Former EU competition commissioner: Vestager claim that Apple owes back taxes an incorrect use of EU law

“The European Commission rejected criticism from one of its own former antitrust chiefs on Friday of its massive tax demand on Apple and pointedly noted that she now works for another U.S. tech company, Uber,” Foo Yun Chee reports for Reuters.

“Neelie Kroes, who was EU competition commissioner for five years until 2010 and ran digital policy until two years ago, said this week’s ruling by current antitrust chief Margrethe Vestager that the iPhone maker must pay 13 billion euros of back taxes that Ireland had waived was an incorrect use of EU law,” Chee reports. “‘EU member states have a sovereign right to determine their own tax laws. State aid cannot be used to rewrite those rules,’ Kroes wrote in The Guardian. ‘However, the current state aid investigations into tax rulings appear to do exactly that.'”

Read more in the full article here.

“State aid is not a cure for all ills. Today, there is a broad sentiment that multinational companies do not pay enough taxes, that they are using mismatches between national tax laws to lower their tax burden,” Neelie Kroes writes for The Guardian. “State aid is not suited to deal with such mismatches. It is a tool to address instances where a member state has made an exception to its own rules and given a specific company an advantage. To know whether that is the case, one has to understand how corporate taxation works.”

“EU member states have a sovereign right to determine their own tax laws,” Kroes writes. “State aid cannot be used to rewrite those rules.”

“But you cannot change the rules of the game through ad hoc state aid enforcement, and then seek retroactive recovery for unpaid taxes,” Kroes writes. “Doing so would be fundamentally unfair and would harm competition, growth and tax income in Europe. And it raises serious questions about legal certainty and the rule of law.”

“It is a fundamental principle of tax law that changes will not apply retroactively,” Kroes writes. “Companies (as individuals) should know what their fiscal obligations are up front and should be able to plan with them. When tax rules change, they do so for the future only and there are strict limits to the re-opening of tax assessments for the past.”

Read more in the full article here.

MacDailyNews Take: Now, to be fair, this is only because poor Margrethe is an idiot politician. Go back to Denmark, honey, you’re in over your head – unless your agenda is to destroy the EU from the inside out, in which case: Carry on, you’re doing a hell of a job!

Anyone who decides to set up a business in a European Union member country today is insane.MacDailyNews, August 30, 2016

As we wrote on August 25th:

There’s nothing like the world’s preeminent superpower playing hardball with some quasi-governmental political confederation that’s already been hit with one very significant defection and the existential threat of widespread desertions hanging over its collective head.

If the EU demands so-called “back taxes” from Apple, it’ll be based invisible legal grounds since the company simply followed the law when paying their taxes.

Irish government to fight EU on Apple tax – September 2, 2016
Treasury accuses EU of trying to steal U.S. tax revenues with Apple decision – September 1, 2016
Irish residents opposed to EU’s tax demand of Apple – September 1, 2016
Apple Inc. pushes back against EU tax grab – September 1, 2016
Apple may repatriate billions of dollars next year after new U.S. President takes office – September 1, 2016
U.S. tax code allows for dramatic retaliation against EU overreach in Apple case – September 1, 2016
Apple CEO Tim Cook on EU tax demand: ‘No one did anything wrong here and Ireland is being picked on… It is total political crap’ – September 1, 2016
U.S. Treasury: The European Commission’s retroactive tax demands on Apple are unfair – August 30, 2016
EU demands Apple pay massive $14.5 billion in taxes plus interest – August 30, 2016
U.S. government warns EU: Do not hit Apple with a massive back tax bill – or else – August 25, 2016


    1. Typing “Period” after your latest incorrect statement doesn’t make it any truer, shit-for-brains. It would make you sound even stupider, but, alas, that’s an impossibility.

        1. The truth is Europe is becoming an also-ran in globalization, unable to compete against freer markets like the US and freewheeling countries like China. Question: what does it say about their system that doesn’t notice “abuse” for well over a decade. The EU won’t be around in a decade as things worsen and more countries bail out on bureaucratic oppression.

    2. OK, so Ireland made a “special and unique deal” with Apple. They just happen to make the same “special and unique deal” with Google, Microsoft, Dell, eBay…

      That is why the EU has gotten it so wrong. What they are using the competition powers for is to get at Ireland’s 12.5% corporation tax, which the EU does not approve of but until now had no way of putting pressure on Ireland to chance the tax rate.

      Have a look at this:

  1. MDN would do well to remember that they are experts on nothing and hopelessly biased. The decision by the EU would have been made on specialist legal advice and not by the commissioner.

    Us mere mortals who have no understanding of European law, or of Apple’s complicated devices for avoiding tax, can only observe.

    The children at MDN will squeal but no-one of any import is listening.

    Moral: if you do not know what you are talking about, best to keep silent lest you reveal your ignorance.

    The EU is cracking down on Ireland rather than Apple. Apple took advantage of the deal but it is Ireland who are in breach of EU law.

    1. “Us mere mortals who have no understanding of European law…” And there in lies the problem. No one understands how to comply because the sand and rules are shifting. Business hates uncertainty. The EU has damaged themselves severely.

    2. I was pleased to see the referenced article. It is one of the very few of those discussed here that actually makes a coherent argument for why Apple does not owe the money. “It isn’t fair” does not rise to that level, I am afraid.

