What I don't understand is why Amazon and Apple are getting the punishment. They were abiding by the laws of the country they were in, and now getting punishment. Surely if any party were to be punished it would be the governments of Ireland and Luxembourg which sanctioned these agreements in the first place? It seems that the EU is less interested in law-abiding and more interested in that sweet, sweet U$D. Ex post facto law at its finest.
Now they weren't just following the laws they were inventing fictional structures where apple for instance kept pretending that its EU profit were in transit to an headquarters where it would be taxable despite the fact that apple did not transfer any of the money from Ireland to any "Headquarters".[https://www.forbes.com/sites/tonybradley/2016/08/30/apples-t...]
Just because you convince a bunch local politicians to look the other way, your still not a law abiding company when your not paying taxes anywhere as even apple aren't allowed to be that stupid about the realities of tax law.
Amazon and Apple are not being punished, i.e. they are not fined or sanctioned. They are simply asked to pay the taxes they were legally required to pay.
Ireland gave them a tax deal it did not have the authority to give. So the deal is void and the taxes must be paid. Imagine a mayor in a US city giving a company a deal whereby they don't pay state and federal taxes and only pay a low municipal tax. Do you think IRS would accept this justification from the company and forgives all the taxes they failed to pay?
> Imagine a mayor in a US city giving a company a deal
Happens all the time, cities choose tax rates for themselves, states for themselves, and feds for themselves. The IRS isn't going to come and tell me to pay my city more in property taxes because I got an unfair abatement.
It's seen as punishment by many because when a country tells you what you are required to pay their country, a rational person reads that and sees someone reasonably following the rule. It's not understood by many that a country cannot tax what it wants and that there is a higher power. It's also not understood by many that this higher power is only reactionary and only reacting to the companies and not to the countries.
To use your analogy (flawed, but we'll stick with it), imagine if there were only a dozen or so cities and the mayors kept giving these tax deals on their own city's taxes. Why would the IRS just allow this to keep happening and then only selectively go after certain offenders? If they are in such power over tax regulation, why not require all tax deals go through them since they are the final judge anyways? Why not do anything to crack down on the practice? What stops these regions from offering tax breaks the next time? Heck if I were a company, I'd rather pay later too.
> Happens all the time, cities choose tax rates for themselves, states for themselves, and feds for themselves.
You might want to re-read gps comment again, because you seem to be mangling their analogy:
>Imagine a mayor in a US city giving a company a deal whereby they don't pay state and federal taxes and only pay a low municipal tax.
Gp's point is that cities don't get to override federal taxes - if they attempt it and you're dumb enough to listen to them, the IRS will definitely collect what they owe. The same goes for individual countries in the EU - they don't get to override EU law.
> The IRS isn't going to come and tell me to pay my city more in property taxes because I got an unfair abatement.
Your critique falls apart because there is no US federal law that says cities can't unfairly advantage companies inside their borders. In contrast - there are EU laws make this form of state subsidies illegal.
> Gp's point is that cities don't get to override federal taxes - if they attempt it and you're dumb enough to listen to them, the IRS will definitely collect what they owe.
And my point is that they will also sanction, admonish, or worse the one overriding those laws regularly. If push came to shove, the IRS would toss an official in jail if they were constantly encouraging/helping people skirt the law.
> Your critique falls apart because there is no US federal law that says cities can't unfairly advantage companies inside their borders
Yup, it does fall apart, but more because the analogy was flawed to begin with.
"Many" is an argumentum ad populum (popularity fallacy). It is entirely irrelevant what "many" think or feel, it does not justify that it is a punishment. Technically and factually it simply isn't a punishment. There is no fine. If it were a punishment, there'd be a fine.
> It's seen as punishment by many because when a country tells you what you are required to pay their country, a rational person reads that and sees someone reasonably following the rule.
Quit playing innocent. We all know exactly that they're trying to avoid taxation. The constructions are well known by now, no need for a facade. It can be easily proven as well, because we can see that e.g. Apple is selling an X amount of iPhones in for example Germany, yet the amount of income tax doesn't resemble that. Not in Germany, nor in Ireland.
> To use your analogy (flawed, but we'll stick with it), imagine if there were only a dozen or so cities and the mayors kept giving these tax deals on their own city's taxes. Why would the IRS just allow this to keep happening and then only selectively go after certain offenders?
Right, so when a burglar gets caught, his defense would be: "but your honor, these other burglars are still freely running around." That's a fallacy, obviously, called tu quoque ("me too").
There's also a plausible reason why they're not going after the other companies: 1) They actually are going after other companies as well. Here's a list [1] 2) the list is big and it takes a lot of research, time, and therefore money to investigate. So they go after the big fish first 3) European companies don't follow this construction. Yes, they do follow another one, and I hope they'll get the appropriate amount of tax due from those as well. The fact those companies might be avoiding tax for now doesn't justify that other's get away with it. That'd be, as explained, tu quoque.
My use of "many" was to explain why "many" see it as punishment. Of course it doesn't make it so, just trying to frame the argument as how it looks from the outside and why people think that.
We're going to have to disagree on some of the merits around innocence. You say these big ones aren't, and I agree, but I don't appreciate selective enforcement and as a small business owner I put myself in the shoes of someone having a tax arrangement with a country only to be surprised I have more to pay (again, the "surprise" obviously doesn't apply to big companies, but I don't think the law should see big vs small).
Selective enforcement is a real thing, and to brush it off as tu quoque, whataboutism, etc misunderstands the reason it is brought up. It's not a "oh, well him too" argument. It's a "why not apply evenly if you can" argument. I agree with you, that "I hope they'll get the appropriate amount of tax due from those as well". Until then, it's not unreasonable to ask if their enforcement choice follows a profile.
In general, I was really hoping you or another would address why the EU doesn't take preventative action. And in your answer, include why they may purposefully choose to let this practice continue with their lack of illegal-country-tax-reducer punishments and their lack of proactivity when these deals are being made (i.e. like requiring certain deals to submit for EU approval if they are going to be retroactively judged anyways).
> In general, I was really hoping you or another would address why the EU doesn't take preventative action. And in your answer, include why they may purposefully choose to let this practice continue with their lack of illegal-country-tax-reducer punishments and their lack of proactivity when these deals are being made
Just because something is happening, doesn't mean it is justified. The wheels of justice grind slowly. Take for example the recent shooting. Do you want me to reply to that: "why didn't you prevent it?" The answer to that question is painfully obvious when applying Hanlon's razor: "you tried to, but you couldn't".
(It is going too slow for me as well, btw.)
> (i.e. like requiring certain deals to submit for EU approval if they are going to be retroactively judged anyways).
That is a great suggestion. I will contact a member of the EU parliament about it. I'm afraid I will get a technical answer explaining why that isn't possible, but we'll see.
