It has to be said that there’s a certain amusement that Apple is now paying some parts of that tax bill to Ireland. The first $1.8 billion has been delivered, so we hear. The amusement that this is coming mere months after the changes to the US tax laws which mean that the money probably isn’t owed anyway. For that has been the effect of Trump’s changes to US tax law. As the profits will now be taxed in the US therefore the EU’s case that they’re not being taxed anywhere rather falls away.
And that is amusing, no, that tax which now doesn’t have to be paid is being paid?
Back in 2016, the European Commission ordered Apple to pay Ireland around 13 billion euros ($15.3 billion at current exchange rates) in back taxes. Apple had a special sweetheart deal with Ireland, which the commission ruled was illegal. Neither party was happy with this decision. Apple argued that the amount owed was miscalculated, while Ireland believed that the EU overstepped the bounds of its authority, but appeals so far have been unsuccessful.
I expect those appeals to be successful myself. But then I was entirely wrong about the original finding too. What matters though is the underlying justification the EU used:
The European Commission ordered Apple in August 2016 to pay the taxes it ruled it had received as illegal state aid, as part of its wider drive against what it says are sweetheart tax deals usually used by smaller states in the bloc to lure multinational companies and their jobs and investment.
The tax rate was illegal state aid, therefore it cannot be allowed to stand.
In an order that reverberated across the Atlantic, the European Commission in 2016 slapped Apple with a record bill, saying Ireland granted unfair deals that reduced the company’s effective corporate tax rate.
The crux – cruces? – of the case was twofold, that it was illegal state aid and also that it was that the profits were taxed nowhere which was that aid. It was indeed made quite clear by Ms. Verstaeger that if those profits were taxed in the US – where I and in general tax law think they should be – then the issue with Ireland all became rather moot. And what does Trump’s tax changes mean? That those profits will indeed be taxed in the US. Thus the entirety of the EU case seems to fail, doesn’t it?
However, this is just wrong:
Apple forks over first billion in $15B Irish tax fine
Both Apple and Ireland are appealing the EU fine.
It’s not a fine and even if it were it wouldn’t be Apple paying it. It never is a fine in illegal state aid cases. The EU Commission has made this entirely clear – I’ve spoken to them on the point. It is simply the collection of that illegal state aid which should not have been given. There is no penalty or fine element to it at all.
And even if there were, who has done the naughty thing? The state offering the illegal aid, obviously. Therefore, if there were a fine it would be Ireland paying it, not Apple.
The thing that really does amuse though is that those Trump tax changes, meaning that the Apple profits will be and are taxed in the US, leads to the EU case for demanding tax in Ireland to fail by their own insistences.