Ireland and a small group of other European countries appeared to still be “central” to efforts by multinational corporations to shift their profits to more favourable tax jurisdictions, the European Union’s (EU) competition chief has said.
On Tuesday, the EU’s top court ruled that tech giant Apple does owe Ireland billions of euros of back taxes, which it did not pay under previous tax arrangements that existed for the company’s Irish subsidiaries for several years.
Margrethe Vestager, the EU commissioner for competition, who was at the centre of the Apple tax case, said the European Court of Justice (ECJ) ruling was a “big win”.
The European Commission had eight years ago ordered Apple to pay €13 billion in back taxes to Ireland, claiming its tax arrangement had amounted to illegal State aid. Both the US tech giant and the Government appealed the decision.
A final EU court ruling this week set aside an initially successful appeal, coming down in favour of the commission in what was a major legal defeat for the Government and Apple.
Speaking at a press conference in Brussels, Ms Vestager said the contested €13 billion that had been held in an escrow account during the legal battle would now be released to the Irish State.
The previous tax regime enjoyed by Apple in Ireland had resulted in the creation of “what was a stateless head office”, which she said existed only on paper, with “no tables, no chairs, no activities”. In 2011 this resulted in Apple paying a tax rate of 0.05 per cent on the profits of one of its Irish subsidiaries, she said.
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Ms Vestager said she was aware some EU countries previously “considered” making claims that some of the €13 billion tax bill was due to them, but she had not been following that debate since.
“As things stand now this is not for us at all, the next thing that will have to happen is unpaid taxes that are in this escrow account will have to be released to the Irish State. What they will do with it is completely up to them,” she said.
Despite international tax reforms in recent times, the Danish politician said that aggressive tax planning by corporations was still “widespread”, and singled out Ireland, the Netherlands, Belgium and Luxembourg as four EU countries who remain “central” to facilitating profit shifting by multinationals.
Ms Vestager, who is due to finish up at the end of the year after two terms in office, said nobody had expected the court to side with the commission. “It was the win that made me cry, because it is very important to show European taxpayers that once in a while, tax justice can be done,” she said.
“When big businesses do not pay their share, well there is not the same financing for what constitutes our societies, educational system, the health system, our infrastructure,” she said.
The commission, which is the executive arm of the EU, had a further “pipeline” of state aid cases related to tax, which she said would be for whoever took over as the next commissioner for competition to take forward.
Ms Vestager said EU competition officials were trying to speed up the pace of their investigations into big companies. “Inherently we will always be slower, because it is fast to break the law, it is slow to prove that someone has broken the law,” she said.
The ECJ judgment is a big win for Ms Vestager at the end of her second term as commissioner, which had been marked by a number of court losses in other similar cases.
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