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If you read the press release or watch Margrethe Vestager's response on the PBS NewsHour of Tuesday, May 30 you will see that there is another serious problem: the fact that Apple has a paper headquarters in Ireland with no staff, just a mailbox, and it routes all of its profits out of Europe, via Holland, through this paper headquarters, thereby paying almost no tax on anything is sells in Europe. This raises the question of the legitimacy of this arrangement and of the impact on the other countries in Europe when Apple only pays a fraction of a percent tax on all of its European sales. It seems that is also an actionable item. I must admit that I would not be sad to see the 'double Dutch' with an Irish desert be invalidated for all. This will also affect Amazon and others who use this tax-accounting scam.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Aug 31st, 2016 at 04:10:26 AM EST
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I have no doubt that the vast majority of people of all political persuasions would like to see such tax scams eliminated and even in Ireland there is a recognition that the days of attracting FDI through such mechanisms are numbered.  Noonan himself abolished the "Double Irish and Dutch Sandwich" and the ability to set up non-tax resident Companies in Ireland.

However the issue here is whether such arrangements are illegal under international tax laws and treaties, and the sad reality is that it seems they are not.  Such tax avoidance measured are widely practised throughout the world, and not only in acknowledged tax shelter jurisdictions like the Cayman, Virgin, and Jersey Islands.  Luxembourg, Holland, and increasingly, the UK are particularly active in this area with the UK pioneering new dodges like the "patent box".

The even narrower issue here which is likely to be determined by the ECJ is whether the Commission has any competence in this area. If Ireland can prove that the Apple's arrangements are in no way peculiar to it and are widely applied by other companies, then I doubt the  Commission can sustain its position that the arrangements amounted to a special deal for Apple. The question of whether "a largely fictitious" HQ can be used to channel those profits away from tax exposure is a much more fundamental issue of Company law also widely applied throughout the world.

No one doubts that such corporate laws are in dire need of reform, but the question is by whom and where and how.  The Commission may be rightly frustrated by it's lack of powers in this area, but that doesn't give it the competence to take the initiative. I suspect it knows this and has decided to highlight the issue as much as possible to the embarrassment of all involved. The fact that it investigated only one high profile Company in a smaller member state greatly weakens its case that this is a matter of giving one company an unfair advantage over others.  More likely, all global corporates have an unfair advantage over smaller national businesses in most jurisdictions in the world.

But the Commission had to start somewhere, and targetting the World's largest and most profitable global company was a good place to start. Whether this leads to more determined and concerted actions by the EU and OECD and other relevant bodies to eliminate such loop holes through international tax treaties remains to be seen.  Brexit will reduce opposition to such reform within the EU, and it seems not un-coincidental that both France and Germany are now signalling their opposition to TTIP - a Treaty that would have increased the powers of global corporates still further.  

Ireland's problem is that such reforms will make it much more difficult to attract FDI precisely at the time when the UK is using Brexit, greater tax avoidance measures like the Patent Box and lower corporate tax rates to greatly increase its attractiveness to global corporates seeking to reduce their tax exposure. The threat to become a "rogue corporate tax nation" seems to be May's strongest card in her attempt to extract a better Brexit deal from the EU.

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by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Aug 31st, 2016 at 08:13:14 AM EST
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Of course it's a scam.  Every tax code on the planet is chock full of them, including Germany's and France's.  As for brass doorplate corporations taking advantage of local tax loopholes, if that's illegal, then Luxemburg and the UK (including Scotland) are toast.  Enforcement actions against such tax practices will turn the slow motion implosion that is the EU into a short fuse explosion.
by rifek on Thu Sep 1st, 2016 at 02:51:01 PM EST
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Enforcement actions against such tax practices will turn the slow motion implosion that is the EU into a short fuse explosion.

I am doubtful that anything definitive would happen within six months and Stiglitz along with others have already estimated that a financial collapse in the EU is likely within six months. And EU Commissioner Margrethe Vestager was very clear that they were proceeding one company/one agreement at a time due to the nature of the laws involved.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Sep 1st, 2016 at 07:04:54 PM EST
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I'm just saying that, if she proceeds with ANY investigation based on the opinion that using empty shells for tax avoidance purposes is a violation of EU treaties, she will create a stampede.
by rifek on Thu Sep 1st, 2016 at 11:29:24 PM EST
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