The Big Bailout of the Eurozone (Another crisis coming? - Seriously)

[Main Street]

From what I gather, this 13bn is a % of income from 110bn, from sales around europe and at some stage that money was routed through some pokey apple owned, 2 roomed unmanned office in Dublin, before going somewhere else,  at present remaining in an untaxed state, a financial limbo, piles and piles of stagnant wealth, extracted from circulation.

The 13bn is 12.5% of Apple's untaxed international profits.

The 13bn is untaxed profit from sales in the EU
"Apple transfers its intellectual capital to an Apple subsidiary in Ireland, which then "sells" Apple products all over Europe. And it keeps most of the money there. Ireland has been more than happy to oblige by imposing on Apple a tax rate that's laughably low – 0.005 percent in 2014, for example.' Newsweek sept 2016

The company that earned it (owned the international IP and technology rights to which all the untaxed profits derived) was incorporated in Ireland, but was never tax resident in Ireland, never managed from Ireland. So just like Dermot Desmond and Denis O'Brien were born in Ireland, but are not resident in Ireland, they don't pay Irish tax on their international earnings. Where they are actually resident, if anywhere, is irrelevant to Ireland - all that's important from an Irish tax viewpoint is they are not resident in Ireland. And this was the way corporate residence used to work too.

State collusion in multinational tax avoidance, whether it be Netherlands or Ireland, does not endow a particular tax avoidance scheme by a multinational, with EU rule compliance.

The profits don't belong to Ireland or anywhere else in Europe for that matter. They all got their share of Apple's profits, based on the activities that take place in those countries. And Apple would be heavily audited by Revenue authorities throughout Europe.

The 13bn is untaxed profit from sales in the EU, no EU country received tax from these untaxed profits. Entitlement to this tax revenue  is an issue to be resolved

The offshore international profits are technically liable to tax in the US. But there is a US provision (or "loophole" as people like to call such things) that allows groups to defer paying tax on group's international profits until the money is remitted back to the US, subject to meeting a number of conditions (which I don't think are too onerous, given all the US MNCs avail of it). No such loophole exists in UK, Germany, Canada, Australia, hence it was only US companies who could leave millions or billions of untaxed income offshore. The loophole could be closed with a flick of a pen in the US, but it never has been.

The considered EU ruling  is that Apple's arrangement in Ireland to avoid paying tax on EU sales' profit was illegal. 

Apple's illegal deals with the Irish government allowed the technology giant to pay virtually nothing on its European business in some years. The arrangements enabled Apple to funnel profit from two Irish subsidiaries to a "head office" with "no employees, no premises, no real activities," economist

'that Irish rulings in 1991 and 2007 artificially lowered the tax Apple was due to pay, and that although the firm did not break any law, this arrangement was in breach of EU state-aid rules preventing member states from offering preferential treatment to particular firms. The spat centres on two Irish-registered subsidiaries that hold the right to use Apple's intellectual property to make and sell its products outside the Americas.'
Economist sept 3rd

This ruling is under appeal.  I have already stated that  it's obvious that this income was not generated in Ireland but the EU have a strong case for Apple to answer and whether it be Ireland or all the other EU states  or the US are the beneficiary, then it's a positive move by the EU  against chronic tax avoidance strategies by multinationals.

[seafoid]

I was at a conference today. An asset manager  said there was nothing wrong with negative interest rates.
https://www.youtube.com/watch?v=Igsb3ejgbL8

[seafoid]

The German government is reported to be putting together a rescue plan for Deutsche Bank.
The EFSF would be redundant. It isn't big enough anawez because Merkel was worried about moral hazard from useless Mediterranean bankers.
Useless German bankers need money now. Negative interest rates mean Deutsche can't generate profits to fix its problems by itself. This is Draghi's fault. QE does not generate inflation.

The Eurozone has no system to wind down  banks that are fucked . Viewers may remember how much AIB and Anglo Irish cost a) bond holders 2) tax payers.

[Hound]

"Apple transfers its intellectual capital to an Apple subsidiary in Ireland, which then "sells" Apple products all over Europe. And it keeps most of the money there. Ireland has been more than happy to oblige by imposing on Apple a tax rate that's laughably low – 0.005 percent in 2014, for example.' Newsweek sept 2016

You're quoting from a US publication that clearly knows nothing about Irish tax rules!
Ireland imposing a 0.005% tax rate is a complete falsehood.

Apple transferred zero intellectual capital to an Irish resident company. Nada.

While Apple International was incorporated in Ireland, it was never tax resident there. The intellectual capital never came to Ireland. Ireland never paid for it, never got any tax deductions for the cost of acquiring it or for the huge cost of maintaining and improving the technology. This was all done by Apple International, an offshore company.

Just like Ireland can't simply decide to tax Dermot Desmond etc, it can't make a non-resident company pay Irish tax on international profits. 

The 13bn is untaxed profit from sales in the EU, no EU country received tax from these untaxed profits. Entitlement to this tax revenue  is an issue to be resolved

Again, not true. Each EU country has received a slice of the pie for the activities that were carried on by Apple subsidiaries in those countries, and tax paid accordingly. All those companies would be just sales companies, and they'd be guaranteed a profit each year, regardless of whether Apple International made a profit or not. They carry no risk, and so while they're profits are guaranteeed they are relatively small. They would have been audited and agreed most years by the relevant tax authorities in Europe.

