Tuesday

20th Oct 2020

EU Commission: Apple paying so little tax still unfair

  • The EU court in Luxembourg overturned a €13bn tax ruling against Apple (Photo: Reuters)

The European Commission says it's unfair that big tech companies like Apple pay less than one-percent tax on profits earned in the European Union.

The comments follow an embarrassing defeat by the Brussels-based executive when the General Court of the European Union annulled its €13bn tax ruling against Apple on Wednesday (15 July).

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

"We do not consider it normal that the largest corporates get away with paying one percent tax at most," European Commission executive vice-president Valdis Dombrovskis told reporters.

"It is just not sustainable from a tax-fairness point of view, it is not sustainable from a public revenues point of view and it needs to be addressed," he said.

Paolo Gentiloni, the EU commissioner for economy, made similar comments.

"A single ruling is not discouraging our commitment in this sense. I would say the contrary."

Margrethe Vestager, the European Commission vice-president, had in August 2016 determined that two tax rulings issued by Ireland to Apple constituted illegal state aid.

She said Apple's Irish subsidiary had recorded European profits of around €16bn but under the terms of the tax ruling only around €50m were considered taxable in Ireland.

But the court on Wednesday said the commission had failed to produce enough evidence to substantiate claims the rulings constituted illegal state aid.

"This case was not about how much tax we pay, but where we are required to pay it," Apple said in a statement.

The Irish government also praised the ruling, saying "the correct amount of Irish tax was charged... in line with normal Irish taxation."

Need better rules

The commission's defeat and its follow up comments are unlikely to assuage critics who say broader efforts to make taxation more transparent and fairer have been lacking for years.

Among them was Tove Maria Ryding, a tax expert at the Brussels-based European Network on Debt and Development.

"If we had a proper corporate tax system, we wouldn't need long court cases to find out whether it is legal for multinational corporations to pay less than one percent in taxes," she said.

Within two hours after Wednesday's ruling, the commission then presented wider plans on what it describes as fairer and more simple taxation.

Among the ideas discussed is article 116 in the EU Treaty, which could be used to label competitive national tax schemes as distortions of the single market.

The article could be used to circumvent the required unanimity decisions among member states when it comes to taxation.

A qualified majority vote would instead be needed to usher in tax reforms, in a move that is likely to generate blowback from some member states.

Sven Giegold, a German Green MEP, said the article needs to be used to prevent vetoes by individual member states.

He signalled out Germany's resistance to public tax transparency for large companies.

Giegold also criticised the commission's latest tax proposals, noting they postponed digital taxation, corporate taxation and majority decisions on tax matters.

"The action plan does not provide answers to the failure of the EU Commission in court today," he said.

Investigation

How Apple lobbied EU to delay common smartphone charger

iPhones and Android products don't use the same charger. This is annoying for consumers and harmful for the environment. Old chargers produce more than 51,000 tons of electronic waste per year.

Germany asks capitals to give a little in EU budget impasse

European Parliament negotiators are demanding €39bn in new funding for EU programmes such as Horizon research and Erasmus, in talks with the German EU presidency on the budget. Meanwhile, rule-of-law enforcement negotiations have only just begun.

EU budget talks suspended in fight for new funds

MEPs are requesting additional, new funding of €39bn for 15 EU programs. The German presidency argues that budget ceilings, agreed by EU leaders at a marathon summit in July, will be impossible to change without a new leaders' meeting.

EU countries stuck on rule of law-budget link

Divisions among EU governments remain between those who want to suspend EU funds if rule of law is not respected, and those who want to narrow down conditionality.

EU countries stuck on rule of law-budget link

Divisions among EU governments remain between those who want to suspend EU funds if rule of law is not respected, and those who want to narrow down conditionality.

Stakeholders' Highlights

  1. UNESDAMaking healthier diets the easy choice
  2. Nordic Council of MinistersUN Secretary General to meet with Nordic Council on COVID-19
  3. UNESDAWell-designed Deposit Return Schemes can help reach Single-Use Plastics Directive targets
  4. Nordic Council of MinistersNordic Council meets Belarusian opposition leader Svetlana Tichanovskaja
  5. Nordic Council of MinistersNordic Region to invest DKK 250 million in green digitalised business sector
  6. UNESDAReducing packaging waste – a huge opportunity for circularity

Latest News

  1. EU money used by neo-Nazi to promote Holocaust denial
  2. Over 80% of Europe's habitats in poor or bad condition
  3. EU's Brexit move could end deadlock in talks
  4. EU's migrants more at risk from coronavirus
  5. Baltics pin hopes on Biden
  6. France marks trauma of history teacher's murder
  7. Spain's Sanchez in storm over judicial appointments bill
  8. Violating promises and law, von der Leyen tests patience

Join EUobserver

Support quality EU news

Join us