EDIT: I've actually written my entire e-mail to a member of the EP but I've decided to not sent it. I've been thinking more about it, and I do not like the condescending, unrealistic tone of "if they are going to be retroactively judged anyways". Law (including common law) and government, all the time, work like that. A lower authority such as Ireland or The Netherlands decides something, and then the EC or EP decides that is not legal, then what happens is they'll be reprimanded (similar to supreme court ruling X while lower court ruled Y). Sometimes with fines, sometimes without. So I prefer the question being "like requiring certain deals to submit for EU approval" not because of "if they are going to be retroactively judged anyways" but to provide legal structure beforehand. However, it assumes that the multinationals we're discussing are somehow victims here. They're not. They know exactly what they were doing, it just failed for them.
EDIT: As for what you wrote here:
> Selective enforcement is a real thing, and to brush it off as tu quoque, whataboutism, etc misunderstands the reason it is brought up. It's not a "oh, well him too" argument. It's a "why not apply evenly if you can" argument. I agree with you, that "I hope they'll get the appropriate amount of tax due from those as well". Until then, it's not unreasonable to ask if their enforcement choice follows a profile.
It doesn't seem you agree with me, you seem to assume malice from the EU. You seem to think its profiling. You seem tho assume it is easy, cheap, and quick to investigate all this accurately.
The proof is in the pudding. It has taken the EU 3 years to get to this point, with 2 companies. The EU still didn't get its money from Ireland, nor did Ireland even bother to get its money from Apple.
You know when your argument would be sound? If preventive frisking on Amsterdam train station or specific zones in Amsterdam would be done to for example black people more so than white people, and statistics would prove that this happens, then it'd be fair to say gelijke monniken, gelijke kappen ("what's sauce for the goose is sauce for the gander"). Why? Because -unlike in your example- it is very easy for the Dutch police to execute that. All they have to do, is do more preventive frisking to white people, or do less preventive frisking to black people.
You clearly only read the headline because it fits your agenda. The article clearly states that the EU is ordering Ireland and Luxembourg to tax Apple and Amazon correctly instead of giving them special tax rates.
Did you read the comment you are replying to? Op said "I don't understand is why Amazon and Apple are getting the punishment" and you essentially said "The article clearly states that countries are ordered to enforce the punishment". You are talking past each other. The question is why the companies are being punished and why the states are not, not about the enforcement. What keeps Ireland and Luxembourg from doing this again? If the EU is going to strike down state-mandated tax deals, why not just require the tax deals to have approval from them in the first place?
> Did you read the comment you are replying to? [..] The question is why the companies are being punished and why the states are not, not about the enforcement.
It isn't a punishment, stop calling it like a punishment. There is no additional fine. The only thing which has to be paid is the due tax plus interest.
It is you who has to read. From the article:
"Meanwhile, the Commission said it planned to refer Ireland to the European Court of Justice for failing to recover €13bn in back taxes from tech giant Apple."
> What keeps Ireland and Luxembourg from doing this again? If the EU is going to strike down state-mandated tax deals, why not just require the tax deals to have approval from them in the first place?
Hopefully Ireland or Luxembourg won't let themselves be allowed to avoid taxes anymore. But since neither Apple, nor Amazon, nor Ireland, nor Luxembourg is being fined (again, there is no punishment) I'd speculate that it might still be lucrative. After all, being able to invest > interest.
> It isn't a punishment, stop calling it like a punishment.
I'm sorry, but a selectively enforced law, only applied retroactively with NO attempt to curb the practice proactively is definitely punishment for whomever they arbitrarily choose to apply it to. Were there an attempt to actually punish the offenders (the states making illegal laws), one could believe they are making an attempt at preventing this law breaking. Otherwise, one can't help but see this as one of those laws left on the book to build offenders.
> Hopefully [...]
Exactly...hopefully. The EU doesn't enforce this evenly, they don't attempt to proactively prevent it, etc. To understand the real reason these enforcements occur, ask yourself why the EU doesn't take preventative action. You'll eventually arrive at the real answer.
> I'm sorry, but a selectively enforced law, only applied retroactively with NO attempt to curb the practice proactively is definitely punishment for whomever they arbitrarily choose to apply it to. Were there an attempt to actually punish the offenders (the states making illegal laws), one could believe they are making an attempt at preventing this law breaking. Otherwise, one can't help but see this as one of those laws left on the book to build offenders.
Do you think it is easy to prevent? Could you describe how you'd do it, by citing the laws? If you can't, why do you assume it is so easy to prevent? Why do you assume malice?
> Exactly...hopefully. The EU doesn't enforce this evenly, they don't attempt to proactively prevent it, etc. To understand the real reason these enforcements occur, ask yourself why the EU doesn't take preventative action. You'll eventually arrive at the real answer.
If I see someone breaking the law, and there are no proactive measures in place to prevent the law, then that means that the intend of the lawmaker is illicit?
What makes you think the EU can enforce this evenly? The whole structure of double Irish with a Dutch sandwich isn't even available to EU companies to begin with.
You gotta start somewhere, if you want to fight it. Same with the war against drugs. Would the drugs baron's defense be: "but the others are frolicking around freely?" Would your response still be when the first action is being taken: "they're not doing enough to prevent?"
As for other tax avoidance, yes, the EU and its states are most definitely looking into those. Starbucks is an example I already mentioned elsewhere throughout the thread (hint: Ctrl+F). Here's another example regarding the Dutch railroad company [1]. That's also an Irish construction, btw.
> Do you think it is easy to prevent? Could you describe how you'd do it, by citing the laws? If you can't, why do you assume it is so easy to prevent? Why do you assume malice?
While I cannot cite the specific laws, when a jurisdiction makes rules regarding contractual arrangements like this, and they are continually broken, I would expect they insert themselves into the process sooner rather than later. Why not require all member state tax arrangements that are below a required threshold be submitted to the EU tax regulators for approval? Instead of waiting on the regulators to get around to them anyways? And put leverage on the countries to be punished if they don't follow these rules? What leverage can the EU put on a country to abide by EU law? Why is that leverage not being applied here?
I think the analogies with burglary and drug war and what not aren't really helpful. When I say "evenly" I don't mean they have to have the resources to apply to everyone. I just mean sans prejudice. I'll just take a statement saying what their priority order is? If they just come out and say "largest offenders first", I think that's ok.
To reiterate a point I made in the above paragraph, what leverage does the EU have to keep member states from flaunting their laws? Why is that leverage not applied to Ireland and Luxembourg in this instance? I am a bit unfamiliar, so I will take any information on what the EU is doing to stop countries from doing this.
> While I cannot cite the specific laws, when a jurisdiction makes rules regarding contractual arrangements like this, and they are continually broken, I would expect they insert themselves into the process sooner rather than later.
