Business Irish

Thursday 22 February 2018

Washington fires broadside at Europe over probes into US firms

US Treasury boss Jack Lew. Photo: Bloomberg
US Treasury boss Jack Lew. Photo: Bloomberg
Colm Kelpie

Colm Kelpie

State aid investigations by the European Commission involving a number of American companies, including Apple, is inconsistent with international norms and undermines the global tax system, the US Treasury has warned.

And potentially demanding back taxes from the companies concerned would set "an undesirable precedent" for tax authorities in other countries, the US said, in a strongly worded paper published yesterday.

Brussels has initiated a raft of investigations into the tax arrangements involving various US companies and their European host countries, including Apple, Starbucks, Amazon and McDonald's.

A decision on the Apple case could be imminent, as Finance Minister Michael Noonan said in June that a verdict could be delivered in September or October. The investigation could force Apple to pay substantial back taxes. It has said it will join Ireland in appealing any adverse ruling.

The row between the US and Europe over the latter's state aid investigations appeared to come to a head earlier this year as Treasury Secretary Jack Lew wrote to European Commission President Jean-Claude Juncker and EU antitrust chief Margrethe Vestager warning the probes potentially represented dangerous precedents.

Now it's ratcheted up further.

The US Treasury yesterday published a 25-page so-called white paper delving into Mr Lew's concerns in more detail.

The Treasury said the Commission's approach is new and departs from prior EU case law and Commission decisions. It also said Brussels should not seek "retroactive recoveries".

"Because the Commission's approach departs from prior practice, it should not be applied retroactively," the paper states.

"Indeed, it would be inconsistent with EU legal principles to do so. Moreover, imposing retroactive recoveries would undermine the G20s efforts to improve tax certainty and set an undesirable precedent for tax authorities in other countries." And it warned that the new approach is "inconsistent with international norms and undermines the international tax system".

The US said the Commission's actions undermine the international consensus on transfer pricing standards, calls into question the ability of member states to honour their bilateral tax treaties and undermines the progress made under the OECD/G20 Base Erosion and Profit Shifting project.

The European Commission has already ordered Dutch authorities to recover up to €30m from US coffee chain Starbucks and Luxembourg to do the same with Fiat Chrysler for their tax deals.

Apple to create 1,000 jobs here as development gets green light, Business p2

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