Irish finance minister calls €14B tax windfall from Apple 'transformational' | Hacker News Reader

Irish finance minister calls €14B tax windfall from Apple 'transformational'

theguardian.com

34 pointsadrian_mrd17 comments

It was win-win for Ireland. They got Apple investment and jobs for years, at the expense of other states, then “lose” a court case and get a tax windfall.

Some companies might leave but they are not better off elsewhere in the EU so I think most will stay.

Exactly what I thought — would be crazy if this was some 5D-chess move from the government after all, but not completely unlikely...

By this logic the other countries should do the same thing and offer them sweetheart deals in the hopes that the EU will cancel the deal ex post facto and give them the money anyway.

Meanwhile the companies would then have the incentive to take countermeasures, e.g. make it so the EU entity has no assets and would then have no money to pay retroactive taxes and file for bankruptcy if they get rug pulled like this again, or just pull out of the EU and sell there through third party distributors that have razor thin local margins.

Retroactive court decisions like this set up perverse incentives.

> Some companies might leave but they are not better off elsewhere in the EU so I think most will stay.

Probably not, if they haven't already; this relates to Apple's tax structure between 1980 and 2014 (ie not currently), and the key issue is that Apple was given unlawful state aid; Apple was advantaged over other companies, and Ireland was advantaged over other member states, which the EU restricts (interestingly, AIUI this would likely have been legal in the US, where states are generally allowed give special tax benefits to specific companies).

I wonder how long this tax revenue will last, I realize this is a one time lump sum, now that the tax advantage for "locating" in Ireland no longer exists.

> The windfall is being banked in two tranches – €8bn this year and the remaining €6.1bn next year – giving the country’s finance department a projected €105bn in tax revenue for 2024.

So this is about 7.6% of their tax revenue for this year and 5.8% of their revenue next year. If AAPL does leave that's a massive loss for the country.

> Combined with the one-off revenue from Apple, the expected corporate tax intake for Ireland is €38bn, half of which comes from the top 10 companies, including the tech companies Microsoft and Intel, and pharma multinationals, such as Pfizer.

Ireland could be facing a massive corporate tax loss if these companies just all up and go to a new European country.

Possible destinations are Luxembourg(Amazon, Fiat Chrylser) and the Netherlands (starbucks)

> If AAPL does leave that's a massive loss for the country.

Is it, though? AAPL didn‘t pay those taxes before, that‘s exactly the underlying problem, no?

Ireland would lose something for sure, as the operations of AAPL certainly created some kind of money for the country — but not taxes.

Before the ruling Apple was paying about 8B in taxes per year to Ireland.

If multinational corporations are no longer able to do a Double-Irish Dutch Sandwich anymore, it doesn't make sense to stay there.

Which means the future losses in a single year from several large multinational corporations leaving will be larger than this one payment.

Double Irish with a Dutch Sandwich has been dead and replaced several times over for years.

>Before the ruling Apple was paying about 8B in taxes per year to Ireland.

> If multinational corporations are no longer able to do a Double-Irish Dutch Sandwich anymore, it doesn't make sense to stay there.

That figure isn't going to change, nor are companies going to be running out of Ireland - the tax strategy has been shut down for more than a decade. Ireland has other features which make it attractive to US businesses, including strong historical ties and being the remaining English speaking member of the EU.

Malta is the other EU state with English as an official/national language.

Aren't Luxembourg and Netherlands also in the EU?

Wouldn't the same rules apply?

The issue is that the rule is highly subjective. So now there is a ruling for how not to structure your tax laws and they'll set out to achieve the same goal in a different way, i.e. they'll be more subtle about it in the future.

It's not even _really_ that (though this is something the EU certainly takes an interest in); the issue in this case was around Apple being given a special tax deal which was not available to other companies.

Not only tax loss but also GDP loss.

https://www.politico.eu/article/ireland-gdp-growth-multinati...

Ireland, like Luxembourg, Singapore, Switzerland and other tax havens have “ghost GDP” - GDP that exists purely because of economic activity recorded as occurring in Ireland due to tax offshoring, but doesn’t actually exist (the economic activity happened in another country, and the money doesn’t end stay in Ireland).

I’ve seen a few attempts at estimating the size and it’s up to 40% of Ireland’s GDP.

If that tax advantage disappears one would expect multinationals to rearrange their affairs and we should see a rapid decrease in Ireland’s GDP over the next few years.

> If that tax advantage disappears one would expect multinationals to rearrange their affairs

To be clear, the ruling relates to a state of affairs which existed from 1980-2014, and the issue in question was whether Apple was given a special tax deal relative to other companies (which the EU generally doesn't allow outside very limited cases). It has no bearing on Ireland tax rules in 2024.

> and we should see a rapid decrease in Ireland’s GDP over the next few years.

This would arguably in itself be no bad thing; Ireland has one of the highest GDPs per capita in the world, and the highest of any country with a population greater than a million people (the rest are microstates plus Luxembourg). This artificially inflated GDP causes some problems; in particular it increases Ireland's EU contributions above where they'd otherwise be. Ireland pays more per capita to the EU than any other country.

> If AAPL does leave that's a massive loss for the country.

This seems... unlikely? Like, the arrangement deemed illegal ended in _2014_; if Apple was going to leave as a result they'd presumably have done so then.

It’s a clear headed decision. Every euro of it needs to be spent on infrastructure. We can’t fix the shit weather but we can try to bring the country up to modern standards.

IMO, fears of companies leaving are unfounded. We’re still the only native English speaking country in the EU and from a business sense, our culture most closely matches that of the US. The Irish government knows where the bread is buttered. There will always be attractive incentives for multinationals to be HQd here.

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