Commissioner Margrethe Vestager, in charge of competition policy, declared: “Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules. The Commission’s investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years. In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014.”
Indeed, according to the findings of an in-depth state aid investigation launched in June 2014, the tax rulings in question enabled Apple to avoid taxation on almost all the profits made in the entire EU Single Market by recording all sales in Ireland rather than in the countries where the products were sold.
The Apple case in Ireland, just like Starbucks in the Netherlands and Fiat in Luxembourg previously, is just another example of how harmful tax competition between EU Member States can be. Several hundred billion euros are lost annually by governments in Europe due to tax avoidance – even though many of them are struggling to finance basic public services and are in fact in dire need of taxes.
As CESI has repeatedly stated in the past, much still remains to be done to effectively fight harmful tax practices at the EU and international level and to restore trust in tax systems, namely:
• ensuring more transparency on tax rulings and public country-by-country reporting;
• creating sanctions for corporate tax dodging – So far, caught multinationals only pay what is due, so a deterrent effect is lacking; and
• adopting a Common Consolidated Corporate Tax Base (CCCTB) which, by removing current mismatches between national systems, offers a holistic solution to the current problems with corporate tax avoidance in the EU.
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