The EU Commission’s latest tax ruling – this time against Belgium – shows that the competition commissioner is pushing ahead with a campaign to target what are see as overly aggressive tax schemes.
With the OECD pushing the same agenda, there is no doubt that competition commissioner Margrethe Vestager (above) has the wind behind her, to some extent anyway. But this is still highly contentious territory, which could yet have an impact on the decision relating to Ireland and Apple, where the sums of money involved could be much bigger than the cases tackled so far.
The decision that 35 companies should repay more than €700 million to Belgium is striking, representing a ruling from the EU Commission that a tax scheme offered to a range of companies represented illegal state aid. There were interesting straws in the wind at the announcement.
The main one was Vestager’s emphasis that “mostly European” companies were involved in the Belgian decision. Among the big European players involved were Belgian brewer AB InBev, oil company BP and the German giant, BASF. It was a significant comment because the US is believed to be putting pressure on Europe about the fact that EU probes have mainly affected big American players, such as Starbucks, which was ordered to repay money to the Netherlands, and Amazon and Apple, where decisions are awaited on dealings with Luxembourg and Ireland.
In this light , it is interesting that the decisions on Amazon and Apple are taking so long. The commission wrote to the Irish Government in recent months looking for more information on its dealings with Apple, and this is likely to delay any decisions until well after the general election. Whether this relates in part to the US pressures, or is a quiet nod to the sensitivities of such action in the run-up to our general election, is anyone’s guess.
Interestingly, Apple recently agreed to pay more than €300 million to settle a dispute with the Italian tax authorities. It is also likely to close off more aggressive recent tax structures. But paying a massive whack of historical “back tax” would surely be a step too far for Apple. And the EU Commission, having taken an aggressive stance on the Apple case , surely cannot back off completely. This one still looks set to go the distance.
