EU competition chief denies anti-US bias in investigating tax deals like Apple's

AppleInsider

The European Commission is not unfairly targeting American corporations like Apple when it comes to cracking down on tax deals constituting illegal state aid, according to the E.U.'s competition head, Margrethe Vestager.

Vestager made the statement in a letter sent to U.S. Treasury Secretary Jack Lew on Monday, Bloomberg reported, explaining that she wanted to clear up any misunderstandings between between the two parties.

"If a national tax authority gives certain companies a more advantageous tax treatment than other undertakings in the same country, this can be extremely distortive of fair competition," Vestager wrote.

Earlier in February, Lew made a complaint to Commission President Jean-Claude Juncker about a supposed anti-U.S. bias in investigations. The Commission has already directed scrutiny towards U.S. companies like Amazon, McDonald's, and Starbucks, and countries like Ireland, Luxembourg, and the Netherlands, which have been accused of using sweetheart tax deals to draw in multinational corporations.

Pending an upcoming ruling, Apple could theoretically owe up to $8 billion or more in back taxes due to deals with the Irish government. Both Ireland and Apple have protested -- in January, Apple CFO Luca Maestri claimed that a "fair outcome" of the investigation would find the company owing nothing.

The Commission has in fact targeted European corporations as well, the most notable example being when Belgium was ordered to recover $765 million from 35 multinationals, among them BP and Anheuser-Busch.

ceek74

Huh.  Legal until certain people realized how much money THEY could be raking in.  Pigs.  Amazing what money does.  The EU should break up as they're clearly not ready to unite, nice try though.

512ke

Europe clearly doesn't want US companies to invest there. OK, let's not. Problem solved. 

suddenly newton

Since this is also the politically correct answer, how do I evaluate its sincerity? Would the EU admit to an anti-US bias, if that were the case? I assume we'll never know, but it is in their best interests to deny a bias.

knowitall

ceek74 said:

Huh.  Legal until certain people realized how much money THEY could be raking in.  Pigs.  Amazing what money does.  The EU should break up as they're clearly not ready to unite, nice try though.

The EU exits in part to make sure its member states are a tax paridise, that is, for the governments, not its citizens. It is now impossible to move to an other European country and have a better tax deal.
We currently have a 75% or higher tax rate and with the EU stranglehold in place this will increase until we reach a revolution.
The other reason for the EU to exist is as a second - extremely lucerative - career for politicians, they sell their own country short to be able to have a seat in this circus.
So it is better for everyone that the EU breaks up; currently GB is having a referendum on this issue but I suspect it will never come to a GB exit.

singularity

"If a national tax authority gives certain companies a more advantageous tax treatment than other undertakings in the same country, this can be extremely distortive of fair competition," Vestager wrote. 

This is the crux of the matter, independent of the country of origin of the company in question.

22july2013

knowitall said:

currently GB is having a referendum on this issue but I suspect it will never come to a GB exit.

Actually GB isn't having a referendum, it's the UK (which includes Northern Ireland). In fact the UK is also wrong, because this referendum also includes Gibraltar. Gibraltar is the only UK territory subject to full EU membership and as such is also entitled to vote. UK polls show no clear leader.

SpamSandwich

You may not like the guy, but at least Trump has committed to providing economic incentives to make it easier to repatriate overseas earnings. We'll see if any of that actually happens.

crowley

knowitall said:

The EU exits in part to make sure its member states are a tax paridise, that is, for the governments, not its citizens. It is now impossible to move to an other European country and have a better tax deal.

Huh?  No it isn't, EU member states all set their own tax rates, and there is freedom of movement for both capital and labour.

entropys

Crowley, I think know-all was referring to the tax status of the eurocrats themselves.  As in the establishment look after themselves very well.  And i am sure eventually the EU will get their members to levy taxes sufficient to transfer wealth from countries like the UK and Germany to the mediterranean failed states. Because unity.

But this little issue isn't anti US bias.  Foreign corporations generally, of which the US has big ones, are just a useful target because of the persistent failure of the political class to balance the books. Just one more version of "look over there! a Squirrel!"

jbdragon

What would you expect them to say? But of course we do it, so what? They can talk about all these other company's, but they pay out is a tiny fraction of what a single U.S. Company is made to fork out. 765 million, but from 35 different company's. I see a story from March 6 2013, The European Union fined Microsoft $732 million. We have Apple with a 8 billion Tax bill to look forward to. For what? Following THEIR Tax laws!!! Just because they don't like it, they're the ones that created this mess. The fact of the matter is, HUGE fines for American company's, and laughable fines for their own!!!

