I found some rather troubling aspects within the ruling itself:
1. Retroactive application of arm's length principle
The Court's reliance on the arm's length principle, despite acknowledging it's not required by EU law, is problematic. As stated in paragraph 124:
> "Article 107(1) TFEU gives the Commission the right to check whether the level of profit allocated to such branches... corresponds to the level of profit that would have been obtained if that activity had been carried on under market conditions."
This retroactive application of a principle not explicitly required by law at the time of the tax rulings is unfair and creates legal uncertainty for businesses.
2. Burden of proof
The Court's criticism of the General Court's approach to evidence, as noted in paragraph 245, lowers the burden of proof for the Commission in State aid cases:
> "As the Commission stated in recital 441 of the decision at issue, its approach is based on an infringement of Article 107(1) TFEU, which has been part of Ireland's legal order since its accession in 1973, and not on a failure to have regard to the framework defined at OECD level."
This shift unfairly advantages the Commission in future cases and will lead to increased challenges to legitimate tax arrangements.
But, overall, yes, I get the concerns about legal certainty and applying rules retroactively. They're valid points. But when I weigh everything, I still think this ruling does more good than harm. It's a big step towards fairer taxes and more transparency in how big companies operate.
Yes, it might ruffle some feathers in the short term. But in the long run, it's setting us up for a tax system where everyone plays by the same rules – whether you're a small local business or a tech giant.
There's not much uncertainty for business really. If you're pulling the moves that Apple and other companies pull to "optimize tax", then you are with 100% certainty trying to game the system and violating the spirit of the law.
It is 100% untrue that "the spirit of the law" isn't factor in the US judicial system. The main way it enters explicitly is through courts taking into account the intent of the legislature. The most notable example of this was the way US courts interpreted the 14th amendment, which was far from it's literal statement.
Even if it was retroactive, which it is not, being punished for premeditated tax avoidance can hardly be called unpredictable.
The central difference of opinion is of course whether outright gaming the system is acceptable regardless of the written rules being followed to the letter.
I find it interesting how in american corpspeak "uncertanty" pretty much always means "our lawyers can't find a way to avoid this law without getting caught" ^^
Well yeah. The prime way they avoid the law is compliance. You would also be pretty pissed off if you couldn't avoid a law fining you for something you couldn't avoid.
> On Friday, January 31, 2020, courts in France, the United Kingdom, and the United States approved analogous versions of a deferred prosecution agreement (DPA) between prosecutors and Airbus that include a combined fine of $3.96 billion for the aircraft manufacturer. The resolution ends multi-year investigations by the French National Financial Prosecutor’s Office (Parquet National Financier or PNF), the U.K. Serious Fraud Office (SFO), and the U.S. Department of Justice (DOJ)
> I find it interesting how in american corpspeak "uncertanty" pretty much always means "our lawyers can't find a way to avoid this law without getting caught" ^^
> I find it interesting how in american corpspeak "uncertanty" pretty much always means "our lawyers can't find a way to avoid this law without getting caught" ^^
Did VW ever complain about uncertainty in diesel gate?
When you do shit to bend and avoid complying with the rules as much as possible, you don't get to complain about uncertainty on application of said rules.
That's exactly right. Corporations need the law to be as predictable as a computer program, so they can find exactly where the loopholes are and slip through them. I'd be surprised if American politicians didn't make laws this way on purpose.
A law that says "you aren't taxed on money you send to overseas subsidiaries" is trivially gameable. A law that says "don't evade tax" is not, so corporations hate not knowing which side of the blurry line they're on. An ethical corporation (as if that exists) would just stay clear of the blurry region and have no problem.
> Yes, it might ruffle some feathers in the short term. But in the long run, it's setting us up for a tax system where everyone plays by the same rules – whether you're a small local business or a tech giant.
