EU Commission has ‘no specific concern’ about Irish tax system – Vestager

Commissioner also says EU has no plans afoot to harmonise corporation tax

EU commissioner Margrethe Vestager uses an Apple iPhone to take a picture in  Washington DC on Monday. Photograph:  EPA

EU commissioner Margrethe Vestager uses an Apple iPhone to take a picture in Washington DC on Monday. Photograph: EPA

 

The European Commission has “no specific concern” about the Irish tax system and is not planning to harmonise corporate tax system, according to competition commissioner Margrethe Vestager.

The competition commissioner, who has ordered Apple to pay €13 billion in back taxes to the Republic, was speaking as she began a three-day visit to the United States.

“We don’t have a specific concern about Ireland,” she said.

“We do very specific case work. If there are reasons for concern, well then we may open investigations. But there can be obvious reasons why you want to place your business in Ireland [in particular because it] has an attractive corporate tax rate of 12.5 per cent.”

The European Union has no intention of trying to harmonise corporate tax rates, she said.

With many large US multinationals having European bases in Ireland, there have been fears that the Apple decision, which both Ireland and Apple are appealing, is a foretaste of things to come for the Irish economy.

However, Ms Vestager seemed keen to dispel the notion that she is on the cusp of launching a slew of similar investigations.

‘Very, very thorough’

“We are very, very thorough. We don’t just open a case in the spur of the moment. Because we need to write an opening decision where we state our concerns, and in order to do that of course we have been asking questions beforehand.”

The commission has been given some 1,000 examples of tax rulings by EU member state governments, she said.

Having reviewed these rulings, she said most of them were “very well done” with “no selective advantages” given to companies.

The Government has stressed that Ireland has not been fined in the Apple case, which involved a ruling that the company should repay tax. But the commissioner pointed out that enforcement of EU state rules does not work with punishments or fines.

“Where I was raised in the western part of Denmark, the most awkward thing you could ever do was to take back a gift” and this was effectively what was being requested here, she said. “You rely on the uncomfortable inconvenience of a member state having to take back a selective benefit or advantage that they wanted to give.”

The Government denies that its arrangement with Apple, which has had a base in the country since 1980 and employs nearly 6,000 in its Cork offices, constituted illegal state aid.

Ms Vestager is meeting officials in the US administration and Congress and speaking at academic conferences in Washington and New York. Asked if the Apple decision had created transatlantic tensions, she said: “Even though we may disagree on this decision, when it comes to global tax issues, we are very very much on the same page.”

OECD

This is especially the case in light of OECD and G20 initiatives to create rules which make it more difficult for companies to legally avoid tax, she added.

Ms Vestager said it was hearings on Apple’s tax arrangements held by the US Senate that led the commission to open its investigation.

“We do not have a national bias,” she said, adding that of the 150 EU decisions taken between 2000 and 2015 where member states were required to recover illegal state aid, only 2 per cent involved US companies.

She was equally adamant that the case did not represent an attempt by the EU to assume tax-raising powers. “We are not trying to become, and we are not now, a tax authority. We enforce competition rules.”

Ireland and Apple intend to appeal the commission’s decision at the EU Court of Justice.