Varadkar ‘heartened’ by Merkel support

Taoiseach Leo Varadkar says he is heartened by "resolute" German support on Brexit and Europe's looming digital tax debate after a meeting with Chancellor Angela Merkel on Tuesday.

On his first visit as Taoiseach to Berlin, Mr Varadkar congratulated the German chancellor on beginning her fourth term last week, and thanked her for close co-operation with Ireland in recent crises and looming challenges.

The two leaders welcomed progress in negotiations between the UK and EU on Monday in ensuring a “backstop solution” to avoid a hard border with Northern Ireland forms part of the Brexit agreement legal text.

Inclusion of this, Mr Varadkar said, made clear the backstop will apply “unless and until a workable solution is found”.

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“We should all remember we are proceeding on the basis that nothing is agreed until everything is agreed,” said Mr Varadkar.

Ahead of a European Council meeting this week to discuss the EU27 strategy for future talks, Dr Merkel agreed a lot of Brexit problems remained unresolved.

"This includes the border in Northern Ireland which is a very sensitive issue of central importance," she said. "We need a solution here and Germany supports the Irish position completely."

Mr Varadkar said he had a "very good" discussion with the German leader on looming tax issues, in particular European Commission proposals for a "digital tax", to be presented tomorrow, to impose a levy on profits of large tech companies.

“I think it is fair to say that our positions were closer than I might have expected before I came here,” he said.

“Big companies should pay their taxes where they’re due and in full but it would be better to take the time to get this right rather than put in place a knee-jerk measure just to be seen to be doing something.”

But Dr Merkel secured her fourth term by promising to tackle “tax dumping”, name-checking US tech with EU bases in Ireland. Does this mean Facebook, Google and the Irish should dress up warm on this front, in anticipation of an icy fiscal blast breeze from Berlin - or Brussels?

“We think we need an (EU) tax system consistent in itself,” she said. “As for dressing up warm, then only because of the inclement weather and not because of Germany.”

After a working lunch Irish officials described the the commission proposals as short-term thinking that could backfire.

Berlin officials, while no friends of the Irish tax model, are not enthused by anything that appears to be a one-sided attack on US tech concerns.

Concern

There is also concern - in Dublin and in Berlin - about the timing of the commission proposals this week as the looming trade war talks with the US on steel and aluminium.

On trade, the two leaders agreed they wanted no protectionist measures and multilateral system and “We hope we don’t have to react to additional tariffs,” said Dr Merkel.

Mr Varadkar sidestepped a question about how serious he viewed a Facebook data loophole left open for at least three years by the Irish Data Protection Commissioner (DPC) and allegedly exploited by Cambridge Analytica and its clients.

Mr Varadkar said the loophole had been closed in 2015 and noted the Government had since boosted resources at the DPC.

“I am confident that we have robust data protection in place,” he said.

“But don’t think we can be in any way complacent about the risks that are posed by people interfering in our elections and referendums,” he said.

Mr Varadkar said that, although there was no evidence of anyone interfering in Irish elections or referendums, he said there was a risk that any future referendum on Europe, for instance, might be interfered with.