I don't understand the ruling however, something doesn't make sense:
- Apple goes to a country and makes a deal with that country
- They pay the tax in the country and they comply with all the rules at that time in Ireland
- After a few years the EU government says "hey, Ireland that's not a correct deal"
- So they don't punish the Ireland government who didn't comply with EU regulation (as far as I understood) and retroactively charge the tax on Apple, who complied with all the regulation. Doesn't the burden of non-compliance be on the party that broke the EU rules and not the company who complied with all the rules?
Several questions arise:
- Was Apple breaking any rules in those years when they had the deal with the government?
- How can any company be sure that if they comply with current tax laws they won't be back charged in the future?
- Isn't that a bad precedent of "we change the rules now", but will punish you for you past behavior for non-complying with the new rules? (e.g. why don't charge back the increase in taxes for this year for the past 3 years)
These are not related to the ethical/moral or fairness evaluation of the situation. It's unfair to charge different taxes at all, flat taxes should be the norm, not charge more if you earn more. However the legal logic doesn't seem to be there.
That's a distinction without a difference. Presumably, if Ireland hadn't offered this deal, Apple would have done their business somewhere else. Sure, they may have paid some other country more taxes, but potentially less taxes than what they now owe Ireland.
Apple isn't blameless here, but it definitely kinda feels like they got a little bit defrauded by the Irish government who now essentially is getting rewarded with billions of dollars for their illegal conduct.
Apple is a lot worse than merely 'isn't blameless'. They knew perfectly well what they were getting into and I'm confident that the current judgment would have been a scenario that their lawyers would have explored.
I'm sure that if Apple thinks that they have been hard done by that they could sue the Irish government for damages in the Irish courts.
I mean, don't you see how that's bad though? Ireland gets to just lie to people, promise them things, profit from their lies and then their courts get to decide if they were wrong?
Also, everyone's stating with a lot of confidence that Apple absolutely knew this was illegal under EU law. Is that in evidence in the case? Have there been other prosecutions of other EU states for doing this?
>>Yes, it might ruffle some feathers in the short term. But in the long run, it's setting us up for a tax system where everyone plays by the same rules – whether you're a small local business or a tech giant.
Yeah, but that only ever ratchets in one direction. Putting everyone on the same rules won't reduce taxes for anyone.
Simple and fair are not the same thing. Also, wait until you’ve issued stock based compensation to employees in a few jurisdictions before you make any certain claims.
> This retroactive application of a principle not explicitly required by law at the time of the tax rulings is unfair and creates legal uncertainty for businesses.
I don't see any problem with this. They knew they were gaming the system, and knew they could get in trouble for it. The law is NOT a computer program where all outputs can be fully predicted from the source code - it also takes common sense into account.
We should just pass a law that says gaming the system is illegal, then we won't need to find silly justifications against people who game the system, but silly justifications work too.
I expect to see very abusive definitions of 'gaming the system' under such a law such that anything which is the slightest inconvenience is viewed as gaming the system. Just like how common sense isn't common.
In support of GP, my experience with judges and lawyers says the law* is much less fond of "rules lawyering" than engineers typically believe.
* to be fair, this varies with legal system: my personal opinion is that one finds significantly more successful rules lawyering attempts in common law systems than in code systems.
1. Retroactive application of arm's length principle
The Court's reliance on the arm's length principle, despite acknowledging it's not required by EU law, is problematic. As stated in paragraph 124:
This retroactive application of a principle not explicitly required by law at the time of the tax rulings is unfair and creates legal uncertainty for businesses.2. Burden of proof
The Court's criticism of the General Court's approach to evidence, as noted in paragraph 245, lowers the burden of proof for the Commission in State aid cases:
This shift unfairly advantages the Commission in future cases and will lead to increased challenges to legitimate tax arrangements.But, overall, yes, I get the concerns about legal certainty and applying rules retroactively. They're valid points. But when I weigh everything, I still think this ruling does more good than harm. It's a big step towards fairer taxes and more transparency in how big companies operate.
Yes, it might ruffle some feathers in the short term. But in the long run, it's setting us up for a tax system where everyone plays by the same rules – whether you're a small local business or a tech giant.