EU warn­ing as Ap­ple wins €13bn tax bat­tle

Mar­grethe Vestager hints at changes to leg­is­la­tion to block loop­holes and stop what it sees as ‘il­le­gal aid’

The Daily Telegraph - Business - - Front Page - By Han­nah Boland and James Crisp in Brus­sels

EUROPE’S com­pe­ti­tion chief warned of changes to EU tax law af­ter Ap­ple was handed a vic­tory in its le­gal bat­tle over €13bn (£11.8bn) in al­leged state aid. Mar­grethe Vestager said the Euro­pean

Com­mis­sion would be look­ing at “ag­gres­sive tax plan­ning mea­sures un­der EU state aid rules to as­sess whether they re­sult in il­le­gal state aid”.

“State aid en­force­ment needs to go hand in hand with a change in cor­po­rate philoso­phies and the right leg­is­la­tion to ad­dress loop­holes and en­sure trans­parency,” she said.

Ms Vestager has taken a tough line on Big Tech with the lat­est court rul­ing seen as a blow to her am­bi­tions.

The case be­gan six years ago when the com­mis­sion first be­gan in­ves­ti­gat­ing tax de­ci­sions by mem­ber states. In 2016, the com­mis­sion or­dered Ap­ple to pay back €13bn in taxes to Ire­land.

At the time, Ms Vestager had claimed that Ap­ple was pay­ing so lit­tle tax on its op­er­a­tions in Ire­land that it amounted to il­le­gal state aid. The com­mis­sion al­leged that Ire­land al­lowed Ap­ple to pay ef­fec­tively less than 1pc in cor­po­rate tax through a “sweet­heart tax deal”.

The or­der was ap­pealed against by both Ire­land and Ap­ple, whose boss Tim Cook called it “to­tal po­lit­i­cal c---”.

The EU’s Gen­eral Court, Europe’s sec­ond-high­est court, ruled that it was wrong for the com­mis­sion to de­clare tax rul­ings had been granted for “se­lec­tive eco­nomic ad­van­tage and, by ex­ten­sion, state aid”.

Ap­ple said: “We thank the Gen­eral Court for their time and con­sid­er­a­tion of the facts. We are pleased they have an­nulled the com­mis­sion’s case.”

It will also be seen as a vic­tory by Dublin, which has been seek­ing to pro­tect its low-tax regime that at­tracts ma­jor tech­nol­ogy firms in­clud­ing Ap­ple, which has about 6,000 staff in Ire­land.

Ir­ish of­fi­cials had ar­gued that their tax rules did not vi­o­late Euro­pean or Ir­ish laws and branded the or­der as

“fun­da­men­tally flawed”. This lat­est de­feat for Ms Vestager could weaken or de­lay pend­ing cases against deals by Ikea and Nike with the Nether­lands, as well as Huh­ta­maki’s agree­ment with Lux­em­bourg.

Ms Vestager, who has made the tax crack­down a cen­tre­piece of her time in of­fice, saw the same court last year over­turn her de­mand for Star­bucks to pay up to €30m in Dutch back taxes.

The EU is ex­pected to ap­peal against the lat­est de­ci­sion at the high­est court, al­though the Euro­pean Com­mis­sion re­fused to an­swer ques­tions on its next move at a press con­fer­ence for fairer cor­po­rate tax­a­tion, in­stead in­sist­ing it would make a de­ci­sion af­ter study­ing the judg­ment in more de­tail.

EU of­fi­cials, how­ever, ex­pressed dis­ap­point­ment on the court rul­ing, with Ger­man MEP Sven Giegold, an in­flu­en­tial law­maker on fi­nan­cial reg­u­la­tion, say­ing it was a “bit­ter set­back in the fight against tax dump­ing in Europe”.

It comes as ten­sions be­tween the US and Europe es­ca­late, with Wash­ing­ton just weeks ear­lier said to have pulled talks with Euro­pean lead­ers over new global tax rules.

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