The EU and Tax Invasion

Notice that: invasion.

EU antitrust regulators ordered Apple on Tuesday to pay up to 13 billion euros ($14.5 billion) in taxes plus interest to the Irish government after ruling that a special scheme to route profits through Ireland was illegal state aid.

The problem, in the EU’s eyes, is that Apple headquartered its European operations in Ireland, which has one of the lowest corporate tax rates in the EU (and which EU Know Betters keep hammering on the Irish to “correct” because its tax rates are, somehow, unfairly low), and then Apple funneled most of its European revenue through that Irish branch so as to pay—legally in their and Irish eyes—low taxes.

“Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years,” said Competition Commission Margrethe Vestager….

Ireland agrees with Apple and will appeal the EU’s demand.  As Finance Minister Michael Noonan said,

This is necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation.

Ireland is quite clear on the invasion matter.

The EU may well be on the right side of its law, but it’s on the wrong side of morality and the wrong side of economic principle.  It’s not the EU’s money.  It’s not even Ireland’s government’s money.  It’s Apple’s money, and it’s the money of the 6,000, or so, Apple employees in Ireland, which they allocate to the Irish government (not the EU governance) as taxes.  If Ireland is charging Apple a lower tax rate than continental members of the EU, the latter should compete, not run from competition by presuming to dictate to a fellow member what that member must do.

It’s also the case that the lower tax rate leaves more money in the hands of those who earned it—those Irish employees and the Apple corporation—which means those employees have more money with which to take care of their families and to spend generally and Apple has more money with which to hire employees and to engage in product development—all of which are good for the Irish economy.

How Ireland takes care of its domestic economy is of no legitimate concern to the rest of the EU, and that Apple paid all the taxes required by Ireland is just a bit of too bad for the EU Know Betters.

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