Monday

18th Jun 2018

Corporate tax breaks could be classed as illegal aid, warns EU competition chief

  • Regimes allowing companies to pay small tax bills could be classed as government aid, Almunia warned (Photo: stumayhew)

The European Commission will assess whether governments re-writing their tax laws to offer corporate tax breaks amounts to illegal state aid, the bloc's competition chief said on Tuesday (11 February).

Speaking at the European Competition Forum in Brussels, EU commissioner Joaquin Almunia said he would investigate whether moves by national governments to tailor their tax laws to allow companies to avoid paying tax had the same effect as a subsidy.

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.

... our join as a group

Subsidising certain businesses could be deemed as anti-competitive, breaching the bloc's rules on state aid.

"Because of the gaps in national tax laws, many of the largest multinational companies pay very low taxes, and they don’t need to break the law to do it," said Almunia.

"In those cases where national laws or tax-administration decisions permit or encourage these practices, there might be a State aid component involved and I intend to go to the bottom of it."

The remarks by the Spanish commissioner's, who described the practice of "aggressive tax planning" as going against the principles of the EU's single market, are the latest in a series of salvos by EU officials aimed at clamping down on corporate tax avoidance.

In November, the bloc's taxation commissioner Algirdas Semeta unveiled plans to re-write the EU's rules on the tax status of parent and subsidiary companies to prevent firms from setting up 'letter-box' companies in different countries to slash their tax bills.

The practice has been widely publicised in recent years.

For example, coffee shop giant Starbucks paid UK corporation tax of £8.6 million between 1998 and 2011 on sales of over £3 billion.

Meanwhile, US-based software giant Apple was revealed to be paying a tax rate equivalent to 1.9 percent on their profits made outside the US by designating its office in the Irish city of Cork as the firms' international headquarters.

Internet companies Facebook, Google and Amazon are also prominent names in the list of companies taking advantage of Europe's patch-work tax regimes.

The European Commission is already examining corporate tax arrangements in several member states and has requested information from authorities in Ireland, the Netherlands and Luxembourg.

"A limited number of companies actually manage to avoid paying their proper share of taxes by reaching out to certain countries and shifting their profits there," said Almunia.

He added that the practice "undermines the fairness and integrity of tax systems" and was "socially untenable."

EU asylum claims drop, Germany registers most

EU states, plus Norway, Switzerland, Iceland and Liechtenstein, registered 728,470 asylum applications last year, a 44 percent drop compared to 2016. Germany had the highest registrations at 222,560, followed by Italy and France.

Opinion

EU summit: migrants get a 'vote' too

Non-citizens from Nigeria to Afghanistan get a binding 'vote' on whatever the EU's internal debates submit to them. They will vote with their feet on whether to keep trying their luck when faced with a new system.

Opinion

EU summit: migrants get a 'vote' too

Non-citizens from Nigeria to Afghanistan get a binding 'vote' on whatever the EU's internal debates submit to them. They will vote with their feet on whether to keep trying their luck when faced with a new system.

Basque threat of 'second front' for independence

Last weekend some 175,000 people in the Basque country demanded a 'right to decide'. For some, it means more autonomy from Spain, others independence. "We want to open a second front within the Spanish state," says one Basque politician.

News in Brief

  1. Report: Audi CEO arrested over Dieselgate
  2. EU-Australia trade talks kick off in Brussels next month
  3. France and Germany moving closer to eurozone reform
  4. Merkel to meet Conte to find migration compromise
  5. Seehofer gives Merkel time to strike EU migration deal
  6. Schroeder and Sarkozy appear with Putin at World Cup
  7. Tennis champ and 'EU diplomat' claims immunity
  8. Italy threatens to ditch EU-Canada free trade deal

Stakeholders' Highlights

  1. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  2. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  3. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  4. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  5. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  6. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  7. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  8. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  9. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  10. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  11. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs
  12. Nordic Council of MinistersCooperation in Nordic Electricity Market Considered World Class Model

Latest News

  1. Tear gas bodes ill for Macedonia name deal
  2. EU asylum claims drop, Germany registers most
  3. EU summit: migrants get a 'vote' too
  4. Basque threat of 'second front' for independence
  5. Progressive regulation needed now for 21st century finance
  6. Greece and Merkel's fate top This WEEK
  7. How Italy's government might hijack EU migration policy
  8. The EU cannot shape the future of AI with regulation

Join EUobserver

Support quality EU news

Join us