The Apple Deal ‘Explained’

at

memorandum

The Department of Finance have sent out a briefing document to TDs ahead of today’s debate on the EU’s Apple tax ruling.

In 1991, a basis proposed by Apple for determining Apple Computer Ltd’s Irish branch net profit was agreed by Revenue.

According to that ruling, the net profit attributable to the AOE branch would be calculated as 65% of operating expenses up to an annual amount of  $60- 70 million and 20% of operating expenses in excess of $60-70 million.

This was subject to the proviso that if the overall profit from the company was less than the figure resulting from this formula, that lower figure would be used for determining net profits of the branch.

Operating expenses included in the formula were all operating expenses incurred by Apple Computer Ltd.’s Irish branch, including depreciation but excluding materials for resale and cost-share for intangibles charged from Apple-affiliated companies.

In 2007, a revised approach for remunerating the Irish branch of AOE was agreed which was based on:

(a) a 10-20% margin on branch operating costs, excluding costs not attributable to the Irish branch, and

(b) an IP return of 1-9% of branch turnover in respect of the accumulated manufacturing process technology of the Irish branch.

Sweetheart deal, state aid or nothing to see here?

Only YOU can decide.

Read the document in full here

53 thoughts on “The Apple Deal ‘Explained’

    1. ReproBertie

      Collapse this government for the actions of a different government 25 years ago. Do you want elections to vote back in the crowd that were in charge when the deal was made?

        1. ReproBertie

          Actually this crowd are much worse as they are utterly impotent. While previous governments were able to make the odd decision here and there this minority government can’t make a single decision without tynig to please everyone in the Dáil so instead of making decisions they set up steering groups and committees and generally push decisions out for another few years.

          This appeal against European intereference in Irish tax affairs is the first decision they’ve made and they got away with it because the party that made the deal in the first place were all in favour of the appeal.

          1. classter

            ‘this minority government can’t make a single decision without tynig to please everyone in the Dáil’

            This situation pertains because the electorate gave no clear mandate to a single vision or party (or parties). FG were the biggest party but support for them had fallen & support for the others had split.

            What suggests that a re-election would yield a different result?

          2. Kieran NYC

            A question – have any of the opposition parties (particularly SF and PBP) come forward with any proposed legislation yet? Since the government is in the minority, they could theoretically get stuff passed if they wanted to.

            I haven’t heard anything bar the usual whingeing.

    2. Bob

      It’ll only be replaced with more of the same. What we need is a benevolent dictator. I vote for Daniel O’Donnell

        1. Sheik Yahbouti

          I’m up for the job and nominate myself – “What’s in it for meeeee?” See, I’m a real Irish politician.

    3. Sheik Yahbouti

      PS. Just tuned in to RTE news to view the “emergency recall” of the Dail to ‘debate’ the Apple situation. The rows of empty benches tell the whole story. Our pampered TDs couldn’t be bothered to return from Bali, Barbados, Ballydehob or Disney World to support this farce. The case for my appointment as Benign Dictator grows apace!

      1. :-Joe

        Taoiseach or maybe… Toa-Sheik Yahbouti has a nice ring to it…

        You’re always half way there already with a good jingle….

        :-J

        1. :-Joe

          Ooops… Tao-Sheik Yahbouti as in Tao meaning “way of” something.

          The way of shaking your booty… It could be a new martial art too..

          :-J

        2. Sheik Yahbouti

          I’m thinking of adapting the great, new “Heinz Bean Can Song” – (log on to learn the bean can song). It is sufficiently dreadful and farty to form a powerful component of my campaign. :-D

  1. Jimmee

    The Revenue said there was nothing illegal about Apple’s proposed tax structure.

    You are not breaking the law = sweetheart deal. Ok gotcha.

  2. Robert

    The EC has no jurisdiction over Tax affairs i.e. the specific numbers here.

    The EC does have jurisdiction over competition affairs i.e. whether the numbers assigned here fall into the category of a special deal.

    What the EC says the numbers *are* (i.e. 13B or whatever) is irrelevant except to the point that they can be demonstrably only applied to Apple.

    How am I doing so far? Has EC provided evidence with regards to the last point? They would have had to investigate the arrangements provided to Google, Facebook, Intel etc. also …

    Legal challenge is required to determine these facts? Since “evidence”released thus far is more akin to glib PR material?

    1. classter

      The argument, however, is that the ruling given on what monies had to be assigned to the Irish branch constituted a specific (and unfair) sweetheart deal.

      By that token, there is no need to investigate every single other multinational with a presence in Ireland.

      It still isn’t clear whether the Commisions verdict will stand up in court but…

      1. Robert

        Of course you have to investigate every other multinational otherwise how could you draw the conclusion that apple got a deal they didn’t? I understand the point the ruling is making but what evidence have they provided?

