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’
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.