Because it isn't in their benefit to, just like the interests of California might not align with those from Delaware, or those from California or Delaware might not align with those from the federal government. Ireland benefited as well from these deals via more tax income, and more jobs. So it is in the benefit of the Irish government to stall this process as much as they can. It buys them time, and there's seemingly no fine anyway. At least, not yet.
> I'll just take a statement saying what their priority order is? If they just come out and say "largest offenders first", I think that's ok.
They don't even know which company is the largest offender before they researched it. Looking at the article, it says: "The decision on Amazon follows a three-year long investigation by the European Commission, which said in 2014 that it had suspicions the arrangement had broken EU rules" 3 years of investigation, yet not even a fine. Do you think the EU is making money here, paying people for 3 years for investigating? The clear loser is the European taxpayer. In the long run, the European taxpayer is better off with companies paying tax than without.
I linked you the list of companies following this construction. They're all US companies. If your argument is they should go for EU companies first, well, there are none following _this_ construction.
I'm curious where you're from, so I can get a picture about your news bubble. I assume your native language is English? If you think only US companies are being targeted by tax departments, then you're probably sitting in some kind of bubble, sorry. I already linked various articles throughout this thread. I gave you information regarding Shell and Nationale Spoorwegen (Dutch raidroad company). Allegations, reactions, and investigations to the Panama Papers are another example [1] [2]. If we look specifically at Britain, we can notice football clubs, real estate, but also politicians themselves. That could certainly explain their lack of action towards their own avoidance. However, that doesn't justify it (no "tu quoque"), nor does it mean all politicians resort to tax avoidance.
> To reiterate a point I made in the above paragraph, what leverage does the EU have to keep member states from flaunting their laws? Why is that leverage not applied to Ireland and Luxembourg in this instance? I am a bit unfamiliar, so I will take any information on what the EU is doing to stop countries from doing this.
It is in the article:
"Meanwhile, the Commission said it planned to refer Ireland to the European Court of Justice for failing to recover €13bn in back taxes from tech giant Apple."
The leverage just got escalated. The wheels of justice grind slowly...
I've seen my country (NL) getting reprimanded about various things by the EC. An example is that downloading copyright infringed content was legal in NL. In a court case though, NL got reprimanded that it is illegal, so it is now by Dutch law (since 2014 or so IIRC). The Dutch government also got a slap on the wrist regarding Starbucks. Eventually, if local governments don't comply, there are going to be financial consequences. We don't know the outcome here yet. We're 3 years in, still no outcome. Does that mean its unjustified? Seems according to your line of reasoning: Yes.
Because only American companies are following the construction [1], only American companies are going to get the "punishment" (it isn't a punishment, btw).
You're correct. It's a shake down of American companies. The US Treasury released a paper detailing how Apple at least was abiding by all laws and not really doing anything out of the ordinary. I suspect Amazon is in a similar place.
Basically, best case Europe can't be bother to have well written laws and punish the companies arbitrairly. Worst case, this is an attack on US business by foreign governments.
> Basically, best case Europe can't be bother to have well written laws and punish the companies arbitrairly. Worst case, this is an attack on US business by foreign governments.
This is a blatant dismissal of actual issues because its easier to blame the big bad foreign governments than it is to look at the shitty (and illegal) behaviour of Irish tax authorities and American companies devising shitty tax deals because they believe they are above the law.
These tax arrangements were not legal, they never were. The rules need to be enforced and they will be.
This is not a punishment, it's a correction.
Crying about 'shakedowns' is pointless dishonest. Address the actual issues.
It's good that the EU is taking steps against these unfair deals, but IMHO it's not enough. In this "web era", we just can't accept that it's enough to open your headquarters in Luxembourg to only pay Luxembourg corporate taxes, when actually your EU operation is like 97% outside of Luxembourg. It's just not sustainable, it needs to change - Luxembourg is just stealing taxes from all other EU countries, that's all.
Luxembourg has a 29% corporate tax rate the 4th highest in Europe.
This isn't Liechtenstein, Ireland or Estonia...
Unlike Ireland Luxembourg also did not hand out tax credits.
Shell paid less than 1 bln US in tax last year in the EU, and less than 5 bln US globally, and overall it's by far much more subsidized than Apple or Amazon, the difference being it's a European corporation.
Most of not all of the largest European corporations excel at Tax avoidance, in fact they are the ones Google, Apple and Amazon learned the tricks of the trade from, heck the EU was just fine establishing tax heavens for their own corporations and canonizing them in EU law as long as they are the ones benefiting from them.
You should read the actual source.
Amazon paid normal tax rates on trade goods, it paid the lower tax rate on IP derived revenue such as AWS and several other digital services the deal wasn’t any different than what EU companies in Europe get including OVH.
The difference is that Amazon like many other US tech companies have substantial revenue from IP and licensing while EU companies still rely on trade goods and services.
This isn’t a court ruling like with Apple there is more than a good chance that this will not hold in the high court.
Likely even better since Amazon didn’t get direct tax subsidies.
> The tax ruling enabled Amazon to shift the vast majority of its profits from an Amazon group company that is subject to tax in Luxembourg (Amazon EU) to a company which is not subject to tax (Amazon Europe Holding Technologies) [...] the level of the royalty payments, endorsed by the tax ruling, was inflated and did not reflect economic reality.
IANAL, but I am not sure why you interpret this as different from Apple's. They both depend on the arbitrariness and non-generality of a company-specific tax ruling.
> They both depend on the arbitrariness and non-generality of a company-specific tax ruling.
Thats an opinion not a fact. The case has yet to begin in court.
IMO Apple did not get any special treatment. Basically all you need is a country like Ireland where an onshore incorporated become non-resident if controlled offshore [1]. And Ireland must be not be considered as tax haven [2] by USA [3] otherwise Apple Sales International would be taxed as per USA laws whether Apple USA repatriates or not.
[1] This was true until 2015.
[2] IIRC Ireland must be considered tax-fair country. Obviously a more strict condition.
[3] Now here Ireland enjoy the benefit of single USA-EU tax treaty.
Licensing IP is the weapon of choice for modern tax evasion. Estimating costs of goods and services is relatively easy for tax authorities, there are detailed rules and so on; but IP is so vague that it can be easily abused. It's the same story with Starbucks and so on.
> there is more than a good chance that this will not hold in the high court.
That is very unlikely. The Commission tends not to act directly unless they are absolutely certain that the case is extremely clear and they have ticked all boxes. This is because these actions have, obviously, huge political repercussions; Commissioners, at the end of the day, are politicians who have been entrusted to be somewhat above the fray and to look out for the whole continent, so they usually don't want to be accused of partisanship (there are always exceptions, of course; but the culprits tend to pay a heavy price in the end). The act itself is basically a statement that they have a great deal of proof. You won't find many people who know European legislation better than EU staffers themselves, so when they act on it, it's very unlikely they will lose a legal confrontation.
