page_title: Leprechaun economics
section_title: Further concerns
hierarchical_section_title: Leprechaun economics / Proof of Apple (2018) / Further concerns
caption_attribution_description: Paschal Donohue, Minister, Department of Finance, Ireland Photo: Aron Urb (EU2017EE)
context_page_description: Leprechaun economics was the 26.3 per cent rise in Irish 2015 GDP, later revised to 34.4 per cent, in a 12 July 2016 publication by the Irish Central Statistics Office, restating 2015 Irish national accounts. The term was coined by Nobel Prize–winning economist Paul Krugman to mark the fact that the long-term distortion of Irish economic data by tax-driven accounting flows had reached a climax; by 2020, Krugman said the term was a feature of all tax havens.
  While the event that caused the artificial Irish GDP growth occurred in Q1 2015, the Irish CSO had to delay its GDP revision, and redact the release of its regular economic data in 2016–2017 to protect the source's identity, as required by Irish law. Only in Q1 2018 could economists confirm Apple as the source and that leprechaun economics was the largest ever base erosion and profit shifting action, as well as the largest hybrid–tax inversion of a U.S. corporation.
  Leprechaun economics marked the replacement of Ireland's prohibited BEPS tool, the Double Irish, with the more powerful Capital Allowances for Intangible Assets tool, or "Green Jersey".
context_section_description: The November 2017 Paradise Papers leaks, documented how in 2014, Apple and its lawyers, offshore magic circle firm Appleby, looked for a replacement for Apple's Irish hybrid–Double Irish BEPS tool.  The leaks showed Apple considering a number of tax havens, especially Jersey and Ireland.  Some of the documents demonstrated that tax avoidance was the driver of Apple's decision making.
  Experts noted that it is prohibited under Ireland's tax code (Section 291A(c), Taxes and Consolation Act 1997), to use the CAIA BEPS tool for reasons that are not "commercial bona fide reasons", and in schemes where the main purpose is "... the avoidance of, or reduction in, liability to tax".
  In November 2017, the Irish media noted that the then Finance Minister Michael Noonan, had increased the tax relief threshold for the Irish CAIA BEPS scheme from 80 per cent to 100 per cent in the 2015 budget, which would reduce the effective Irish corporate tax rate on the CAIA BEPS tool from 2.5 per cent to 0 per cent.  This was changed back in the subsequent 2017 budget by the new Finance Minister Paschal Donohoe, however firms which had started their Irish CAIA BEPS tool in 2015, like Apple, were allowed to stay at the 100 per cent relief level for the duration of their scheme, which can, under certain conditions, be extended indefinitely.
  In November 2017, it was reported that the EU Commission had asked for details on Apple's new Irish structure post the EU Commission's 2004–2014 ruling.
  In January 2018, when Seamus Coffey and others, estimated that since the Q1 2015 restructuring, Apple avoided Irish taxes of €2.5–3bn per annum, based on the 0% effective tax rate Noonan introduced for the CAIA scheme in the 2015 budget. Coffey estimated that a second EU Apple State aid fine for the 2015–2018 (inclusive) period, could reach over €10bn, excluding interest penalties, adding to Apple's existing €13 billion EU fine for the 2004–2014 period.
caption: In 2017, Finance Minister Donohoe reversed the benefits Noonan gave Apple's 2015 CAIA BEPS scheme, but only applied it to new schemes.
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