The clover, the apple and the sin

The clover, the apple and the sin

The clover, the apple and the sin

According to Christian doctrine, Adam and Eve were warned by God that if they ate the fruit of the tree of the knowledge of good and evil (by the way, an apple), they would surely die. However, influenced by the serpent, both ate the forbidden fruit. They were still alive, but were expelled from the Garden of Eden. It is the so-called “original sin”.

The 3-leaf clover has an interesting history in Ireland. St. Patrick, the patron of the country, used the shamrock clover (term of the ancient Gaelic language, which designates a young three-leafed plant) to explain the mystery of the Holy Trinity, because its leaves are divided into three and attached to a single stem, just as God is an entity with three Persons and convinced the Celtic kings to convert to Catholicism. Since then, Ireland has adopted the clover as a national symbol.

You are wondering by now, what the “apple” has to do with the “clover”. Apart from both being linked to the history of Catholicism, apparently nothing. However, given the current situation, I am sure you have already discovered the connection… Apple (apple in English, and name of an American giant of consuming electronics) and Ireland (whose national symbol is the clover) are in the order of the day because of tax issues. Let’s say it was a different way (I’m not sure if good…) to introduce the theme of the moment. And there is still the “sin”… we will get to that.

Let’s start from the beginning. The European Commission recently said that the agreements between Ireland and Apple are illegal. Brussels contends that the company will have to pay the back taxes for the period between 2003 and 2014, which according to their calculations amount to 13 billion euros. The European Commission considers that Apple has benefited from “improper” tax benefits, which is “illegal” under state aid rules because Apple has been able to pay substantially less tax than other companies.

Both (Apple and Ireland) are in disagreement with that position. As for the company, it’s obvious why. As for the country, the case is a bit different. It should be noted that the EC is not “asking” for tax payments for itself, but for Ireland itself. So why does it object to receiving 13 billion euros? Well, if we think a little beyond the immediate (the Irish are doing), we easily realise the “pandora box” that would open (or will open) in Ireland, and which impact will certainly be very negative for the country in a long-term, starting with the attractiveness of foreign investment (it should be remembered that tax attractiveness in Ireland has been a strategic issue for many years).

Let us deepen the question. Parallel to the actual activity in Ireland, which employs thousands of skilled technicians, Apple has another, created for tax savings purposes. In practice, the company records the sales made in the European single market in that other entity, whose tax residence is not in the US but is not in Ireland, and therefore falls outside the scope of taxation, as there is no territorial jurisdiction to tax. We face an elaborate tax scheme, which effectively allows Apple to save a lot of money on taxes.

Ireland has the legitimacy to invest in fiscal competitiveness to create wealth in its territory. But it is no longer legitimate to do so at the expense of obscure schemes, and to the detriment of the other Member States. There resides the “sin”.

I have nothing against Ireland, let alone against Apple (I even use its great products), but it seems clear to me that this time, the European Commission is on the side of reason.

The mere fact that we have arrived here, and of Brussels having had the courage to confront a world-wide giant, is already very positive. It follows, of course, a long and complex legal battle. May “the good ones” win, just like in a Hollywood movie…

Till next post!

Marco Libório

UWU Solutions CEO / Consultant / Lecturer


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