Rather Than Coming Up With Brand New Taxes For Tech Companies, The EU Just Issues A Massive Fine On Apple

from the double-irish-with-a-dutch-sandwich dept

For quite some time now, we've seen EU regulators talk fairly openly about their desires to harm American internet companies, mostly in a misguided attempt to boost local European companies (and to collect more money). It's why we keep hearing about weird, carefully targeted regulations designed to pump up how much money companies like Google, Apple and others pay.

At the same time, parts of Europe (Ireland, in particular) have been doing basically everything they can think of to woo American tech companies. Ireland has successfully offered ridiculously friendly policies, leading many large internet companies to set up offices in Dublin, and then use that as the place where they "recognize" all their revenue. There are a variety of tax dodges employed here, which go by fun names like Dutch Sandwich and Double Irish.

US Companies have been doing this for many years, and while it (frankly) looks pretty sleazy, they do seem to mostly play by the rules. We can argue over whether or not the tax breaks they get are worth it, but the whole thing just feels sketchy in that it's clearly playing some jurisdictional games to get lower tax rates. Of course, there's also been another looming issue on all of this, which is that these giant internet companies have been pushing heavily to be able to get the cash that they've been accumulating in Ireland back into the US, without then having to pay all those taxes on it. So they've been pushing for some sort of "amnesty" period or "holiday" where they can bring the cash back in.

Frankly, the whole thing is a little ridiculous. With so much money on the line, you can see why these companies play games, but that still doesn't make it right. The internet giants often seem to put this issue at the top of their lobbying priority list, and that's unfortunate. The thing that I like about Silicon Valley is that much of the industry comes from actually creating new and useful things and building stuff up. Playing tax dodging games is the opposite of that. It's playing political games and it feels super counterproductive.

Now, add on top of that the fact that the EU has realized that rather than just create new laws that will tax internet giants, it can just go ahead and hit Apple with a massive tax increase all by itself.

Apple Inc. was ordered to pay as much as 13 billion euros ($14.5 billion) plus interest after the European Commission said Ireland illegally slashed the iPhone maker’s tax bill, in a record crackdown on fiscal loopholes that also risks inflaming tensions with the U.S.

The world’s richest company benefited from selective tax treatment that gave it an unfair advantage over other businesses, the European Union regulator said Tuesday. It’s the largest tax penalty in a three-year campaign against corporate tax avoidance. Apple and Ireland both vowed to fight the decision in the EU courts.

No one comes out of this looking very good. The tech companies playing tax haven games look bad -- even if you think the tax rate is too high and they should be trying to get it lowered. The EU government looks typically jealous and petty towards American companies. And of course, people are already talking about a possible trade war over this issue.

Frankly, I'd much rather tech companies be focused on innovation in their products, rather than in their tax strategies.

Filed Under: eu, ireland, tax, tax avoidance, tech companies
Companies: apple