Friday 19 January 2018

EU's not yet done tinkering with tax rulebook

Pierre Moscovici. (Photo: JOHN THYS/AFP/Getty Images)
Pierre Moscovici. (Photo: JOHN THYS/AFP/Getty Images)

Sarah Collins

While the Coalition tears itself apart in Dublin, Brussels is using the Apple decision to reinforce its push for an EU-wide law on how to calculate multinationals' tax bills.

"The Commission's Apple decision is a watershed moment," said EU tax chief Pierre Moscovici. "It sends out the signal that the era of large-scale tax avoidance by multinationals in Europe has ended."

The Frenchman is preparing to resurrect a proposal known as the common consolidated corporate tax base, put on ice back in 2011 after failing to win the support of EU governments.

The law would have made it impossible for Apple to book all profits on its European sales in Ireland, forcing the tech giant to pay taxes where it made its profits. So profits made on iPhones bought in Paris should be funnelled through Apple France and taxed there, at 33pc.


The move would not touch corporate tax rates but would set out how to allocate multinational profits between EU countries, based on staff, assets and sales. "These measures will dramatically change the EU's tax landscape for the better," Mr Moscovici said.

The proposal is slated for a November release, and is likely to receive a warmer welcome than when it was first tabled five years ago. The EU landscape has fundamentally changed in the last two years, following large-scale tax avoidance scandals in Luxembourg and the Panama Papers revelations.

Most of those in the Brussels beltway view the Apple ruling as a victory for ordinary taxpayers over large corporations.

Competition chief Margrethe Vestager as good as invited new claims for compensation by saying "other countries in the EU or elsewhere can look into our investigation, can use our reasoning, our data, if they conclude Apple should have recorded its sales in those countries".

No EU country has indicated that it might like a slice of Ireland's €13bn tax pie, though German MEP Burkhard Balz said he felt "strong discomfort" at Ireland getting the lot.

"The money clawed back should flow into the EU budget instead," he said.

The EU did clear up the mystery over what the Government can do with the money, saying there is "no legal obligation on how to use" it.

Last May the Commission recommended that Ireland "use windfall gains from strong economic and financial conditions, as well as from asset sales, to accelerate debt reduction".

Irish Independent

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