Vestager under fire from predecessor Kroes over Apple ruling

Neelie Kroes [Holger Rings/Flickr]

Ex-Commissioner for Competition Neelie Kroes slammed the EU for concluding that Apple owes Ireland €13 billion, calling the decision “fundamentally unfair”. The European Commission replied that Kroes was wrong, and that she was speaking on behalf of Silicon Valley.

The Commission found that Ireland had breached state-aid rules by allowing the California technology group to pay substantially less tax than other businesses since 1991.

EU says Apple must repay €13 billion over ‘illegal’ Irish tax deal

The European Commission said on Tuesday (30 August) that US tech company Apple must repay €13 billion in back taxes after ruling that a series of Irish tax deals were illegal.

In an op-ed for The Guardian, Kroes argues that EU member states have a sovereign right to determine their own tax laws, and that the Commission cannot change the rules of the game and seek unrecovered taxes retroactively.

“EU member states have a sovereign right to determine their own tax laws,” she said. “State aid cannot be used to rewrite those rules. However, the current state-aid investigations into tax rulings appear to do exactly that,” Kroes wrote.

Kroes is also critical of the retrospective nature of the ruling, which determined that Apple had underpaid its Irish taxes from 2003 until 2014, saying a fundamental principle of tax law is that changes do not apply to past years.

Former Dutch politician Kroes served as Competition Commissioner from 2004 to 2009, and as Commission Vice President for Digital agenda from 2010 to 2014. She is now special envoy for StartDelta, a tech startup development project run by the Dutch government, and sits on the public policy board of Uber and the board of directors for Salesforce, an American cloud computing company headquartered in San Francisco.

In fact, Vestager has already addressed the issues raised by Kroes. She has stated that the tax ruling favouring Apple are a matter of state aid, because member states cannot give unfair tax benefits to individual companies.  She has argued that this has been long confirmed by the EU courts and the executive’s case practice.

“State aid can come in many forms, as a task benefit, as a favourable treatment of a piece of land, a favourable loan,” Vestager has told journalists.

Regarding accusations of changing the rules of the game and seeking to recover taxes retroactively, Vestager explained that no legislation has been changed in the time frame of the Apple ruling, and that that consequently there was no ground for such claims.

Asked to comment on the accusations by Kroes, European Commission chief spokesperson Margaritis Schinas acknowledged that the Commission had seen the op-ed. Reading from a prepared statement, he said:

“We understand that it may be sometimes challenging to reconcile the role as a former Commissioner with the temptation to publicly express the views of those, in Silicon Valley or elsewhere, who oppose the Commission’s decisions. This seems to criticise how the Commission applied state aid rules, but the fact is that they were not applied in the way it was alleged,” Schinas said.

Brussels Apple tax ruling reverberates across the Atlantic

The European Commission’s demand for Apple to pay back a record 13 billion euros in back taxes in Ireland has triggered warnings that it could damage transatlantic economic ties. Others in Washington, however, used the case to call for an international tax system to ensure revenues are paid where they are due.

In fact, Kroes was very popular as a Commissioner precisely for playing hardball in the EU-Microsoft competition case, which resulted in a €497 million fine for the US company.

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