      Neither does, “Anything that negatively impacts Americans must be motivated by anti-Americanism,” or “The EU just wants the money (which it won’t get, even if it prevails)” or “Public servants, whether American or foreign, are lazy SOBs motivated solely by greed” or “This is an attempt to apply a rule retroactively to the 1984 Apple deal because changing the name from the EEC to the EU invalidated all the treaties signed since Ireland joined Europe in 1973” or “It is all socialist nonsense.”

      As this article illustrates, there are sensible arguments against the European Commission ruling. I just wish we were seeing more of them here.

      1. Sense and Sensibility are kicked here and asunder by political footballers. It is nothing less than a free-for-all on the internet, and one can only pray that legal judgments rise above the fray.

    3. Not quite. Ireland is a sovereign state, as are all EU members, and can set its own Tax Rates. The EU is using the competition law to get at Ireland’s low 12.5% corporate tax rate.

      The unique deal Ireland had with Apple was the same unique deal that they had with Google, Microsoft, Dell, etc. Therefore the deal was not anti competitive as the EU ruled.

  2. There was no EU when Apple started in 1980. So there is no EU tax law even now. You can’t just make up crap and then throw it at people and companies out of thin air. Especially to collect large some of money for taxes that have already been paid for legally. And the country of Ireland agrees totally as well.

    1. The EU isn’t applying their ‘ruling’ back to 1980. According to The Guardian:
      The €13bn, plus interest, to be recovered covers the 10 years before the commission first requested information in 2013.

      I.E. from 2003 – 2015. This period was during Ireland’s membership in the EU. The EU will lose on appeal for other reasons.

    2. I keep seeing people quote this “there was no EU in 1980” line. Who cares about that fact? It’s completely irrelevant. The Commission aren’t claiming that Apple owes them money from the 1980s are they?

      Laws change, they change all the time. Companies and individuals have to stay in line with those changing laws, not the law as it was when you were first born or first went into business. All the underpaid tax money being claimed back is from a time when there was an EU. That’s all you need to know.

      1. No, what matters is that Ireland is a sovereign state which (as all EU members) can set its own tax laws. Ireland and Apple did not break Ireland’s tax laws. The “Double Irish” tax loophole was legal at the time. It was morally wrong but still legal. It has now been closed.

        This ruling has much bigger ramifications that the €13 billion. The EU ruling means any EU country can have its tax laws challenged. Any person/corporation could be tax compliant and the EU could retrospectively change the tax laws and leave the person/corporation facing a large tax liability.

  3. I believe the EU is going after  because,  has lots of money and can afford the retroactive tax.

    I think the EU should expand the logic to traffic violators. Charge traffic violations by the ability of the owner to pay the fine. Base ability to pay on the value of the auto, the more expense the car, the greater the fine. Apply retroactively from 2001. Just think of all those Euros they could collect. 🖖😀⌚️

    1. As I recall reading somewhere no long ago, they already do this in some EU countries. Scandinavian ones If I remember correctly.

      But it’s not retroactive like the EU tax situation.

      As for all those here saying that (for whatever reason they assume) MDN and most of the rest of us do not understand or know what we are commenting about, the same applies to them as well. They spout a lot about our lack of knowledge, etc., but they do not source/cite where their “knowledge” of the facts comes from, or they simply accept blindly what EU (non-elected) officials say the situation is.

      In their eyes, Apple is wrong because it is a multi-national corporation and is, ipso facto, wrong/guilty of anything it is accused of. These people are possessed of their own form of moral absolutism as much as the Westboro crowd.

      Plus, these people clearly cannot disguise between tax avoidance and tax evasion. There is a difference and it is not a fine line. At least in the U.S.

      It wouldn’t surprise if it were different in the EU or elsewhere. But, that doesn’t change the fact that there is a difference… just that in such other places they ignore it in their tax code in order to get as much as they can.

      1. Lots of EU countries have grades of traffic fine based on the income or wealth of the violator. The point of a fine is that it has to hurt your wallet, so that you amend your behaviour in the future as a result. So there’s no point fining a multi-millionaire the same amount as a college student.

        So if the same logic is being applied here to the business world, it is to ensure multinationals amend their behaviour.

    2. No, they’re going after a whole swathe of large companies that are doing this. You’re only reading about the Apple decision because it’s been so heavily publicised by the media.

  4. I posted earlier today over at The Guardian:
    …The EU will end up looking foolish and manipulative. Apple will look as insightful as ever and the US Congress will finally be shamed into lowering the tax rate for foreign made profits to a permanent sane level.

    It’s certainly going to be entertaining.

    1. Only from a high perch of splendid isolation can such political machinations seem a mere entertainment. Outside of the cocoon, future prospects, life savings and ideals are subject to damage.

  5. What’s with MDN and females in high office? There was “incompetent” Judge Koh and “federal puppet” Judge Cote and now ‘in over your head” anti-trust chief Vestager.

    Ad hominem attacks have no place in presidential campaigns and in good reporting.

    It’s also worth remembering that the two US judges’ decisions were mostly sustained on appeal. There’s a pattern there too.

    MDN does its readers and itself a disservice with its reflexive ad hominem attacks on females who make decisions it disagrees with.

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