International Tax Avoidance

In August 2016, the European Commission ordered Apple to repay thirteen billion euros in back taxes to Ireland. The commission had investigated Apple’s tax arrangements in Ireland and concluded that they amounted to illegal state aid: Ireland had given Apple a selective advantage unavailable to other companies, allowing the company to pay an effective tax rate of 0.005% on European profits of sixteen billion euros in 2014. The Irish government was ordered to collect the money, and promptly announced it would appeal the ruling. Ireland did not want the thirteen billion euros; its government argued in court, alongside Apple, that the commission had made an error. This only baffled the cynical: Ireland’s unusually favorable tax treatment of multinationals was a deliberate policy to attract foreign companies. The mechanism Apple used was a variant of a structure known as the Double Irish, which Irish tax law had made available through a combination of specific provisions and deliberate…