Wednesday 16 October 2019

Facebook's Irish tax regime now in Vestager's sights

EU Commissioner may open a formal investigation into tech giant after documentation seized here

Tough: EU commissioner Margrethe Vestager. Photo: REUTERS
Tough: EU commissioner Margrethe Vestager. Photo: REUTERS

Gavin McLoughlin and Ellie Donnelly

Facebook is in the sights of the European Commission as it continues its crackdown on multinationals.

The tech giant's tax arrangements in Ireland are now under the spotlight.

EU Competition Commissioner Margrethe Vestager, who led the probe into Apple's tax relationship with Ireland, is considering a formal investigation of Facebook's affairs, according to a media report.

The 'Politico' report cited a former Irish official as saying data relating to Facebook had been seized as part of a trawl of tax records here. It also related to the Apple probe and a number of other companies.

Yesterday, both the commission and Facebook declined to comment.

A Government spokesperson said: "The European Commission has been gathering information from all EU member states on tax rulings since 2014. So far, it has examined over 1,000 rulings across Europe. This exercise has been ongoing since this time and has not been limited to Ireland.

"Ireland has always co-operated in respect of these requests and will continue to do so. It is not appropriate to comment on the nature of such requests, as such enquiries are a confidential correspondence between Ireland and the commission."

The Apple probe resulted in the iPhone maker being asked to pay €13bn in back taxes to Ireland, because of what the commission said was a 'sweetheart' tax deal in violation of EU rules on state supports to companies. The Government and Apple denied there was a special deal and are appealing through the European courts.

The 'Politico' report cited three unidentified people as being aware of the potential probe. It said one of them did not believe Ms Vestager would have enough evidence to open a formal probe. The Danish politician has become famous for her tough approach towards big multinationals.

Apple and Ireland are not the only company and country to have been on the wrong end of one of her decisions. Starbucks and Fiat were previously ordered to pay tens of millions in back taxes to the Netherlands and Luxembourg respectively.

Google has run foul of Ms Vestager on multiple occasions. Earlier this year she levied a record fine of €4.34bn on the company after finding that it had used its Android operating system for mobile phones to block rivals.

That followed a €2.4bn fine last year after she found Google had disadvantaged rival price comparison services. A third probe of the company is under way, relating to the company's advertising service Adsense.

Interference by Europe in Irish tax affairs has proved a sensitive matter, given the importance ascribed to Ireland's 12.5pc corporate tax rate in attracting foreign direct investment.

Our tax regime has received serious criticism from some elements in Europe over the years. However a planned EU tax on the revenues of big tech companies, which Revenue estimated could cost Ireland up to €160m a year, appears to have been fended off for now amid opposition from Ireland, Sweden and Denmark. Unanimity is needed for the tax to come into law.

Speaking at the Oireachtas Finance Committee yesterday, Finance Minister Paschal Donohoe said the best place for reforming multinational taxation was at international level. He insisted he wasn't "shying away" from the issue.

He said if the EU implemented such a tax without agreement from trading partners, there could be negative consequences.

"These trading partners could make decisions regarding trade that could have very serious consequences for EU and Ireland, and Ireland needs to be very clear on the best route." (Additional reporting by Reuters)

Irish Independent

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