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US Investigations Led To EU Apple Probe, Says Vestager

by Ulrika Lomas, Tax-News.com, Brussels

13 September 2016

The European Commission's probe into Apple's tax rulings from Ireland was prompted by an investigation by US authorities, European Commissioner for Competition Margrethe Vestager has said.

Following an in-depth state aid investigation launched in June 2014, the Commission concluded that two tax rulings issued by Ireland to Apple have "substantially and artificially lowered the tax paid by Apple in Ireland since 1991." It has ordered the recovery of illegal state aid for a ten-year period preceding the Commission's first request for information in 2013.

Delivering a speech at the Copenhagen Business School on September 9, 2016, Vestager revealed: "The story of the Apple investigation began in the US. Because the US Senate cares as much as we do about making sure companies pay their fair share of tax. And it was their investigation into Apple - and US transparency rules - that tipped us off that the company might have received state aid."

Vestager said the ruling against Apple's tax arrangements was based on facts, as were its state aid decisions on rulings from authorities in the Luxembourg, the Netherlands, and Belgium.

Both Ireland and Apple are appealing the Commission's decision. According to Michael Noonan, Ireland's Finance Minister, the appeal is "necessary to defend the integrity of our tax system, to provide certainty to business, and to challenge the encroachment of EU state aid rules into the sovereign member state competence of taxation."

In her speech, Vestager clarified that enforcing the EU state aid rules is not about interfering with national tax laws. She said that "there is nothing to stop EU governments from deciding to apply a low tax rate to everyone. They just have to make sure that when they apply their tax laws, they do not give certain companies special treatment."

"The Commission has been enforcing the state aid rules for nearly sixty years. And it has been clear since the start that state aid can take many different forms. A Government might just hand over cash, of course. But the effect is just the same if it gives a company some land at a knock-down price; or makes a loan with a favorable interest rate; or, for that matter, if it provides a tax benefit that others in the same situation do not get."

"If we find that the state aid rules have been broken, then of course we have to take action. But that doesn't mean we're trying to turn the Commission into a tax authority. We know it is not easy to work out how a company should be taxed. And we're not trying to second-guess the decisions that national authorities make. We just want to be sure that the tax treatment that a company gets isn't totally out of line with economic reality."

TAGS: Finance | tax | investment | business | European Commission | Belgium | Ireland | Netherlands | tax avoidance | interest | law | Luxembourg | enforcement | tax authority | agreements | multinationals | legislation | tax planning | transfer pricing | advance pricing agreement (APA) | penalties | trade | European Union (EU) | Europe | BEPS

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