EC is not just disagreeing with Apple's legal team but Ireland Govt (IG). Arguably IG is atleast as competent as EC if not more. And then not to mention 3rd parties such USA Treasury.
I dont know how EC can justify (in court) violating non-retroactivity traditions/laws.
That's why the Commission rarely acts in such a direct manner - they know they are talking to very powerful interests. But again, in most cases, when such procedures are invoked, national governments are eventually found in violation. Nobody enjoys victimizing a member state, they only do it when infractions are so egregious that they cannot be ignored.
> violating non-retroactivity traditions/laws.
If you don't pay taxes in 2012 and the state sues you in 2014, as long as the statute of limitations allows it, there is no retroactivity. The Commission only started to actively investigate these arrangements recently, but the relevant laws have been on the books (or rather in the treaties) for a very long time. Just because a policeman doesn't arrest you for beating your neighbour doesn't mean you're not breaking the law.
One corporation doing something morally wrong and getting away with it doesn't excuse another company for doing the same. "He did it first" doesn't work on the playground and neither should it work in corporate law.
There's nothing morally wrong with reducing one's tax burden to the extent that is legally permissible. From Judge Learned Hand: "Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister
in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands"
While that's true, it's also a simplistic take on taxes.
The mega-rich, including corporations, work with the government (bribery, oops, I mean campaign donations) to ensure there are loopholes in place to avoid taxes.
While the average citizen can attempt to minimize his obligation, he has very little opportunity to do so. In the US, most people (about 60%) do better taking the standard deduction vs itemizing their deductions.
If we continue down the path with this logic, shouldn't citizens who don't find themselves below or near the poverty line and support increasing the role of the government skip the standard deduction to increase the rate of tax they pay? After all the standard deduction was only added to garner middle class votes and is thusly "immortal lobbying" of a sort.
Possibly. But, the size of government, and the relative tax rates needed to fund it, is a different discussion than tax breaks that are only available to the wealthy.
>There's nothing morally wrong with reducing one's tax burden to the extent that is legally permissible.
Yes there is. It may not be legally wrong, but it sure is morally wrong. What matters is the spirit of the law. The fact that big corporations can hire squads of lawyers and search and identify loopholes that allow them to pay outrageously low taxes on outrageously high revenues doesn't make it morally acceptable, even if they technically are following the letter of the law.
Add to that the fact that these loopholes and exploits are kept in place by fierce (and expensive) lobbying efforts from those very same companies and people.
> It may not be legally wrong, but it sure is morally wrong.
Ah now. Governments don't just use taxes to raise revenue, but also for incentives. If they tax moving cash abroad to help with the balance of payments and you restructure your company to avoid doing this then everyone is happy. It doesn't excuse manipulating the government to make favourable tax laws however.
For it to be morally wrong to reduce one's tax burden, I suppose you believe that corporations, big or otherwise, are morally obligated to pay higher taxes than legally required. Why?
Aah, yes, those crafty poor with their Dutch sandwiches, accounts in the Caymans and Switzerland, and their tax-shelter charities.
This quote sounds almost ironically similar to this quip from Anatole France: The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.
Well there's an income spectrum in society beyond 'the rich' and 'the poor' but certainly our poorest citizens reduce their tax burden as much as possible as well. When was the last time someone working for cash under the table declared their income?
I agree and disagree. For the individual, looking only after their own affairs, it is fine to reduce one's tax burden as far as legally possible. The citizen, looking the health of their society, has to take a wider view and consider if the existing tax laws and enforcement is contributing to a better or worse society.
The specific ruling that was posted seems to be that Amazon and Apple acted illegally and hence are liable for back taxes. The wider point is what OP was making, by my reading, and which the comment I replied to was refuting.
> The citizen, looking the health of their society, has to take a wider view and consider if the existing tax laws and enforcement is contributing to a better or worse society.
This is very important in deciding to pay taxes at all, and highly salient for people trying to impact tax legislation.
In terms of tax _burden_, though, it's quite odd to do anything but minimize taxation, and the extent of minimization cannot be extrapolated to social health or social costs.
The primary mechanism the government has to shape the economy is through taxation. It's not just transferring cash to the collective public coffers, there are specific reasons the government wants or doesn't want certain kinds of spending and certain kinds of economic relationships. You get a mortgage deduction because house ownership has perceived social benefits, for example. You get write offs for specific programs, or kinds of spending the gov wants to encourage. By ignoring the relevant tax-regime you are also ignoring the economic directives of your elected government.
At the same time: overpaying on your taxes is a highly inefficient way to do just about anything. Send post-tax cash to the DOD, NHS, charities, political parties, or to Lockheed-Martin directly, if you're so inclined. This will always yield more direct impact then indirect funding through government taxes.
Legal tax minimization is good for the economy and lets capital move 'intelligently' towards desired outcomes. It lets legislators shape the cradle-to-grave picture while maintaining representational control. Illegal tax minimization is criminal :)
It seems to me that the dispute here is between the EU and its member countries and not between the EU and Amazon, Apple, etc.
I generally disagree with the creation of special tax deals between governments and individual businesses, but it is the government that I disagree with, not the businesses for optimizing their tax burden.
'....Luxembourg’s role in orchestrating tax avoidance deals for hundreds of global companies was revealed by the Guardian in 2014, raising questions about tax policy in one of the EU’s oldest member states.
The case continues to hang over Jean-Claude Juncker, the European commission president, who served as Luxembourg’s prime minister from 1995 to 2013, and acted as finance minister for much of that period..... '"
Why do so many companies are there if it is not for taxes?
Every large corporation regardless where they are from are try to get out of paying taxes in EU and it is great they are hunted. Many of them have been under EU tax crackdown and many more are to come.
For the same reasons as Delaware, the legal framework and establishment are favorable but there is nothing criminal in this.
As for the second parts it’s every large non-EU corporation and that is the problem.
These acts as well as the anti trust investigation into Google and other such affairs is a protective response to the lack of competitiveness from EU corporations primarily in Tech.
Tax avoidance in the EU isn’t an oversight it’s a deliberately orchestrated and legislated ordeal which was established to favor EU corporations.
Since the EU seemed to nearly skip the tech giant bubble and it’s largest corporations are primarily ancient energy and finance giants it now goes after US corporations which have subsidiaries in the EU.
This is selective enforcement the EU didn’t go after Lidl which keeps much of its Tax books private it didn’t go after BNP, Shell, ING and the like all of which also excel at not paying.
> For the same reasons as Delaware, the legal framework and establishment are favorable but there is nothing criminal in this.
What you omit is that it is favorable because there is no income tax [1]: "Delaware charges no income tax on corporations not operating within the state, so taking advantage of Delaware's other benefits does not result in taxation."
