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Saturday 10 December 2016

Britain backs EU on Apple as screw turns on tax rates

European finance ministers in corporation tax warning as they support Commission's ruling

Sarah Collins

Published 11/09/2016 | 02:30

Apple issue: Britain's Foreign Secretary Boris Johnson talks to media before a meeting of EU foreign ministers in Bratislava, Slovakia on Friday Photo: Hans Punz
Apple issue: Britain's Foreign Secretary Boris Johnson talks to media before a meeting of EU foreign ministers in Bratislava, Slovakia on Friday Photo: Hans Punz

Ireland found little sympathy in Europe this weekend as Britain backed the European Commission ruling that Apple owes the Revenue Commissioners €13bn in unpaid tax.

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Chancellor Philip Hammond said the EU was keen "to make sure that international corporations pay the right tax at the right place .

"That's the fair way to do it, and we are going to make sure it happens," he said.

Dutch Finance Minister Jeroen Dijsselbloem urged Apple to pay a bill that analysts say could reach ¤19bn, with interest. He said the US tech giant will have to pay back taxes both in the US and Europe, "so get ready to do that".

The EU finance ministers met this weekend to discuss ways to harmonise tax rules for international companies. Several EU countries, led by Spain, are vying for a share of Apple's ¤13bn Irish tax bill. Germany and Austria are also looking into the issue, it was revealed at the meeting.

The move follows EU Competition Chief Margrethe Vestager's invitation to governments to check if Apple should have recorded its sales, and paid more tax, in their countries.

Finance Minister Michael Noonan said the move could jeopardise the recovery of back taxes from Apple, which will be kept in trust, pending Ireland's appeal against the EU decision.

"I just think it was an extraordinarily bizarre thing to say, in the documents accompanying the decision, that this may be spread all around Europe, because the essence of the case is that Ireland should have collected this tax from Apple. And now the suggestion, from the same commissioner, is that this money may not be Ireland's at all," Mr Noonan told RTE News after the meeting.

The commission said on August 30 that Apple enjoyed illegal tax breaks in Ireland, enabling it to pay as little as 0.005pc tax some years, largely by funnelling profits through Irish shell companies.

Spain wants to use the commission's evidence to check if it is due a slice of the Apple pie. The cash-strapped country narrowly escaped EU fines this summer for breaching the bloc's budget rules, and is in the middle of a wide-ranging corporate tax overhaul.

"We want to know what the impact is, we want to analyse it, we want to see it, because at a time when we are making major efforts from the point of view of reducing our public deficit, it's fundamental that we don't lose out on revenue," said Spanish Finance Minister Luis De Guindos.

Spain is also keen to talk to other countries - such as the Netherlands, Belgium and Luxembourg - that use "tax rulings", or clarifications, for companies on their national tax bills.

Tax rulings themselves are not illegal, the EU says, as long as they are not used to offer one company a "selective" advantage over another.

Germany and Austrian finance ministers, Wolfgang Schauble and Hans-Jorg Schelling, confirmed their tax authorities are investigating the Apple case, but Mr Schauble expressed scepticism that any money would flow back to Germany and said Ms Vestager's invitation to other countries was "mysterious".

Sunday Independent

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