        They’ve provided evidence of tax evasion, which is beyond their remit, and however distasteful is legal under “European” rules.

        The issue at stake is unfair taxation aka state aid.

        I wonder have they done any investigation into VW’s tax breaks in Wolfsburg? Just for instance.

          1. ReproBertie

            Ah now Moyest. Tax avoidance is the legal method of paying the minimum tax required. I’m sure if you heard of a legal way to pay less tax that you were not taking advantage of you wouldn’t turn your nose up at it.

          2. MoyestWithExcitement

            I really don’t think comparing your average Joe to corporations really works. A parent on 30k a year trying to minimise their tax liability isn’t the same as a corporation worth hundreds of billions doing it.

            And I just find it offensive that people regard tax evasion and avoidance as two different things. “You” use our roads to transport your goods. Our education system to operate your business. Our police force to protect it. You need to pay for it. Whether our goverment said it was ok or not doesn’t change the morality of not paying for things you use, especially when you’re worth billions and can afford it.

          3. ReproBertie

            But tax evasion and avoidance ARE too different things.

            I do get where you’re coming from but until there’s profit in it we won’t get much morality from corporations.

          4. MoyestWithExcitement

            “But tax evasion and avoidance ARE too different things.”

            Officially they are, but in reality they’re not. It’s a man made concept. God/Allah, avoidance/evasion. Just because you use a different government logo on your tax return than normal, or whatever, doesn’t change the reality that you’re consciously avoiding paying your bills. If a pensioner from Neilstown racks up a couple of hundred euros in an unpaid ESB bill, he can go to prison. If you rack up €13 billion in unpaid bills, our government will fight the EU for you and people *not necessarily yourself) will defend you with terms like tax avoidance.

            “I do get where you’re coming from but until there’s profit in it we won’t get much morality from corporations”

            Which is why it’s important for our society and others to do away with rules that allow high level theft by corporations.

    2. Sheik Yahbouti

      The EC as you say seem to be complaining about competition issues – NOT taxation policy. But you knew that already. Fondest regards to all in the Fraperoom. I trust the food has improved?

      1. classter

        He/she is right though.

        You can protest that the media is mildly inaccurate or ignoring the nuances.

        The point is that we have allowed all this get to a point where it looks terrible & have made ourselves a target.

        1. manonfire

          Exactomondo, this could have been sorted out much earlier and a lot more quietly

          Alas the corporatocracy tried to milk it for all its worth

          First we have pat hickey, than we get done for VAT evasion

          Bad month for the boys in green

        2. Robert

          That’s not the point that was made though.

          The Commission has deliberately and cynically spun the story ala PR in such a way as to feed a story that can only be defended with nuanced arguments. They “say” they’re going to investigate other countries such as Luxembourg or Netherlands but we’ll see how far those go.

          There’s far more to this than has been described by the EC in it’s “ruling” but they’ve basically made an “argument from authority” that the media has lapped up.

          We don’t have the platform to counter in kind because we are a small and week nation.

          Bully tactics.

  3. Granny Smith

    “Apple Sales Ltd” ?

    It was the tax deal with “Apple Sales International” that had the custom loophole the EU ruled against, they’re not trying to be sneaky are they?

    1. Robert

      Who else would it be? We’ve all ready established that Apple gear is “Designed in California, made in China” …

      The whole purpose of setting up an office “In Europe” is for sales into that market. If you didn’t have a common trade area (i.e. “The EU”) then Apple would have to have an office for each country separately. Instead they get to have one for all the EU, that happens for the purposes of our discussion to be based in Cork.

      Now I do happen to know they do “all sorts” of other things in Hollyhill besides sales administration, but I can only presume these activities fall under the auspice of ASL which presumably bills the “Head Office in the sky” in all sorts of other manner of skulduggerous ways …

  4. dav

    In fairness the spineless dealings of irish governments with the eu has invited this powergrab, we”ve meekly acquiesced to eu instruction on bondholder debt and their war on the poor ( disguised as “austerity”) so why wouldn’t they think our fearful leader and company, will roll over on the dodgy tax deals?
    civilwarshirts – always respect their “betters”

    1. Robert

      Well if you look at it, this is a good thing. It sets a precedent for questioning EC policy in future.

  5. Maire

    I wonder if Noonan has any shares in Apple. Maybe that’s why he intends using OUR money for this appeal. Did not hear a peep out of him re Water Charges. Has he got shares in Siteserv? We know, by public record that the CEO of Ervia who run Irish Water has 400,000 shares so why not Noonan or Kenny. Follow the money ….

      1. Sheik Yahbouti

        How dare you! My ;pension has shares in Armaments, fracking, tobacco, drugs and prostitution. No where near as disreputable as Apple! Yield isn’t up to much though, hence my bid for the Leadership.

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