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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.
Index of Frank's Diaries
Enforcement actions against such tax practices will turn the slow motion implosion that is the EU into a short fuse explosion.
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