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.
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?
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.
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.
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.
> 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.
[1] https://en.wikipedia.org/wiki/Double_Irish_arrangement#Compa...
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).
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.
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.
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.
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.
[1] https://www.ad.nl/economie/fiscus-onderzoekt-ierse-belasting...
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.
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.
[1] https://en.wikipedia.org/wiki/Panama_Papers#Allegations.2C_r...
Wow, no need for name-calling, dude. Let's keep it civil.
[1] https://en.wikipedia.org/wiki/Double_Irish_arrangement#Compa...
I don't see how it's fair to take advantage of free access to the EU market and not follow EU law.
It wasn't law abiding and the EU doesn't see a cent of that money, the tax payers do.
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.