For non-EU readers, note that taxation is explicitly not a competency of the EU (i.e. Ireland can set its tax levels to whatever it wants). The only thing in question here is whether it was applying the same taxation rules to all companies, as granting special exceptions to certain companies could be viewed as state aid (which is not allowed). Ireland claimed it wasn't, the current (over-)ruling says otherwise. This case is also specific to tax rules from many years back. AFAIK the rules have subsequently been tightened and the exemption no longer exists.
Some important context that are in every European media, but apparently not the American ones [1].
Apple said in 2017 that it had an effective tax rate of 21 percent on foreign earnings. The Commission said its effective tax rate on European profits was 1 percent in 2003 and 0.005 percent in 2014.
[Edit] To be fair to CNBC they did cover the tax structure Apple set up some years ago [2].
> Apple, however, said in a statement: "The European Commission is trying to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to taxes in the US."
My understanding is that the U.S.A. double-taxes both corporations operating abroad, as well as it's own expats. If this is true, then it's quite the remark to say _the country you're actually in_ is the one double-taxing you.
The fact that your "income was already subject to taxes in the US" isn't the fault of the hosting country.
It would just be really good if companies stopped avoiding tax. Most countries are already pretty much bankrupt - it's worth thinking about for every debt (US National Debt is $35.35 trillion!!) there is a rich person on the end of it with the loan as an asset earning interest.
If companies avoid tax and rich people avoid tax it means more tax for normal people who work for a living.
I found some rather troubling aspects within the ruling itself:
1. Retroactive application of arm's length principle
The Court's reliance on the arm's length principle, despite acknowledging it's not required by EU law, is problematic. As stated in paragraph 124:
> "Article 107(1) TFEU gives the Commission the right to check whether the level of profit allocated to such branches... corresponds to the level of profit that would have been obtained if that activity had been carried on under market conditions."
This retroactive application of a principle not explicitly required by law at the time of the tax rulings is unfair and creates legal uncertainty for businesses.
2. Burden of proof
The Court's criticism of the General Court's approach to evidence, as noted in paragraph 245, lowers the burden of proof for the Commission in State aid cases:
> "As the Commission stated in recital 441 of the decision at issue, its approach is based on an infringement of Article 107(1) TFEU, which has been part of Ireland's legal order since its accession in 1973, and not on a failure to have regard to the framework defined at OECD level."
This shift unfairly advantages the Commission in future cases and will lead to increased challenges to legitimate tax arrangements.
But, overall, yes, I get the concerns about legal certainty and applying rules retroactively. They're valid points. But when I weigh everything, I still think this ruling does more good than harm. It's a big step towards fairer taxes and more transparency in how big companies operate.
Yes, it might ruffle some feathers in the short term. But in the long run, it's setting us up for a tax system where everyone plays by the same rules – whether you're a small local business or a tech giant.
anonymousDan ·126 days ago
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kasperni ·127 days ago
Apple said in 2017 that it had an effective tax rate of 21 percent on foreign earnings. The Commission said its effective tax rate on European profits was 1 percent in 2003 and 0.005 percent in 2014.
[Edit] To be fair to CNBC they did cover the tax structure Apple set up some years ago [2].
[1] https://www.politico.eu/article/commission-scores-surprise-w...
[2] https://www.cnbc.com/2016/08/30/how-apples-irish-subsidiarie...
ghusto ·126 days ago
My understanding is that the U.S.A. double-taxes both corporations operating abroad, as well as it's own expats. If this is true, then it's quite the remark to say _the country you're actually in_ is the one double-taxing you.
The fact that your "income was already subject to taxes in the US" isn't the fault of the hosting country.
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andy_ppp ·127 days ago
If companies avoid tax and rich people avoid tax it means more tax for normal people who work for a living.
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gzer0 ·127 days ago
1. Retroactive application of arm's length principle
The Court's reliance on the arm's length principle, despite acknowledging it's not required by EU law, is problematic. As stated in paragraph 124:
This retroactive application of a principle not explicitly required by law at the time of the tax rulings is unfair and creates legal uncertainty for businesses.2. Burden of proof
The Court's criticism of the General Court's approach to evidence, as noted in paragraph 245, lowers the burden of proof for the Commission in State aid cases:
This shift unfairly advantages the Commission in future cases and will lead to increased challenges to legitimate tax arrangements.But, overall, yes, I get the concerns about legal certainty and applying rules retroactively. They're valid points. But when I weigh everything, I still think this ruling does more good than harm. It's a big step towards fairer taxes and more transparency in how big companies operate.
Yes, it might ruffle some feathers in the short term. But in the long run, it's setting us up for a tax system where everyone plays by the same rules – whether you're a small local business or a tech giant.
Show replies