European companies cannot incorporate in Delaware. If they would, they'd fall under US law.
Now, if the United States of America wishes to keep legal frameworks like these intact that is mostly the loss of all of the US citizens, although also a problem for competition due to lower prices.
You are deceiving when you claim Shell is paying no tax. I have a Dutch source with data saying they paid 10 billion in 2010 in The Netherlands [2].
I don't know if this fair or not, but I want to state that the EU needs to go after every company which is avoiding paying tax. That said, they should go after the biggest and easiest fish first.
> Tax avoidance in the EU isn’t an oversight it’s a deliberately orchestrated and legislated ordeal which was established to favor EU corporations.
Pot, meet kettle. AFAIK, no EU corporations follow the Irish-Dutch construction.
Starbucks, for example, had to pay back money as well. If you want to do business in the EU, you're going to pay income tax. Simple.
> This is selective enforcement the EU didn’t go after Lidl which keeps much of its Tax books private
Lidl is not keeping its tax books in UK private anymore since 2014 [3].
For completion, here's a list of companies following the double Irish with a Dutch sandwich construction [4].
Yes. In a globalized world that model just can't work anymore. That's just siphoning off wealth from all countries to enterprises, backed by one single country.
Sorry to open that can of worms, but taxing on profit in the country (and not headquarter placement) is actually one of the few early Trump suggestions that differed from the mainstream and made sense.
>> few early Trump suggestions that differed from the mainstream and made sense.
That doesn't really make sense for America First...Why would US want its corporations taxed with 20% all over EU instead of 1% in Luxembourg? It would be less left to bring back home (whenever the corporate tax is lowered to make that possible).
> If BMW sells a car in the US, where is the profit from that taxed?
The profit made in US is taxed in the US. Isn't that so? Maybe I didn't understand it but the article is more about the import/customs tax. As far as I understand from that link Trump wants to make the import costs non-deductible and basically pay an extra tax(due the lack of deductibility) on top of the custom tax. It's a pure protectionist policy.
The issue in EU is different. The companies operate in a certain state(i.e. Italy) but pay the tax in a different one(i.e. Luxembourg). Like BMW would do all its tax/accounting in EU with no regard to US's IRS even if it operates a business in US(i.e employs people, sells products etc).
See the excerpt:
>> Lawyers said the impact of the border adjustment and deductions for U.S. costs meant that imports would face an effective tariff of up to 20 percent.
“The total tax rate on the 100 percent domestically-produced good is going to have a lower effective tax rate than the rate on the import,” said Scott Lincicome, counsel with White & Case in Washington.
That would breach Article 3 of the General Agreement on Tariffs and Trade, which is policed by the WTO. This allows signatory states to impose permitted tariffs on goods entering their country, but precludes them from treating a domestic item more favorably than an imported one when it comes to internal taxes like sales or income taxes.
> The profit made in US is taxed in the US. Isn't that so?
Hypothetical analogy: say BMW GmbH owned an American subsidiary (BMW Inc) that did all the US manufacturing under license via another subsidiary in Panama. BMW GmbH controls the cost of the IP (design, patents, control software) being licensed to BMW Inc - this cost can be tweaked so that BMW Inc never turns a profit, and so will not pay any American taxes. All the profits will be accumulating in Panama while waiting for Germany to rework its repatriation laws.
- Import tax on all the products(IP, patenets, licenses etc) licensed/purchased from BMW Panama
- Sales tax?
So the US would get more customs and sales tax and less profit tax. Nevertheless the scheme you mentioned is meant to lower the tax paid(i.e. the import tax may be lower than the profit tax) so I fully agree that something should be done. I guess only solution would be the term "tax avoidance" to be defined, put into the trade agreements(i.e. WTO, EU etc) and governments allowed fine the companies employing such practices just like the "state aid".
The issue in EU is way worse because there is no import or sales tax so using your hypothetical story BMW GmbH pays only the profit tax in Panama.
Related: In Europe the operating company takes loans at high interest rates from its shell in Luxembourgh to siphon off the profits.
Taxing profit is essentially a tax break for spending. Amazon.com in the US reinvests almost everything it makes back into Amazon from what I understand (please correct me if I'm wrong). Is it ok for them to pay no taxes?
Let's say someone buys $1B worth of junk, has expenses like salary etc of $1B, does something with it and sells products and services worth $2.2B. Do they pay taxes on $2.2B or on $0.2B? I think we can fix some kinds of tax dodging by taxing the $2.2B. If I'm on a low margin business, that's not the government's problem to pick winners and losers, right?
The $1B of salaries are being taxed as income and the $2.2B of sales most likely hits a sales tax. (Or the $1.2B difference, if it’s a VAT/GST style tax.)
I personally don’t see the point of corporate tax, other than to make other taxes seem smaller than they’d otherwise have to be. Profits are not in and of themselves useful to people; they have to be converted to income somehow.
The problem with taxing income is that it taxes the lower/middle class heavier than upperclass. Usually the upperclass has ways of diverting their income into other means. Taxing profits is the current approach. There's been talk about taxing revenue for companies. Which is measurable on a nation's level
> Let's say someone buys $1B worth of junk, has expenses like salary etc of $1B, does something with it and sells products and services worth $2.2B. Do they pay taxes on $2.2B or on $0.2B? I think we can fix some kinds of tax dodging by taxing the $2.2B.
That does not quite add up .... let's say the tax rate is 20%. The tax on $0.2B is $40m, the tax on $2.2B would be $440m, which would mean the company is making a $220m loss. But not only that, say the salaries are $1B then the government would $200m in double taxation, maybe socialise the loss and take $200 million from the workers salaries.
Then not only that, lets say the $1B of junk is made in the same country as the above company, the government would make another $200m by taxing them. That is a little regressive.
Amazon is paying payroll taxes on all its salaries, sales taxes on everything it buys, property taxes on its physical locations, plus employing thousands of people. They are not "dodging" any responsibilities.
- I'm sure Amazon did its best to pay the lowest possible tax. In EU they are taxed on profit so if they woundn't make a profit(i.e. they would reinvest) they would not be taxed.
- Amazon Europe is not Amazon US. They don't want to trade as Amazon US in Europe because they would pay even more tax(in the US).
- It's not enough that they are registered in a country with the lowest possible tax, they get a special deal there too to pay less tax than the other Luxembourg based companies/business. This is what EU is sueing them for...they've got state aid(as tax break) from Luxembourg.
