Tension between US, Europe mounts as EU regulator signals Apple may be just Start of tax probes
REUTERS photoMonths of simmering tension between U.S. and European officials on tax and other issues have boiled over as the EU’s top competition regulator stood by her decision to demand more than $14 billion in tax repayments from Apple, tweeting that she may investigate other major U.S. companies on Sept. 17, ahead of meetings with officials in Washington.
At the end of August, the European Commission said Apple had benefited from illegal tax benefits in Ireland for its European operations and ordered the company to pay 13 billion euros. Severe criticism was voiced over the Commission’s decisions, mainly from the U.S., as well as Europe itself.
Some 185 American CEOs, comprising the Business Roundtable, then warned European leaders they risk a “grievous self-inflicted wound” unless they overturn Brussels’ demand that Apple pay the Irish government 13 billion euros, in a joint letter on Sept. 16.
However, European Commissioner for Competition Margrethe Vestager then signaled that she plans to investigate the European tax affairs of further U.S. multinationals, less than three weeks after delivering the verdict that Ireland had given Apple billions in illegal state aid.
Davide Serra, the founder of Algebris Investments, tweeted Vestager in relation to the letter on Sept. 16: “Apple: so in the USA there are 185 CEO which think it’s legal to pay 0.05% Taxes in Europe! @vestager pls check what they pay asap!”
Vestager responded in a tweet on Sept. 17: “I will. And I keep thinking about all the CEOs who just make sure that their companies do pay their taxes. They exist too.”
A few weeks after the EU’s Apple decision, the U.S. fined $14 billion to Deutsche Bank to settle an outstanding probe into the company’s trading of mortgage-backed securities during the financial crisis.
Vestager will meet with U.S. Treasury Secretary Jack Lew in a trip to the United States this week, where she has been criticized for allegedly targeted U.S. companies, something the EU denies.
European Union antitrust regulators have also signaled similar probes for European companies as well. The authority opened a probe on Sept. 19 into tax deals granted by Luxembourg to French power utility Engie, stepping up the EU’s campaign against tax avoidance by multinationals.