Brussels, 18/09/2015 (Agence Europe) - Corporate tax evasion cannot be tackled solely using state aid control, warned Competition Commissioner Margrethe Vestager on Thursday 17 September at a joint meeting of the European Parliament's economic and monetary affairs committee and the special tax committee (see EUROPE 11391).
Vestager said: “I will not hesitate to take appropriate action when a company receives an undeserved advantage that distorts competition. But State Aid Control also has its limits, defined by the Treaty and it is clear that we cannot solve it all when using this tool.”
Vestager listed the limits when it comes to recuperation of unlawful state aid. In tax committee's draft report, Elisa Ferreira (S&D, Portugal) and Michael Theurer (ALDE, Germany) say that in investigations into possible unlawful state aid through tax rulings, that if the Commission were to demand recovery, that would in fact mean a bonus for countries for failing to comply with the rules (see EUROPE 11365) and the draft report therefore urges the Commission to examine the option of amending existing rules to allow the money recovered in cases of unlawful state aid being given to countries that have suffered an erosion of their tax basis or to the EU budget, rather than to the budget of the country that granted the unlawful aid “State aid control tackles distortions of competition between companies. If competition is distorted, the logical consequence is to restore the situation to before aid was granted. This means that the taxpayers get their money back in state budget, use for something legitimate,” Vestager told MEPs, noting the idea is included in the draft report.
Bernd Lucke (ECR, Germany) asked the Commissioner what criteria she would be using to decide whether fiscal state aid is lawful. She said during the hearing that the Commission wanted to give greater guidance to the member states on application of state aid rules for corporate tax planning. Beforehand, however, the Commission has to conclude a number of cases and evaluate the form that the guidance could take, she explained. In response to a question about country-by-country reporting on tax payments, she said that it would be useful to examine the effective rate of tax. “If the effective tax rate goes down to zero, then it would be interesting to see how this could happen. Is this the illustration of a benefit due to fiscal aid? Therefore this would enable our work,” said the Commissioner. The Ecofin Council is also trying to examine effective taxation (see EUROPE 11387).
To get a better understanding of tax rulings, Vestager has asked all member states to provide information on the subject and they have all now complied. Later, the Commission asked them for more detailed information about a number of these rulings in order to be able to assess them (see EUROPE 11330). “At this stage, although my services are busy as we speak, analysing all the information received, it seems that the procedure for granting rulings in several member states actually does comply with the OECD recommendations. So also good news in what we are doing,” said Vestager, refusing to give any timing indications for investigations currently under way (into Apple in Ireland, Starbucks in the Netherlands, Fiat and Amazon in Luxembourg and so on) (see EUROPE 11232). She said that quality is more important than speed.
Finally, in answer to a question from Esther de Lange (EPP, the Netherlands) about public or non-public country-by-country reporting, Vestager said she did not have any preconceived ideas on the subject (see EUROPE 11391). She called for transparency while maintaining a balanced approach and said that one needed to take a look at what the US was doing about transparency. (Elodie Lamer)