Apple tax. A good basic technique of international tax practice is to convince Country A that your income is earned in Country B, and convince Country B that your income is earned in Country A, because then neither of them will tax it. That is essentially what Apple seems to have done in Ireland, with the tiny wrinkle that it convinced the rest of the world that its income was earned in Ireland, and convinced Ireland that its income was earned nowhere : The two tax rulings issued by Ireland concerned the internal allocation of these profits within Apple Sales International (rather than the wider set-up of Apple’s sales operations in Europe). Specifically, they endorsed a split of the profits for tax purposes in Ireland: Under the agreed method, most profits were internally allocated away from Ireland to a " head office " within Apple Sales International. This "head office" was not based in any country and did not have any employees or own premises. Its activities consisted solely of occasional board meetings. Only a fraction of the profits of Apple Sales International were allocated to its Irish branch and subject to tax in Ireland. The remaining vast majority of profits were allocated to the "head office", where they remained untaxed. That’s from today’s European Commission ruling finding that "Ireland must now recover the unpaid taxes in Ireland from Apple for the years 2003 to 2014 of up to €13 billion, plus interest." The "head office" of Apple Sales International (an Irish-incorporated subsidiary that essentially books most of Apple’s revenue in the European Union) is not the U.S. parent company. It’s just an expression. It’s just the head office. In, you know. In your head. It exists in a place that is not a place, where the tax rate […]