But there is approx $110 billion (i.e the bulk of the profits) that belongs to the IP holder that is untaxed (or untaxed until remitted to the US - when remitted to the US it would be taxed at approx 35%, although this won't happen anytime soon. Although things could change if Donald wins and reduces the rate to 15%!).

The intellectual capital is what drives profits. In the 1980s Apple transferred their international (non-US) intellectual capital offshore. US tax would have been paid on that transfer. The offshore company would have paid billions to Apple US to share the costs of all new research that led to the iPhone, etc. Therefore, it is this company that rightfully obtains all the super profits that have arisen from the super technology.

The decision made by the Commission was made by non-tax experts. Assuming the appeal is heard by a judge or legal expert with actual knowledge of the various tax systems, then there isn't a hope in hell that Ireland/Apple will lose the appeal. It's arguable that Apple should have put a bit more profit in Ireland, which could result in extra Irish tax of between, say €100m and €1 billion, but to suggest we're due the full €13 billion is just absolutely ludicrous. Pure nonsense.

And the rest of Europe is due nothing extra. They've pretty much all already done their audits

[muppet]

That is the best explanation I've seen of this situation Hound.

As far as I can see, Apple is deferring tax that will eventually fall due in the US. Certainly that is how the US sees it. The EU Commission made a grab for it, using Ireland as proxy, and playing sleeveen politics by trying to embarass us into playing along - 'shur why don't you take the free €13bn we have handed you?'.

This reflects very, very poorly on the EU Commission imho.

[armaghniac]

That is the best explanation I've seen of this situation Hound.

+1

As far as I can see, Apple is deferring tax that will eventually fall due in the US. Certainly that is how the US sees it. The EU Commission made a grab for it, using Ireland as proxy, and playing sleeveen politics by trying to embarass us into playing along - 'shur why don't you take the free €13bn we have handed you?'.

This reflects very, very poorly on the EU Commission imho.

Exactly.

The US needs to get its act together.

[trileacman]

"Apple transfers its intellectual capital to an Apple subsidiary in Ireland, which then "sells" Apple products all over Europe. And it keeps most of the money there. Ireland has been more than happy to oblige by imposing on Apple a tax rate that's laughably low – 0.005 percent in 2014, for example.' Newsweek sept 2016

You're quoting from a US publication that clearly knows nothing about Irish tax rules!
Ireland imposing a 0.005% tax rate is a complete falsehood.

Apple transferred zero intellectual capital to an Irish resident company. Nada.

While Apple International was incorporated in Ireland, it was never tax resident there. The intellectual capital never came to Ireland. Ireland never paid for it, never got any tax deductions for the cost of acquiring it or for the huge cost of maintaining and improving the technology. This was all done by Apple International, an offshore company.

Just like Ireland can't simply decide to tax Dermot Desmond etc, it can't make a non-resident company pay Irish tax on international profits. 

The 13bn is untaxed profit from sales in the EU, no EU country received tax from these untaxed profits. Entitlement to this tax revenue  is an issue to be resolved

Again, not true. Each EU country has received a slice of the pie for the activities that were carried on by Apple subsidiaries in those countries, and tax paid accordingly. All those companies would be just sales companies, and they'd be guaranteed a profit each year, regardless of whether Apple International made a profit or not. They carry no risk, and so while they're profits are guaranteeed they are relatively small. They would have been audited and agreed most years by the relevant tax authorities in Europe.

But there is approx $110 billion (i.e the bulk of the profits) that belongs to the IP holder that is untaxed (or untaxed until remitted to the US - when remitted to the US it would be taxed at approx 35%, although this won't happen anytime soon. Although things could change if Donald wins and reduces the rate to 15%!).

The intellectual capital is what drives profits. In the 1980s Apple transferred their international (non-US) intellectual capital offshore. US tax would have been paid on that transfer. The offshore company would have paid billions to Apple US to share the costs of all new research that led to the iPhone, etc. Therefore, it is this company that rightfully obtains all the super profits that have arisen from the super technology.

The decision made by the Commission was made by non-tax experts. Assuming the appeal is heard by a judge or legal expert with actual knowledge of the various tax systems, then there isn't a hope in hell that Ireland/Apple will lose the appeal. It's arguable that Apple should have put a bit more profit in Ireland, which could result in extra Irish tax of between, say €100m and €1 billion, but to suggest we're due the full €13 billion is just absolutely ludicrous. Pure nonsense.

And the rest of Europe is due nothing extra. They've pretty much all already done their audits

Game, set, match.

[Hardy]

Spot on Hound.

[seafoid]

Commerzbank is dropping 10000 jobs

[bennydorano]

Is Deutsche Bank going to sink Europe?

[seafoid]

Is Deutsche Bank going to sink Europe?

Not yet.
Negative interest rates will destroy banks everywhere. Banking is based on taking in short term deposits to fund long term loans eg mortgages . The profits are a cut of the difference between interest charged and interest paid. Negative interest rates wipe out those profits.

[thejuice]

Deutsche Bank is too big to fail. Germans are going to have to shoulder this one.

[seafoid]

Deutsche Bank is too big to fail. Germans are going to have to shoulder this one.

The Axis powers
There isn't any spare sovereign balance sheet capacity.  The EFSF only has 700 bn
Something will have to give.
If you can't hold on
I've got soul but I'm not a soldier

[Declan]

Here's the book we should all be reading for Christmas
https://www.smashwords.com/books/view/685170

[muppet]

Exit polls suggesting big win for the 'No' vote in Italy.

Does Renzi resign?

Will it make markets turbulent on the run in to Christmas?