Well, that’s me wrong then

To my totally untrained eye, it looks like the panjandrums in Brussels are saying that there was a fictional corporate structure which didn’t have any economic basis. (A sales “head office” was credited with income from apple sales international and apple equipment international, but said head office was only a board that met a few times a year).
So, because the head office was a fiction, all the income from 2005-2015 from the sales and equipment subsidiaries needs to be taxed at full Irish corporation tax rate.

So not a simple transfer pricing haggle after all.

That’ll teach the Paddies not to try to run a business-friendly economy in the eurozone.

Yeah, for the moment Tim. But at least you admit it. Will be interesting to see how it goes, so don’t shut up totally.

From the IRS statement from your Forbes article;

“If so, the companies’ U.S. tax liability would be reduced
dollar for dollar by these recoveries when their offshore earnings are repatriated or
treated as repatriated as part of possible U.S. tax reform.”

Probably gives the game away, as far as I can see. The EU have decided to stake their claim to a chunk of MNC cash piles, effectively by blaming the Irish, as opposed to, say, the French, before the US gets their ducks in a row and sticks their oar in.

Ducky

The EU have decided to stake their claim to a chunk of MNC cash piles, effectively by blaming the Irish, as opposed to, say, the French

isn’t the EU’s intention that the Irish (rather than the EU) take the money from Apple?

PF, yes entirely. But consider that if the tax is paid to the Irish, then surely there must have been economic activity in Ireland; presumably there will be some effect on Irish GNI over the period (that €13b is 12.5% corporation tax so notional profit about €104b?), so the Commission can adjust Irish contributions/receipts accordingly and retrospectively. Much easier for the Commission to shake down the Irish than the French.

(If the Commission were to attempt to take the cash directly from Apple, you’ve got a very odd situation indeed. A supranational treaty based organisation, not itself party to any taxation treaties as an entity in itself, attempting to recover tax apparently due to a national government, against the publicly stated position of said national government. Very peculiar. Everyone probably gets extremely pissed off extremely quickly)

Having then established that the Commission has the power to make these sorts of determinations about tax law over national governments, it would then be able to harmonise (probably capriciously) tax across member states (assuming that the Irish appeal to the ECJ, who eventually side with the Commission), without any member having explicitly signed up to it via treaty. (On the assumption that there’s nothing in Lisbon that’s clear and explicit). In this scenario, something that looks like fiscal union is achieved via the ECJ, and the Eurozone can be saved (or those bits that deserve it, obviously). Plus they get to stick one over the vulgar Americans, before they get all supranational again.

Quite where this would leave the internal constitutional arrangements of the member states is up for debate, probably in a somewhat robust fashion.

They must be playing with some funny dice to come up with 13.

Am I the only one who laments Tim’s previous regular and plaintive posts on the EU (now no longer made it seems since the referendum) and which said:

“Can we leave yet?”

I think the claim is that as the transfer pricing agreement amounts are ‘incorrect’ the agreements don’t exist, so all profits are with the Irish company and taxable in full.

This gets a good headline.

Apple and Ireland will agree new transfer pricing and actually pay a few million in additional taxes. They will hope this doesn’t get any headlines.

How in buggery have they managed to calculate that?

It looks like they took 2% of the market capitalization and ran with it. As 2% is the just noticeable limit for most human activities any more would have made what they did obvious to everyone.

JerryC – a couple of d10 dice would do. 10 sided.

2d10 rolled in gamer parlance
Can achieve similar (except with number 1) on a d20.

“How in buggery have they managed to calculate that?”

Simple. Worked out the shortfall in EU income after Brexit for one year and charged it to Apple.

Justin – that would be d6. As ordinary as a d4, d10, d20 etc.
d6 would be quite limiting in working out tax. Perhaps they secretly had a d100.

The thinking is that Apple has a big pile of money, and dammit, that’s just not fair.

I like the comments of Michael Noonan today:
“The Commission has stated that:
•The amount of unpaid taxes to be recovered by the Irish authorities would be reduced if other countries were to require Apple to pay more taxes on the profits recorded by Apple Sales International and Apple Operations Europe for this period.
•The amount of unpaid taxes to be recovered by the Irish authorities would also be reduced if the US authorities were to require Apple to pay larger amounts of money to their US parent company for this period to finance research and development efforts.

This illustrates the contradiction at the heart of the European Commission’s decision. While requiring Ireland to recover the tax sums, the Commission is also acknowledging that the sums may in fact be taxable in other jurisdictions.”

I can’t fault his reasoning. If there are agreed rules as to where economic activity is subject to corporation tax ( where the value is added, economic reality, that sort of thing ), then why has the Commission effectively conceded that it really doesn’t know where the tax is rightly due.

Still, you have to giggle a bit as Apple are total shits.

I must admit to a little tingling of Schadenfreude, indeed.

The BBC said Apple can easily pay up

So that’s the BBC’s position, then? Willie Sutton tax policy? So much for the law, I guess.

As an appeal basis would Ireland have to prove that other multinational consumer electronics firms were offered, or would have been offered the same deal? This was about competition after all

Anyone know properly how it was meant to work?

“Under the agreed method, most profits were internally allocated away from Ireland to a “head office” within Apple Sales International.”

Apple Sales International must have been non-resident in Ireland. It was incorporated there, but I think the Irish allowed Irish-incorporated companies to be non-resident so long as the Board-level control was outside Ireland (as the UK used to, although I think we stopped that in the 1980s).

So if it’s non-resident, it’s only taxable in Ireland on its Irish-source income, so anything that comes from the Irish branch is taxable in Ireland, anything else isn’t. You have to treat the different branches as if they’re separate companies, and allocate profits between them on an arms’ length basis.

In which case I’m with Tim; you can challenge the transfer price between the different branches (i.e. the amount of profit allocated to the non-Irish branch), but they’ve not done that. They’ve said that the company’s entire profits should be taxable in Ireland just because part of its operations are there and the other part don’t seem to be anywhere in particular. That leaves the taxation of international companies a bit shaky.

For those interested in understanding how the Apple tax structure really works, the link below is essential reading.

http://www.sweetandmaxwell.co.uk/catalogue/eDownloadDoc.aspx?filename=331_201471_92131.pdf&sapmaterialnum=6594&fileserver=EPIC

It’s pretty clear to me that the EU just destroyed itself.