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EU Drops Court Case After Apple Repays More Than $16 Billion In Taxes and Interest To Ireland (theguardian.com)
"Ireland's government has fully recovered more than [$16 billion] in disputed taxes and interest from Apple, which it will hold in an escrow fund pending its appeal against a European Union tax ruling," reports The Guardian. From the report: The European commission ruled in August 2016 that Apple had received unfair tax incentives from the Irish government. Both Apple and Dublin are appealing against the original ruling, saying the iPhone maker's tax treatment was in line with Irish and EU law. Ireland's finance ministry, which began collecting the back taxes in a series of payments in May, estimated last year the total amount could have reached -- [$17.5 billion] including EU interest. In the end the amount was [$15.2 billion] in back taxes plus [$1.4 billion] interest.
For its part, the commission said it would scrap its lawsuit against Ireland, which it initiated last year because of delays in recovering the money. "In light of the full payment by Apple of the illegal state aid it had received from Ireland, commissioner (Margrethe) Vestager will be proposing to the college of commissioners the withdrawal of this court action," the commission spokesman Ricardo Cardoso said. Ireland's finance ministry said its appeal had been granted priority status and is progressing through the various stages of private written proceedings before the general court of the European Union (GCEU), Europe's second highest court. The matter will likely take several years to be settled by the European courts, it added.
For its part, the commission said it would scrap its lawsuit against Ireland, which it initiated last year because of delays in recovering the money. "In light of the full payment by Apple of the illegal state aid it had received from Ireland, commissioner (Margrethe) Vestager will be proposing to the college of commissioners the withdrawal of this court action," the commission spokesman Ricardo Cardoso said. Ireland's finance ministry said its appeal had been granted priority status and is progressing through the various stages of private written proceedings before the general court of the European Union (GCEU), Europe's second highest court. The matter will likely take several years to be settled by the European courts, it added.
More to the point, why does the EU care if Ireland collects taxes from Apple?
Because Apple is reporting profits in Ireland that were not actually earned in Ireland. This gives Apple an unfair competitive advantage and compels other companies to seek similar tax shelters, and compels other countries to lower their corporate tax rates in a "race to the bottom".
There are two solutions:
1. Harmonize corporate income tax rates, so all countries, or at least all EU countries, tax at the same rate.
2. Stop taxing profit. Profit is very easy to manipulate and shift around. Instead, tax sales, or payroll, or dividends, or charge resource excise taxes, or infrastructure use fees, or whatever. None of those can be easily shifted between jurisdictions.
The EU's lawsuit against Ireland is trying to impose #1, but #2 would be better for Europe's economic future.