On the day Margrethe Vestager lost the latest state aid lawsuit in EU courts, the 27-nation bloc’s head of competition and digital claimed regulators were ready to fight back.
On the face of it, the legal setback wasn’t that big — at least financially. Last month, the European Court of Justice, the highest court of the EU, ruled that Fiat does not have to pay Luxembourg her €30 million in taxes.
Shortly after the court’s ruling, Vestager clarified her view that this is not the end of the road for competition law enforcement.
“The Court confirmed that Member States’ actions in areas not covered by the harmonization of EU law are not excluded from the scope of the treaty provisions on the monitoring of state aid.”
Fiat’s victory is the latest in a string of lawsuits filed by Vestager to block its aggressive corporate tax plans. Last year, a judge reversed her order asking Apple to return her €14.3 billion in taxes to Ireland. Many legal experts believe she will ultimately lose the case in the Supreme Court after the EU’s appeal review is complete.
Since taking office in 2014, the Danish Commissioner has failed to deter him from using the EU’s state aid rules to pursue the tax regimes of member states such as Ireland and Luxembourg.
EU officials also cite a partial victory for regulators. Some countries, such as Ireland and Luxembourg, have already changed their tax regimes, despite facing rising legal losses, said people familiar with the commission’s thinking.
Nevertheless, some insiders in Brussels say that as Brock continues to lose lawsuits, some governments see it as a green light to continue pursuing friendly tax deals with the likes of Apple and Amazon. I am afraid that
“Bestair’s tool of choice [state aid] According to the court, it’s not the right tool,” said a person familiar with the EU’s thinking. “We’re talking here about a regime that’s on the line between what’s selective and what’s not. The courts said let’s give them some margin on how to interpret the law. Some companies may tweak their tax regimes.”
The person said recent court rulings are creating room for smaller member states to become tax havens through the creation of schemes that mean companies are taxed lower across the continent than elsewhere. Stated.
So what is the solution? Political willingness to act, according to some Brussels experts. His Assimakis Komninos, a partner at law firm White & Case in the Belgian capital, said the tax issues companies should pay are about “global governance”. He explains:
“It’s complicated. We need international instruments for that. A lot of work has been done by the OECD. It’s important that states sit down and deal with it.”
In addition, countries are failing to make efforts to reach an agreement. Last year, 136 countries supported tax arrangements coordinated by the OECD. The deal aims to address public dissatisfaction with large corporations not paying their fair share of taxes.
There are two approaches to this deal. The first part of the deal aims to get the big companies to redistribute some of their profits to where they operate and pay enough money for the system. The second part creates the minimum effective corporate tax rate currently found at 15%.
But despite calculations that the deal could cost the largest multinationals about $150 billion in additional taxes annually, progress has stalled.
Member States are ready to pay off the digital services tax if negotiations fail. Last month, Czech Finance Minister Zbyněk Stájula cautioned that the United States may not implement the deal, even though he is rotating the EU presidency for six months. Solved.
Vestager, meanwhile, maintains that the battle against what she sees as an unfair tax system continues. At her recent press conference in Paris, she said: . . In effect, it is nothing but unreasonable subsidies. Our enforcement should continue within the clear limits of the court given to us. “
javier.espinoza@ft.com
