Thursday 23 February 2017

Merkel fearful ruling will deter multinationals from investing in Europe

Donal O'Donovan, Kevin Doyle and Sarah Collins

French President Francois Hollande welcomes German Chancellor Angela Merkel as she arrives for a meeting in Evian, France, yesterday Photo: Reuters/Philippe Wojazer
French President Francois Hollande welcomes German Chancellor Angela Merkel as she arrives for a meeting in Evian, France, yesterday Photo: Reuters/Philippe Wojazer

Angela Merkel has expressed fears the €13bn Apple tax ruling will hurt investment in Europe, putting her on the same side as Ireland in a looming showdown over the limits of national sovereignty and the rights of the federally minded European Commission.

In Brussels, a shockingly blunt attempt by a Commission official to denigrate former Competition Commissioner Neelie Kroes signalled the rising tensions around the issue.

It is understood that Ms Merkel's concerns are about the impact on the European Union's investment environment, not motivated by a desire to protect Irish tax sovereignty.

She is understood to be taking particular issue with the retroactive nature of the ruling - which seeks payment of €13bn in past taxes dating back over a decade, based on standards and rules introduced later.

The German Chancellor told her Italian counterpart that the ruling on Apple risks becoming a deterrent for multinationals that want to invest in the EU, Italian newspaper 'La Repubblica' reported.

She warned that EU Competition Commissioner Margrethe Vestager's ruling could become an "extraordinary opportunity" for non-EU countries to grab investment from companies scared out of the EU by the ruling.

Finance Minister Michael Noonan said Ms Merkel was the only EU politician to have spoken out on the issue, saying that she has concerns about the ruling because it might drive investment in the EU into tax havens.

Asked if he had the backing of other countries in Europe in challenging the Commission, he said: "Yes, that would be a general concern that's being expressed privately."

He noted that on Thursday, former EU Competition Commissioner Neelie Kroes had written in the 'Guardian' newspaper that the Apple ruling issued this week by her successor marked an attempt to rewrite global tax rules - and would harm rather than boost competition.

"One of the best Competition Commissioners ever was the Dutch Commissioner between 2004 and 2010 (Ms Kroes) and she said yesterday that her successor was incorrect on the basis of this ruling because she shouldn't have used competition law to collect tax retrospectively," Mr Noonan said.

Brussels, however, looked to shoot down the intervention by Ms Kroes, now a director of US-based Uber and Salesforce.

Commission spokesman Margaritis Schinas said: "We have seen the op-ed by Neelie Kroes on the application of EU state aid rules to tax rulings.

"We understand that it may be sometimes challenging to reconcile the role as a former commissioner with the temptation to publicly express the views of those in Silicon Valley or elsewhere who oppose the Commission's decisions.

"The piece seems to criticise how the Commission applied EU state aid rules, but the fact is that they were not applied in the way it was alleged.

"This is clear from Commissioner Vestager's statements here in the press room and the Commission's decisions."

Irish Independent

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