After handing Apple a breathtaking demand for 13 billion euros, officials and experts said that multinational companies can expect the European Commission to press on with a crack down on sweetheart tax deals.
But after a string of investigations of U.S. global giants that, especially after Tuesday’s Apple verdict, has enraged the United States, Competition Commissioner Margrethe Vestager may be tempted to train her fire on European companies.
Since the Commission began probing some 1,000 companies in up to 23 EU states in 2013, the Apple order for paying up taxes to Dublin was the biggest.
A unit of Italy’s Fiat must hand a similar sum to Luxembourg and another U.S. firm, coffee chain Starbucks was ordered to repay up to 30 million euros to the Netherlands. On the other any many of the companies in a separate case involving 35 firms in Belgium were not identified but some were also from the United States.
There are two outstanding cases involving two more U.S. firms, Amazon and McDonald’s, both in Luxembourg wit the Commission but it will not say when a decision is likely on any one.
Vestager has a case to answer on charges of anti-American activity — albeit one that she strenuously denies, set alongside a series of high-profile antitrust probes into Google.
The Commission may choose a company closer to home for any major new inquiry, say people involved in competition law in Europe, many of whom declined to speak on the record.
“It is quite obvious that the Commission will not be able to investigate 1,000 tax rulings. It will only go after manifest violations,” said Georg Berrisch, partner at law firm Baker Botts, who noted the fertile ground the Commission may have in evidence turned up in 2014 by leaked data from Luxembourg.
“It will have to pick and choose a few cases, maybe look into European companies. Luxleaks mentioned several European companies having tax deals with Luxembourg,” Berrisch said.
No secret of her reliance on others at times to provide the evidence that can justify her inquiries is made by Vestager, arguably the most powerful official in the EU due to her individual power to rule on competition cases across the 28-nation bloc.
Revelations provided by a U.S. Senate subcommittee inquiry into taxation formed the basis of the Apple case as well the other current cases, despite all the fury in Washington over Apple.
In the end the question of how many companies may face back tax demands is unclear.
With the expectation that success — still to be tested in court — can deter others from going to extremes in reducing their global tax burdens, the Commission’s competition directorate is likely to focus on a fairly small number given limited resources, officials and observers said.
The manner in which political institutions, not just in Europe, were responding to popular pressure to gather more taxes from rich corporations and the danger that posed of legal turmoil and reputational damage can be gauged by the Apple order which should also be a wake-up call for others, said Jonas Koponen at law firm Linklaters.
“The amounts at stake may intensify the political pressures both within the EU and from outside the EU. Companies must now more than ever carefully assess whether any agreements or rulings they receive from national tax authorities are compliant with state aid principles,” he said.
(Adapted from Reuters)
Categories: Economy & Finance, Regulations & Legal
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