The days are passing by with no sign of any let-up in the tension, two days after the European Commission's decision to impose a tax adjustment of €13 billion on the American company Apple for its activities in Ireland (see EUROPE 11612).
On Thursday 1 September, the CEO of Apple, Tim Cook, wrote in the Irish Independent that the Commission's decision was political and not based on facts. The enforcement part of the competition portfolio "doesn't fit into any political picture", but is solely the result of the application of the treaties, the European commissioner for competition, Margrethe Vestager, responded. She underpinned her words by adding that a case based on feelings and not facts would never hold water before the Court of Justice.
The Commission does indeed have a political agenda when it comes to the fight against aggressive tax optimisation, but in order to pursue this agenda, it "proposes legislation", as it has done under the aegis of Pierre Moscovici, the European commissioner for taxation.
Nor does Vestager share the American view that recovering the illegal tax advantage in Ireland from Apple will lose the American Treasury tax income. This case concerns sales and profits made or registered in Europe; it is, therefore, fairly clearly a "European issue", Vestager stressed, adding that she was looking forward to meeting Jack Lew, the American Treasury Secretary, in Washington in September.
The Treasury recently threatened the EU with reprisals. When asked about this, a European source acknowledged that a certain provision of the American fiscal code existed, but had never been invoked. According to Reuters, this is Section 891, which has been in place since 1934 and allows the president to double the tax rates for citizens and corporations of any country the administration considers has discriminated against US companies. According to the same Commission source, talks with the American authorities largely tended to show that reprisal measures had never been seriously under consideration.
Furthermore, reprisals would be "awkward", according to the same source, in a context in which the EU was just making sure that profits generated in Europe were taxed in Europe.
Finally, in response to Cook's criticism, who said that he did not know where the Commission had got the figure of 0.005% of tax paid by Apple in certain years, Vestager explained that she had received the figures from the company itself in the course of the investigation, and at the hearing of the company before US Senators in 2011. The Apple case makes a "strong case for transparency", said Vestager, who called for a swift agreement on country-by-country reporting. This increased transparency, the commissioner added, would make it easier for questions to be asked if a company with no employees or activities was making profits at this level and not paying any tax, she concluded. (Original version in French by Élodie Lamer)