20th Sep 2019

EU 'orders' Estonia and Poland to disclose tax deals

  • Vestager issued an injunction against Estonia and Poland (Photo: Radikale Venstre)

Estonia and Poland have one month to give the European Commission data on sweetheart tax deals with big companies or face court action.

The EU’s competition regulator, Margrethe Vestager, on Monday (8 June) said it’s needed to ensure competition is not undercut by unfair tax rulings.

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National governments use rulings to attract corporations, but they may be illegal if they amount to state aid.

“We want to analyse them carefully to find out whether member states employ tax rulings to grant companies selective tax advantages that breach EU state aid rules,” said Vestager in a statement.

The commission is finding the task wrought with difficulties and has had to make multiple requests.

“Still, there are pieces missing. To have a complete overview we also need full information from Estonia and Poland,” Vestager noted.

Both were issued injunctions on Monday after failing to provide the documents initially requested last December.

They now have one month or risk facing a panel of judges at the European Court of Justice in Luxembourg.

Vestager also on Monday asked 15 member states - Austria, Belgium, the Czech Republic, Denmark, Finland, France, Germany, Hungary, Italy, Lithuania, Portugal, Romania, Slovakia, Spain and Sweden - to hand over additional information on individual tax rulings.

The issue is sensitive following media revelations that Luxembourg let several multinationals pay almost no tax in Europe.

The affair - known as LuxLeaks - is an embarrassment to European Commission Jean-Claude Juncker, who led Luxembourg at the time.

Despite the injunctions, neither Estonia nor Poland is suspected of breaking EU laws.

But their refusal to hand over the requested documents has irked regulators.

“These two member states, unlike all the others, have not responded in full to the commission’s request and basically what has happened is that we are now ordering these member states to respond”, said Vestager’s spokesperson Ricardo Cardoso.

National law

The commission says Estonian and Polish arguments of fiscal secrecy are not good enough to impose the information blockade.

But Marika Post, who speaks on behalf of the Estonian government in Brussels, struck a defiant tone.

"We will carry out legal analyses once we have received the commission's letter and in particular will need to confirm the legal basis for sharing such information with the commission”, she said in an email.

Estonia sent the commission all the information requested except the data protected by the business and tax secrecy provisions, she said.

"It has to be stressed, that the Estonian legal framework does not allow beneficial treatment of businesses by tax rulings," she added.

Poland, for its part, was unable to comment.

“It looks like first we need to analyse the matter thoroughly before we allow comments,” said a spokesperson from Poland’s permanent representation in the EU in an email.

The commission last December requested all national governments provide information on the different tax ruling practices and for lists of different tax rulings.

Big companies in commission target scope

Last June, it opened separate probes into Apple in Ireland, Starbucks in The Netherlands and Fiat Finance & Trade in Luxembourg.

Another was opened against Amazon in Luxembourg in October. Earlier this year, it launched a fifth probe into a Belgian tax scheme.

All five are being investigated for receiving state aid.

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