Tuesday

19th Mar 2019

EU takes aim at UK tax perks

  • City of London faces uncertain future on single market access (Photo: Ralph .)

EU competition authorities have sunk their teeth into UK tax perks for multinationals amid a wider crackdown on aggressive tax avoidance.

The European Commission said on Thursday (26 October) it had opened an "in-depth investigation" into a British law that let big corporations shift profits to offshore subsidiaries.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • Vestager's probe comes after claw-backs in Belgium, Ireland, Luxembourg, and Netherlands (Photo: European Commission)

It said the opening of the probe did "not prejudge the outcome of the investigation".

But it indicated that if the UK scheme constituted illegal state aid, then Britain could go the way of Ireland or Luxembourg in terms of EU injunctions.

"We will carefully look at an exemption to the UK's anti-tax avoidance rules for certain transactions by multinationals, to make sure it does not breach EU state aid rules," the EU competition commissioner, Margrethe Vestager, said.

The Commission's wider crackdown has seen US tech giant Apple ordered to pay back €13 billion in tax perks to Ireland and online retailer Amazon pay €250 million to Luxembourg.

It has also clawed back money in Belgium and the Netherlands in actions involving corporate giants Fiat, McDonalds, and Starbucks.

The size of the UK ruling could be significant, with the British tax office, HM Revenue & Customs saying multinationals avoided paying €5.8 billion in taxes last year by booking profits overseas.

Vestager's investigation comes amid a background of slow progress in Brexit talks.

But the Commission indicated that the two processes were unrelated. It said the UK tax reforms in question and its initial investigations dated back to 2012 - four years before the Brexit referendum.

It added: "As long as the UK is an EU member state, it has all the rights and obligations of membership."

"EU competition law, including EU state aid rules, continue to apply in full to the United Kingdom and in the United Kingdom until it is no longer a member," it said.

The British treasury quickly rebuffed Vestager's initiative on Thursday.

"We do not believe these rules are incompatible with EU law but will cooperate with the European Commission's investigation," a treasury spokesperson said.

"We are clear that all multinationals must pay tax ‎on any profits they make in the UK, and our rules prevent these profits from being artificially diverted overseas," they added.

British negotiators are hoping to start talks in December on a transitional deal for after the UK leaves the bloc in March 2019.

They are also hoping to start talks on future trade relations.

With the future of the City of London at stake, British chancellor Philip Hammond has previously hinted the UK could become an offshore tax haven if the UK's financial centre was locked out of the single market.

News in Brief

  1. Blow for May as third vote on Brexit deal ruled out
  2. Three killed in possible 'terror' gun attack in Utrecht
  3. Third Brexit vote this week only if DUP will support it
  4. Germany's two largest banks confirm merger talks
  5. Serbian pro-democracy protests reach 15th week
  6. 'Yellow Vest' riots leave Paris shops vandalised
  7. European woman older when having first baby
  8. Majority of Germans want Merkel to stay on

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  2. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  3. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  4. Nordic Council of MinistersNordic commitment to driving global gender equality
  5. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  6. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  7. Nordic Council of MinistersNordic talks on parental leave at the UN
  8. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  9. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  10. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  11. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  12. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson

Join EUobserver

Support quality EU news

Join us