Companies are generally taxed on income (so in your example, 20% on $0.2B). This is the "corporate tax". In addition other taxes may be applied (VAT, labor taxes etc), but this is another matter. Companies try to reduce the amount paid in corporate tax (on income) in many ways. Some legal (e.g. creating a separate company that owns the IP, like brands and patents, which then charges a fee for their use to other part of the corporation; this way they can shift profit from a high rate country (France, US) to a lower rate country (Ireland). This seems to be the case here, plus the fact that Luxembourg offered a deal on this tax rate. Another legal way to reduce taxes is by investing your income: this generates depreciation which reduces your profit for the following years (but not your cash at year end, particularly if you finance part of the investment through debt). Illegal ways to reduce your profits: fake invoices, etc.
The EU is now discussing ways to tax some companies (in particular tech companies with substantial cost bases abroad (e.g servers, ip, brands could be owned by a separate company in Bermuda which charges sister companies in UK, France, US, thus leaving potentially zero profit to be taxed in those countries) based on revenues (e.g. you have revenues of $1B in UK, you pay 3% tax on that (equivalent to charging 20% tax rate on $150 Million of profit. This would make the separate IP company useless.
Taxing based on revenue sounds very detrimental for companies with low margins - say your profit is only 1% of your revenue. Then you would go out of business by this tax. Also seems very harmful to yet unprofitable startups.
> If I'm on a low margin business, that's not the government's problem to pick winners and losers, right?
So you would penalize companies that are offering a useful service and making less profits over those that are offering a useful service and making more profits. The former may be reducing cost greatly to the consumer but may not be able to stay in business due to this type of tax. Thus, it would artificially prop up the cost of goods to the consumer.
To me this looks like a corporate shakedown. The EU has some truly dumb laws (as do we here in the US), but punishing companies that folllow the law shouldn’t be the solution. Fixing the law is the only right (and moral) option. Everything else is basically thuggery.
They are not punishing the companies, they are ordering the countries the follow EU law and that indirectly means that Apple or Amazon for example needs to pay more taxes.
I think it is a pretty reasonable law. EU has a large inner market and the idea behind this law is that corporations should not be able to play countries against each other (i.e. you get a lot of jobs if we don't have to pay corporate tax) and just using tiny countries to get access to the large ones.
So see it as a collective bargaining that is beneficial for EU.
The EU is based on a legal system that believes that the spirit of the law, if it is obvious, is above the letter of the law (and also it doesn’t have precedents, all courts can reinterpret law again, if you want to change something, you need to rewrite the laws).
As a result, this is completely justified – Amazon and Apple broke the spirit of the law with a technicality.
Realistically its those governments who offered them the deals that broke the law. I don't see why its the companies obligation to deny these tax deals and uphold the EU's wishes.
I find it difficult to believe companies as big as Apple and Amazon don't have teams of tax lawyers aware of EU tax law that knew very well this deal wouldn't last, and yet they claim they knew nothing of how illegal this was.
The funny thing is that if you try to do it as a one person or small company, it won't work as your company will be considered a tax resident in the company you live in (as far as I'm aware).
There are plenty of stuff that does not work as a small company.
You know the easy way that large companies balance their cashflow between countries selling IP and stuff. Try that as a small company (eg: make money in the UK, try to hire some guy in Spain to build an app there, i.e. a genuine case of actual workflow issues) and realise that you can only charge for actual service and yes you can in theory have vague service like "consulting" but in reality if the tax office take an interest in your company you are going to be crucified. Cashflow balancing is corporate taxed both ways, better get it right.
Absolute complete nonsense. Not only a misunderstanding of the situation but a crazy and completely incorrect understanding of EEC principles.
This particular problem aside, for there are reasonable nuances from the EUs POV.
Your statment:
> we just can't accept that it's enough to open your headquarters in Luxembourg to only pay Luxembourg corporate taxes
Yes. We can. That is quite literally the point of being in the EEC and isn't at all the nuance of the issue Amazon and Ireland have encountered and not something even remotely in question by this report. Complete misrepresentation.
You only pay appropriate taxes in the nation state in which you HQ. This allows poorer countries to compete with richer countries, and allows wealth to "drain" into poorer countries whilst providing cheaper services to the richer ones.
> You only pay appropriate taxes in the nation state in which you HQ. This allows poorer countries to compete with richer countries, and allows wealth to "drain" into poorer countries whilst providing cheaper services to the richer ones.
Not sure from where you got that idea, but in real life it sure as hell doesn't happen that way. I live in one of the poorest countries in the EU, comparatively speaking (Romania), and let me tell you that there's no multi-national company that "drains" money into our country based on tax arbitrage the way countries like Luxembourg and Ireland do. Quite the contrary, lots and lots of companies do the exact opposite, i.e. draining money out of Romania to their headquarters in Ireland, Luxembourg and other (much richer than us) countries of Europe.
What it also does is allow companies to pay below living wage because the "rich" country will pick up the bill for the social care of the companies employees.
The "rich" country then doesn't get the corporation tax, which would help balance the losses incurred by large companies forcing wages down; instead that money goes to the lowest bidding country elsewhere that's not incurring costs from the company's operations.
Allowing this exploit makes the corporation's (and thus their owners/executives) richer at the expense of the workers and ordinary tax payers.
It's right for the EU to act in favour of its citizens in this regard.
Indeed you're right the money drains to the country offering the best deal, which isn't necessarily the poorest as they can't afford to give rich corporations such deals. There's probably a measure of legal framework too - how easy is it too bypass legal requirements by supporting the political party in power, that sort of thing.
What? The most central EU institutions are based in Bruxelles, Belgium. The EU Parliament also spends half the time in Strasbourg, France. Only the Court of Justice is in Luxembourg.
There is no "appointed capital". Bruxelles is the closest thing in practical terms, but the location of the institutions it hosts was an early choice that has since been slowly rejected. All new EU authorities are "dispersed" elsewhere, and there is talk of moving the Parliament to Strasbourg full-time, now that it's pretty clear that the French are nowhere as dominant in European institutions as originally feared.
> The seven institutions of the European Union (EU) are seated in four different cities, viz. Brussels, Frankfurt, Luxembourg and Strasbourg, rather than being concentrated in a single capital city.
Yeah, FOUR different cities "rather than being concentrated". So no, Luxembourg is not "the" capital city of the EU, it's one among a number of institutional seats (a number that is expanding, btw; anything that is not set in treaties is being pushed elsewhere).
> This allows poorer countries to compete with richer countries
No, that's free movement of labor and goods that does that: you can manufacture in PoorCountry for X rather than the X+Y that would cost in Rich Country, then you can sell competitively in RichCountry for X+Y and bag Y.
What happens to Y after that is another matter entirely.
A 250M fine is almost a joke. Companies like Amazon, Google, Facebook, etc, save Billions of dollars every single year by setting up "creative" tax schemes.
A 250M fine is almost an incentive to keep doing it.
The modest size of the fine is probably just because Amazon isn't all that into making profits and thus has little taxable income. Apple had to pay a lot more.