SpamSandwich

It's corporate blackmail and they know it.

ewtheckman

I actually believe the claim that it's not anti-US bias that's motivating them. That's because I think greed is far more likely. "Hey, how are we not taking more money from such a rich company?"

latifbp

singularity said:

"If a national tax authority gives certain companies a more advantageous tax treatment than other undertakings in the same country, this can be extremely distortive of fair competition," Vestager wrote. 

This is the crux of the matter, independent of the country of origin of the company in question.

Which a--holes over in the EU are even trying to compete with Apple at making premium computer products? Nobody, so it's a moot point in Apple's case.

brakken

SpamSandwich said:

You may not like the guy, but at least Trump has committed to providing economic incentives to make it easier to repatriate overseas earnings. We'll see if any of that actually happens.

How could having a racist, ignorant, emotional president help the US, regardless of random tax breaks? I thought Bush jnr would've been enough to keep the world safe from the repetition of such terror.
I usually like your insights, but this is definitely spam.

SpamSandwich

brakken said:

SpamSandwich said:

You may not like the guy, but at least Trump has committed to providing economic incentives to make it easier to repatriate overseas earnings. We'll see if any of that actually happens.

How could having a racist, ignorant, emotional president help the US, regardless of random tax breaks? I thought Bush jnr would've been enough to keep the world safe from the repetition of such terror.
I usually like your insights, but this is definitely spam.

Democrats and his Republican rivals are calling him a racist. I've seen no evidence he's a racist.

Also as I say, no matter your opinion of him, (A) repatriation of billions in overseas earnings would be beneficial and (B) my choice of candidate is no longer in the race. Trump beats Hillary, Obamacare goes away and (hopefully) things get better for American businesses.

The worst Trump could do is not follow through on his campaign pledges, so really he cannot possibly be worse than Obama. Even if he achieved absolutely nothing for his term, that would be an improvement.

tallest skil

knowitall said:

So it is better for everyone that the EU breaks up; currently GB is having a referendum on this issue but I suspect it will never come to a GB exit.

I’m to understand that’s because non-Britons will be able to vote therein.

crowley

tallest skil said:

knowitall said:

So it is better for everyone that the EU breaks up; currently GB is having a referendum on this issue but I suspect it will never come to a GB exit.

I’m to understand that’s because non-Britons will be able to vote therein.

Can we at least wait for the vote to happen before blaming the result on aliens?

birko

Many countries have quite specific laws regarding tax. But they also have less specific laws. One of the less specific laws is that companies and business operating in the country need to act in a way that, within reason, maximizes their profit. Any international parent companies must, within reason, not act in a way that works against this.

Now the "within reason" is the area that is questionable.

An example: Company A based in land X, is owned by company B based in land Y. Company A borrows money from company B in order to run its business. All fine and legal. Problem is that the interest rate company B charges is as much as 10 times higher than the market rate. Company A could easily get a loan from local banks, or hold back more profits so it has operating cash, but chooses to pay 10s of millions extra interest to its parent company.

To me, this appears to be an obvious case of company A not fulfilling its obligation to operate in a way that maximizes profits. Land X could decide to go after company A, and where possible company B, for lost taxes. Naturally, land Y would go after neither because it is already getting its taxes and more.

If land X was a EU land and land Y was America, this would not be a case of a vendetta, just a case of a country protecting its interests.

What is happening with Apple is less "obvious" and, interestingly, revolves heavily around a EC land. Regardless of the outcome of this investigation, it is not a EC vs US vendeta.

crowley

birko said:

One of the less specific laws is that companies and business operating in the country need to act in a way that, within reason, maximizes their profit. 

Is that actually a law anywhere? I've never seen that as legislation.

singularity

latifbp said:

singularity said:

This is the crux of the matter, independent of the country of origin of the company in question.

Which a--holes over in the EU are even trying to compete with Apple at making premium computer products? Nobody, so it's a moot point in Apple's case.

You obviously do not understand the concept of illegal state aid and thus the reasoning behind the investigations.
Also you seem to have forgotten about Nokia or Erivsson who were in the same arena as Apple in mobile phones who didn't have access to the (alledged) same sweetheart deal. So that's two companies as an example.
Also it is irrelevant that Apple may or may not have direct competitors it is all about whether they had a tax deal unavailable to others and whether the deal goes against EU rules.