Brussels loses tax case against Apple
An EU court in Luxembourg has quashed a European Commission order and ruled that Apple does not have to pay a record 13 billion euros in back taxes. The court said it had not been "shown to the requisite legal standard" that the tax benefits granted by Ireland to the US tech giant constituted illegal state aid. This is a bitter blow for the EU, commentators stress.
A system full of loopholes
Putting an end to the Double Irish strategy, which uses letterbox companies to avoid taxes, is extremely difficult, laments Corriere della Sera:
“The Double Irish has won. The Vice-President of the European Commission, Margrethe Vestager, has lost. Now we must make sense of what the decision of the European Court of Justice means not just for Apple, but also for Amazon, Microsoft, Facebook, Google and - albeit to a lesser extent - for many industrial companies. ... Can they really not be prosecuted by the tax authorities? The tax method that forms the basis of the Irish system and was examined on appeal is in fact so complicated that it leaves a lot of room for subjective evaluations.”
Use this defeat as an opportunity
The ruling ups the pressure on Europe, says Der Standard:
“An excuse that has delayed vigorous action in Europe is less valid than ever now: the argument that a new tax system only makes sense at the global level. For at this level the US has long since pulled out of the talks, which is why the hope for international consensus is an illusion. ... If the EU finds ways of combating the shifting of profits and tax dumping, it will not only ensure greater fairness but also prove its worth as a strong community based on solidarity. The prerequisite for this would of course be to repress egoism and the small state mentality. If this were to succeed, the Apple case would turn out to be a salutary shock for the EU.”
Unanimity principle is blocking EU progress
La Vanguardia considers it unlikely that Brussels will be able to push through the EU tax law reform:
“This initiative is doomed to failure because any change in EU tax law requires the unanimous approval of the 27 member states, which is never possible. The only solution would be to amend Article 116 of the EU Treaty so that the laws applying to tax issues can be approved by a qualified majority. ... But such a reform of the EU treaties has little chance of success. Not least because of the radical opposition of the newly elected Eurogroup chief, Irish Finance Minister Paschal Donohoe, who has publicly praised the court's ruling. Meanwhile, the big US technology companies like Apple, Google, Facebook, Amazon and Microsoft are taking unfair advantage of European fiscal disunity.”
The struggle continues
NRC Handelsblad hopes that Brussels' struggle for fairer taxation won't end despite this defeat:
“As promising as the proceedings seemed, in recent years the Commission's decisions have repeatedly been overturned by the court in Luxembourg. Even though the judges recognise that tax deals can be tackled through competition law, the Commission has so far failed to provide sufficient evidence of unlawful government aid. ... The setback may be bitter now, but that does not mean that Brussels' struggle for 'honest taxes' has come to an end. The corona crisis and the impending recession have put the issue back at the top of the European agenda.”