The EU needs to find a balance though - too little and they'll just keep doing it, like what you're saying. Too much though, and a few things will happen:
* They will spend 10+ years in courts to fight it; paying a team of lawyers to fight the ruling or at least postpone having to pay it will be cheaper than paying it.
* They'll get out and find a new tax haven.
250 - 500 million seems to be a figure that gets paid eventually (see also EU/RealPlayer vs MS). Higher than that and they'll find a way to not have to pay it and annoy a lot of people - legally.
Amazon will leave the EU to find a tax haven? Like stop trading?? Because if they're tradinging here then they've not left the jurisdiction of the EU - we're talking about Amazon, whose zero-hour workers have to be supported by social care, making slightly less profit.
They reportedly paid £15M tax on profit of c.£20 Billion.
Actually, that’s pretty much the point of the civil law system the EU uses, that the spirit of the law stands above the letter of the law, and if you violate the spirit of the law – even while abiding the letter of the law – you can be punished.
It's a bit simplistic a view the more complex reality is that the code civil(unlike the common law) doctrine have a "bonus pater"(or informed citizen) standard that puts an obligation on especially large(and supposedly competent) companies to proactively make sure they follow the law as it is not as they think it is.
I.E. apple's "but this guy down at the pub told us it was legal"* defence fails the bonus pater standard as apple highly paid legal council should have known better then accept it as a indication of actual law.
*In reality there was a unpublished letter from some politician, who did not actually have the authority to speak on irish tax law, to apple stating that Irish revenue would not challenge apple's claims about not owing Irish taxes on money in transit. though all evidence point to apple knowing full well that was not an indication that their tax sceme was legal.
I agree that taxes are amoral, not a matter of moral consideration. Companies cannot be expected to pay more than legally required, as their competitors would be doing the same. It would be immoral to expect them to follow anything else but the legal requirement.
They are not being fined. EU decided to retroactively tax Amazon more. Amazon is required to payback the taxi that EU suddenly decided to charge even though Amazon legally worked with a country to come up with that taxing scheme.
I have always this question in my mind, If Amazon never made any profits, ( They are ALL invested back to somewhere ), or they decide to borrow $50 Billion, and have any profits left over from investment being paid to the loan's interest.
Basically there are Zero profits.
Why would there be Tax?
It doesn't matter if you are in US, EU, or anywhere else in the world. Surely No Profits = No Collected tax, or am i missing something obvious?
Tax law is quite complex. Even for taxes based on profits, it is non-trivial to tie patterns of revenue and expense to particular tax jurisdictions (much less particular geographical locations).
This is particularly true in the age of e-commerce - did the revenue occur where the purchaser clicked an icon, where a server received the buy message, where a server recorded/confirmed the transaction, where a bank sent/received currency, where a warehouse dispatched an item (what if it's a digital item), where the item was received, all of the above, some of the above depending on ever shifting tax law in multiple jurisdictions? There are more and different questions related to expenses. For example, should it have some relationship to where employees are located?
Armies of people work every day to prevent upsetting some tax jurisdiction while minimizing tax expense. It's a sisyphean task. Compared to Amazon's revenues, $250m is a rounding error, so they have very good accountants working for them.
That's exactly why the back taxes owed are only €250 million, a pittance compared to Amazon's EU revenue of over €20 billion. Note that Amazon's profits aren't high, but they aren't zero.
Please, no more of this "starve the beast" nonsense. Look at the US. Regardless of what you think of government, know that starve the beast does not work. If you want to reduce expenses, reduce them directly. Reducing income does not necessarily reduce expenses. There are no shortcuts here.
Thanks, Ronald Reagan. You'll forever be one of the worst POTUS in modern history to me.
Reducing expenses is a commendable effort, but your comment is off-topic in this discussion. It is completely orthogonal to levelling the playing field when it comes to paying taxes (you can do both).
just another smoke screen while "the union" is on fire to keep the sheep calm and comfy on their fucking couch. greece? nobody's talking about that anymore. britain's decision to leave in peace? they're screwing around with that. catalonia? shows you the "values" of this great europe.
votes have shown that people are greatly unhappy and the clowns in brussels have nothing better to do than to pretend a few corporate bucks will benefit the people.
When Caesar divorced Pompeia, he said "my wife ought not even to be under suspicion". As a European I feel the same about the way the EU is plundering US tech companies. Maybe they really broke the law, but you should be above suspicion. When VW has not paid any fines in Europe for the emissions scandal, it's hard not to be suspicious about what's going on.
The Eurostoxx 50 is still below its 2007 peak (and that peak was below the 2000 peak). GDP growth has been pathetic. Almost a decade into the Greek crisis they're still just kicking the can down the road. Is the EU trying to be a productive economic system or a kleptocracy that survives on the scraps it can extract from the Americans? Get your house in order, then maybe these fines would not look as bad.
This is not how this works at all. The issue at hand is "illegal state aid". Briefly, in the EU, member states may not unfairly favor local businesses by subsidizing them [1]. This includes subsidies via tax breaks that favor some companies over others.
Now, you can have reasonable disagreement about whether those tax breaks are indeed illegal state aid or not (in the case of Apple in Ireland, reasonable arguments have been advanced for both sides). But this is not about plundering US companies: it's about large companies not getting special favors from the state. The tax breaks would not be owed to the EU, but to the member state that gave them the illegal tax break.
The Volkswagen situation is different, as this is not about antitrust law, and the EU has much less power outside antitrust cases [2]. That does not mean that the European Commission hasn't tried to exert political pressure on Volkswagen [3] and the member states [4], but it is bound by the powers granted by the EU treaties.
[1] There are exemptions in the treaties, such as for charities or in response to a crisis or natural disaster. It also only affects state aid that distorts or risks distortion of competition.
Starbucks, Apple, Amazon, McDonald's...do you notice a pattern? The suggestion that the Commission is not targeting big US companies is comical (especially in the light of similar actions with other justifications, like the 2.7b fine on Google for their shopping search), as is their interpretation of both tax law and illegal state aid.
The commission doesn't even challenge the transfer pricing laws, they just interpret them differently and based on their interpretation they decide that the tax authorities have granted a selective advantage. The procedure is completely arbitrary as its entire basis is the disagreement between the commission and the tax authorities. Given the complexity of corporate structures and tax law, and the inherent ambiguities of things like transfer pricing, such disagreements can be generated wherever the commission wants to find them. If they wanted to target Chinese companies it would be trivial to conjure up similar issues.
It's particularly ironic that a law against selective treatment of corporations is being used to selectively punish some of them.
> Starbucks, Apple, Amazon, McDonald's...do you notice a pattern? The suggestion that the Commission is not targeting big US companies is comical, as is their interpretation of both tax law and illegal state aid.
If you selectively only pick the cases against US companies because that's what you hear about in the US media, but ignore the cases against EU companies, then I can see how you can get that impression. But it's not really the full picture.
