My former colleagues at Good Jobs First released Violation Tracker Global on October 10, complementing their hugely popular Violation Tracker and Violation Tracker UK databases. Violation Tracker Global focuses on penalties assessed against the approximately 1600 largest multinational corporations. The database includes over 50,000 violations from 45 countries, the European Commission, and the European Free Trade Association.
The database records over $700 billion in penalties handed down since 2010. Banks account for 1/3 of this amount, although the largest fine recorded is $20.8 billion against BP for its massive 2010 oil spill in the Gulf of Mexico. Financial services more broadly is by far the most penalized industry, followed by pharmaceuticals, automobiles, and petroleum.
Violation Tracker Global is free to search at violationtrackerglobal.goodjobsfirst.org. There is lots to be found.
The number four penalty in Violation Tracker Global is the long-running Apple/Ireland state aid repayment case, covered heavily in this blog as it developed. You can easily be forgiven for not remembering it, since the European Commission ruled on it all the way back in 2016. But four years later, the EU General Court annulled the Commission's decision. It took a further four years for the Commission's appeal to be decided upon by the Court of Justice of the European Union. In a great victory for tax justice campaigners as well as for the Commission, the CJEU reinstated the Commission's decision last month, forcing Apple to repay €13 billion plus interest to the Irish government.
The gist of the Commission's decision was that the government of Ireland provided illegal fiscal aid to Apple by allowing the company to incorporate subsidiaries that were owned in Ireland but not tax-resident in Ireland (yes, you read that correctly); in other words, virtually all the profits were taxable nowhere. Ireland then negotiated advanced payment agreements with those subsidiaries that were based not on their profits, but on a convoluted formula based on their expenses only. These agreements allowed Apple to pay effective tax rates on 12 years worth of profits (2003-2014) that ranged from 1% to 0.005% (yes, you read that correctly, too), according to the Commission's analysis. Ireland's corporate income tax rate is 12.5%. According to The Wall Street Journal, over the course of this period, Apple was able to pay virtually no tax on $130 billion in profits its Irish subsidiaries earned from royalties on the company's patents, copyrights, and other intellectual property held in Ireland. The mind boggles.
As a result of this case, Apple and Ireland ended these arrangements in 2015, and with the CJEU decision, Apple repaid the illegal aid. Of course, since Apple is a pioneer in tax avoidance strategies, it will no doubt come up with new gambits. The struggle for tax justice continues.
For the text of the court decision, appropriately via Violation Tracker Global, see here.
