was an agreement negotiated with the Irish government? ( You read the article, right? )
Last I checked if you do something with the permission of a government your a law abiding person ( and companies are people now you know ).
The EU is going after the companies because Ireland has been ignoring the EU on this. Don’t think this is anything but political gamesmanship on the part of a bunch of EU members in response to a recalcitrant EU members tax policy – the companies involved are just pawns in this.
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Microsoft has done this for years… decades even. So why is all the focus on Apple here? Something stinks – smells like MS was jelly that Apple was trying to copy their business tactics.
There has been no finding of fact and no finding of illegality. There is just an investigation underway.
The European Commission is not about to release a report of their findings in this case about Apple’s tax structure or state aid. It’s going to release the report that outlines what it is investigating and why. And even if it does, at some indeterminate point in the future, find illegal state aid there will be no fine imposed upon Apple. Simply because that’s not how the basic public policy works.
There is no possibility of a fine upon Apple whatsoever. For in cases of illegal state aid there never is a fine levied upon the company or recipient of such aid. The government that allowed or paid out the aid must recover it, that’s true, but there’s no fines over and above that even if there’s a finding of said illegal aid.
The European Commission investigation is about whether Apple has artificially been moving profits from the UK (and other higher tax countries) to Ireland? If yes, bad boys and that’s illegal state aid. If not then it’s not an nothing else will happen. It’s a complex and technical investigation because Apple, like all large transnational companies, is actually composed legally, and in terms of accounting, of several separate entities which trade (transfer goods and payments) between each other.
To use a simplified version of the corporate set up, there are three companies. There’s Apple.ie (Apple Ireland), Apple.uk and Applereseller.uk. The first two are owned by Apple itself and the third is entirely independent. Apple.ie rents the design of the iPhone off Apple. It also buys all of the components, finances their production, has them assembled in China and transports them to the UK where they are to be sold. That is roughly what one of Apple’s Irish companies does by the way.
Apple.uk is also owned by Apple and it runs the Apple Stores. This is where Apple itself sells the iPhones to the general public. And Applereseller.uk is an independent phone shop buying from Apple.ie and selling again to the British public. The temptation, of course, is for Apple.ie to charge a higher price to Apple.uk than to Applereseller.uk. Charge too high a price to the second and they don’t buy: but Apple.uk has to buy and a high price there will move profit from high tax Britain to low tax Ireland. Apple.ie would like this. That would also be illegal under those transfer pricing rules. The internal to Apple prices should be the same (at least roughly comparable, given volumes etc) to the prices charged to that external buyer.
Why this rather vaporous story got such legs was best expressed by Tim Worstall at Forbes
A conspiracy theory?
Really?
That’s your final argument?
My god.
Thom you claimed a criminal conspiracy on the basis of a press release about an ongoing investigation. My god indeed.
Conspiracy? The fact that Ireland offered far lower tax rates to specific companies – Apple included – is not a conspiracy; it’s a known fact. The argument here is whether or not that constitutes illegal state aid.
The EU seems to think it does, and I agree. There’s no conspiracy here, and your attempt to divert attention from your idiotic “the EU and media are doing this to hurt Apple’s stock!!11!!” is laughable, at best.
The quote I included never said the EU or media was involved in a conspiracy to hurt Apple stock.
The reality is that the EU is investigating whether the deal Apple did with the Irish government breaches the EU State Aid rules. The EU has come to no official conclusion on that matter or announced any final decision.
This is the list of State Aid cases under investigation in the last three months, as you can see there are huge number of these cases, including cases involving BMW, Porsche and many financial and energy companies:
http://ec.europa.eu/competition/elojade/isef/index.cfm?fuseaction=d…
The ongoing investigation of Apple is reported here as “EU to accuse Apple of taking illegal tax aid from Ireland”. A statement of fact not based on any official announcement. This is followed by your pithy comment of “Nail these corporate criminals.”
Should all the State Aid cases under investigation in the list I posed involve nailing those corporate criminals?
Wouldn’t a more mature and less emotional response to the Apple case be to basically report it as “if it turns out Apple broke the rules by accepting the Irish tax breaks they should and will have to repay some tax”. Not so much of exciting story is it when it’s put that way, even though it’s actually more accurate.
A tax loophole may have been found and and might be closed. End of story. Instead for some weird reason you seem to want to reduce every case involving technology companies being found in breach of some regulations into some sort of titanic struggle between good and evil. You seem to want to divide the world into black hats and white hats when in fact most hats are grey. It seems so emotional, so over the top, so unworldly, so trite. It’s the way the tabloid press operate.
“Nail these corporate criminals.” – It’s always nice when corporate criminals are nailed, but in this case, at best, it’s politicians that are criminal. Or do you hold that a corporation is criminal in case it seeks a business deal with a government at all?