What is truth?

Just minutes after the excitement over Apple’s new product announcement hit, The FT drops a rather more painful headline stating that Apple will on Tuesday be hit with Europe’s largest tax penalty after Brussels ruled that the company received illegal state aid from Ireland. Despite Treasury Secretary Lew’s pleas/demands just a week ago that the EU back off, the company will have to pay billions of euro in back taxes to Dublin as the European Commission moves to redraw the boundaries on aggressive tax avoidance by the world’s biggest corporations.

A week ago, Jack Lew implored Europe to reconsider…

After a meeting with U.S. Treasury Secretary Jack Lew last month, the European Union’s antitrust chief Margrethe Vestager tweeted a photo of herself standing awkwardly next to the American finance chief, with the two of them facing in slightly different directions.

 

 

It was a “very good meeting,” she tweeted. But the photo was fitting, for the two were far from seeing eye-to-eye over the EU’s investigations into the sweetheart tax deals some multinational companies have sealed with various European governments.

 

The trans-Atlantic discord could deepen this fall when the European Commission, which holds the bloc’s antitrust authority, is expected to decide on some of its biggest cases, including one involving Apple Inc. The commission could require the companies to pay back large sums in unpaid taxes.

But it appears Washington’s might has been overlooked as The FT reports that Vestager circulated the final ruling to her counterparts in the EU’s executive branch only on Monday morning, deploying a fast-track procedure in a bid to minimise leaks. The usual notice period is two weeks.

A 130-page judgment by the commission follows a three-year investigation into claims that two advance tax opinions issued by Dublin violated EU law by granting Apple an advantage not available to other companies.

 

The decision is set to be the subject of appeals in the European courts by Apple and Ireland, both of which have denied any wrongdoing.

 

The commission’s ruling calls on Dublin to raise a new tax assessment on Apple, which previously warned the US Securities and Exchange Commission that an adverse decision by Brussels could have a “material” impact on its finances.

 

One person familiar with the inquiry said Apple will have to restate its accounts as a result of the ruling.Investigators have examined how Apple paid a tax rate of less than 1 per cent on European sales — far lower than Ireland’s headline 12.5 per cent tax rate on business profits.

 

The commission is concentrating on the tax treatment of Apple’s intellectual property assets, a hotly disputed area likely to lead to a large claim for back taxes.

 

Although the decision itself does not specify the precise amount of money in play, Ms Vestager will set out an estimate when the findings are released on Tuesday, according to people briefed on her plans. Several people briefed on the findings in Brussels and Dublin believe the liability will run to billions of euros.

The Starbucks and Fiat rulings are under court appeal, and investigations continue into Amazon’s arrangements.

Clearly, the ruling marks a setback for the Irish government, which has moved in recent years to unwind the most contentious elements of a corporate tax regime that has long irritated other EU member states.

“The government‘s case is very robust,” said Ireland’s finance ministry. “The minister has indicated previously that any adverse ruling should be appealed in the European courts and will recommend that course to cabinet.”

How long before we hear calls for IreLeave?

And how long before more European banks face fines for various money-laundering charges or mal-treatment of investors? The ‘tit’ for this ‘tat’ – just as American hegemony is being called into question globally – will likely be large.

http://www.zerohedge.com/news/2016-08-29/jack-lew-furious-after-europe-set-hit-apple-largest-tax-penalty-ever

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