More importantly, and regardless of what you think of the merits, the EU is not the beneficiary, since those tax breaks are to be paid to the respective member state. The benefit for the EU – one way or another – is a more competitive environment, not the money it does not even get. So, "plundered" is an inaccurate term either way.
And you hear a lot about big US companies, because (1) smaller US companies are less likely to operate in the EU and (2) US antitrust law has been watered down since the late 1970s (starting with Bork's "Antitrust Paradox"), leading to a concentration of corporate power that's simply not present in Europe [1]. As a result, antitrust cases against EU companies tend to be more about collusion, while antitrust cases against US companies in the EU tend to be more about abuse of a dominant market position.
Do you have any idea of a good data source showing the total amount of state aid fines imposed by the EC? One source I've found [0] suggests that total state aid fines by the Commission from 2005-2015 were somewhere on the order of 2.5 billion euro, which is dwarfed by the 13-15 billion euro fine Apple is facing. But I may be misreading the report I found/missing some better data.
[0] rlegutko.pl/download/en-nieuczciwa-konkurencja-polityka-insight-270320171.pdf, see Chart 8 on page 18.
There is no such thing as a fine for state aid. Member states are required to recover illegal state aid from the beneficiaries, with interest.
Recovery of state aid is uncommon, since most governments simply seek approval for exemptions beforehand (such as the UK for Hinkley Point) and so there are relatively few large incidents of illegal state aid. Especially as it's rare for a government to throw that much money at a single company without great need, illegal or not.
Thanks, that's helpful. Although, from your answer I take it that U.S. companies are, in fact, the major subjects of these high-profile EC enforcement actions and there are not actions of similar magnitude against EU companies that I've missed. (That could be entirely just and appropriate, of course.)
It's mostly Apple that's an outlier here, with €13 billion owed (contingent upon the ECJ not overturning that), and that's over a period of 12 years.
Amazon has to pay back €250 million, which is a pittance compared to their annual EU revenue of over €20 billion, and that was originally triggered by the LuxLeaks revelations, which are also hitting (say) IKEA, which is reportedly being investigated for over €1 billions in illegal tax breaks [1].
One interesting aspect of the Apple case is that the American federal government may not actually mind Apple getting slapped around a bit; Apple not repatriating its foreign profits has been an issue for quite some time, and that only works out for Apple because Apple can park those in tax havens abroad.
Apple, Amazon, etc., are not USA companies - they're based in Ireland, Luxembourg, etc..
These companies have the same names as USA corporations but they're not the same corps legally,are they, otherwise they'd be based in Delaware or wherever they falsely claim to be based in USA?
Well, do you think that IKEA and FIAT are American companies, too? Both are having their tax deals investigated as well.
You could make a good case that the European Commission choose to do this as part of an approach to reform the taxation of multinational entities within the EU. But they didn't single out Apple and Amazon specifically.
>Plundering US companies? At least back that up with numbers. You mean they pay almost no taxes on their profits in the EU. They are plundering Europe!
How can that be defined as "plundering"? Even if these companies didn't pay a single cent in taxes, that would merely mean that the EU government didn't plunder them.
> How can that be defined as "plundering"? Even if these companies didn't pay a single cent in taxes, that would merely mean that the EU government didn't plunder them.
There's no need for the plunder rhetoric. They omitted to pay tax to EU states, and now they'll have to pay. You have to pay income tax as company here in the EU, including big multinationals. Actually, especially multinationals because those are selling the most. So our EU governments are also missing out the most on them.
The whole problem can be solved btw, if there's political willpower. It is fairy easy. If you have a McDs franchise in San Francisco, then you are selling your McNuggets in San Francisco at that franchise. There's a fellow swiping his card in San Francisco and receiving his goods in San Francisco. A clear case of selling your goods in San Francisco. This means that your transaction was in San Francisco, so you pay income tax there as well, ie. to California. There you go, done.
No more companies incorporated in silly states or countries like Delaware or Liechtenstein or Ireland or Cayman Islands.
It isn't happening because "everyone is doing it" but that is a bad excuse, a fallacy actually: Tu quoque [1]
> Is the EU trying to be a productive economic system or a kleptocracy that survives on the scraps it can extract from the Americans?
Taking into account that Apple and Amazon case (and FIAT in Netherlands) are not fines and don't go to the EU I don't understand how are they scrapping anything
I'm actually quite pro europe, but the insidious influence of the French in particular and, to a geat extent in other ways, the Germans, over their desire for economic imperialistic dominion (now enriched tenfold with GB no longer party to anything going on) is a problem.
Ireland is a very small country with no natural resources. Its way of participating in the EU's drive for growth was the nation's economic policy and its well educated population as a base for American companies to bridge into Europe.
France clearly is bent out of shape because if other EU members can survive without gouging business, citizens et al with incredible levels of punitive taxation, then they can't continue their own shakedown forever without seeing business flight. Sooner or later they will have to relent and reduce their own taxes.
Same with the pursuit of Google, MS, Facebook et al. by Eurocrats with open portfolios.
Its an old fashioned shake down by the biggest self protecting bureaucracy outside of China. In my opinion.
The decision seems pretty clear. Why shouldn't Ireland have to abide by the agreements it signed when entering into the EU? If it wants to be able to enter into these agreements it shouldn't have joined. If it considers it extremely important, maybe it should leave.
Exactly! To someone in California, is it any better if jobs move to Texas because of lax employee protection and rock bottom taxes as opposed to the jobs moving to China PR? Why do we allow this race to the bottom?
> Ireland is a very small country with no natural resources. Its way of participating in the EU's drive for growth was the nation's economic policy
Irelands economic policy is "no taxes, make your EU HQ here!", so you just argued for the exact opposite position a few minutes before. Which one is it?
I'm perfectly aware. No one in the successive Irish governments has done anything other than state they will stand by their current policies. Without them there would be few jobs in Ireland.
If you are Apple, yeah, as long as you can keep using Ireland as you proxy, you are 13bn better out and will not face any penalty.
If you are Ireland, you weren't paid that much (it's actually your refusal to get paid that was the problem in the first place), and you will be fined once you've lost the lawsuit. (For the record, the fine will be a detraction on funds paid by the EU to Ireland.)
But hey, if the Irish citizens are happy to subsidize both Apple and EU coffers, I guess it's a win-win in someone's book. I personally don't think it's the smartest approach...
I'm pretty sure Ireland can thrive without leeching taxes from the rest of the EU. And regarding no natural resources, I don't think Japan or South Korea or quite a few other developed countries have those either.
Ireland is around 4 million people and in the 80s was an incredibly poor country with little industry. Now it is building a large services economy and is a business destination. Thanks to the tax policies implemented in the early 1990s. Without those, the jobs and net population decline would have continued faster than it is now.
