EXCLUSIVE / Margrethe Vestager, the EU’s competition Commissioner, has drawn praise and criticism regarding the Ireland-Apple case. In an interview with euractiv.fr, she says Ireland’s appeal will actually strengthen the Commission’s case and says more tax rulings are in the pipeline, with Amazon and McDonald’s coming next.
Margrethe Vestager is the EU’s competition Commissioner, in charge of applying EU state aid and antitrust rules.
She spoke to euractiv.fr’s Cécile Barbière and Aline Robert in Paris during a visit on 15 September.
The Luxleaks scandal has drawn international attention to Luxembourg’s tax rulings. How come Apple, in Ireland, is the first case to be uncovered by the Commission?
Luxembourg was one of the first ones because the Fiat case is a Luxembourg case. But it is of course much smaller. The taxes to be recovered from this Fiat holding is only 20 or 30 million euros. It’s a completely different magnitude. But the principle is the same: this is about allowing a company to have a benefit, a specific tax ruling, not available to any other company.
Ireland wants to appeal the decision. Could this weaken the Commission’s case?
On the contrary. Of course, we’ve prepared the case to be as robust as possible. I’ve asked my team to do the case, then change the angle, look at it once again, and have someone to be the devil’s advocate.
We knew we could end up in Court. Now, we have a very robust case.
When the court will have a say, there will be no dispute anymore. Others companies and the member states will be looking at this case and that may actually be a good thing.
What about the timeframe?
That is for the court to decide. What we’re doing right now is to work with the Irish authorities to do the exact calculation of the unpaid taxes.
Irish authorities shall use our methodology, and then they will recover the unpaid taxes and put them in a closed account. It has already happened in the Starbucks case and in the Fiat case.
Even if you appeal, it doesn’t hold the effect of the decision, you still have to do it.
You suggested that other European countries might want to ask their share of Apple’s 13 billion euro bill of unpaid taxes. For now, only Spain an Austria have done it. Are you hoping that other countries join the movement?
If a company has activities that generates profits in one country, it’s important for tax authorities to look into it. And that is of course for them to evaluate.
But there is a lack of transparency, it’s difficult for tax authorities to have the full picture. This case only started because of questions being asked in the US Senate!
The level of secrecy around these numbers and on tax rulings is high. Which is also why I am very strongly in favour of public country-by-country reporting. It will change how we work with corporate taxation and also with corporate culture.
The US has made a political reading of the Apple ruling, saying it raises issues of tax sovereignty. What’s your answer to their claims?
We take it very seriously. This is not politics, gut feeling or anti-Americanism or whatever. This is very old school Europe: we have been doing state aid control in the Commission since the beginning.
The US doesn’t have prohibition of state aid like we Europeans. So, of course, we have been trying to say: ‘you have to look at Europe with European glasses’. Because this is European legislation that applies here: This is specific to the EU, and we have been doing it for decades.
But one of the reasons why we very much want to tell about the case and explain how it works, is that the US is a very important partner when it comes to taxation.
We work very closely with the US within the framework of the OECD, the G20. If you want fair taxation it’s not just for us, here in Europe. We can take important steps, but it is a global issue. And therefore it is important for us to keep the dialogue open.
Is it politically conceivable for your next decision to be about another US company?
Well, I don’t have much choice because in my pipeline I have a number of US companies. I think in Europe we have this strange fascination with US companies. The huge majority of our decisions concern European companies, and not necessarily on taxation. The general rule is that it involves European companies. But since that is sort of normal for us, it is not in the headlines, it’s not in the public debate.
So the next decision could be about Google, for example?
We still need some of the answers in the Google case, but when it comes to tax rulings in the pipeline we have Amazon and McDonald’s, which are also very well-known US companies.
You also have IKEA.
Yes. We are still looking into the material that was handed to us by the Green group of the European Parliament, but we have no conclusions yet. It’s a bit early.
The EU has no competence on taxation so your services have approached the issue from the angle of competition policy, which is a first. Now, you are probably aware of problems created by social dumping in Europe. Is there an angle for competition rules to tackle issues there too?
I think it is important to take a direct approach to social dumping. What we see in a number of member states is that nationals are being undercut by people who are willing to do the same job for a much lower rate of pay.
And I think the most direct way to deal with that is to say that in a social Europe, the same work should receive the same pay. This is part of the value of equal treatment and fairness.
What about the merger between Bayer and Monsanto? Concerns have been raised about food prices going up and a concentration of production on GMO seeds. Are you going to look at this merger?
Yes it is a concentrated market. It is too early for me to comment on this specific merger. What’s important is that farmers still have a choice in products, that they are able to use different types of seeds, and are not forced to use one pesticide only.
Agriculture is for everyone, so it’s a very important topic. We have noticed a deep concentration in what is called plant protection products. For R&D, it’s the same thing. We have to keep that in mind.
You received much praise by the European Parliament this week regarding the Apple case. Nearly all political parties showed support, which is unusual. Do you think you can make this Commission work better?
The members of the European Parliament agree that the Apple decision simply makes sense. It can be an eye-opener about some of the wonderful jobs done by my colleagues. For example, what the French Commissioner is doing about changing taxation, bringing the proposal on public country-by-country reporting on the table. My Polish colleague, who is in charge of the single market, made a very good decision to make Disneyland stop discriminating based on where their customers are from. My German colleague and Vice-President Ansip are trying to make it easier for us to buy things across borders through e-commerce.
People are concerned about their personal safety, about our borders, about their children’s future. Parents used to take it for granted that their children would do better than them, but these days people worry. And I think it is very important for people to see that their concerns are at the very centre of the work we do.
EU leaders will talk a lot about security and defence at the Bratislava summit this week. How can you make Europeans dream if you speak about security and defence all the time?
We should not be afraid to open the newspaper in the morning. Security is one of the basics. It is about trusting that we can make it on our own. As President Juncker said, we have a European lifestyle and we want to sustain it. It is worth developing and preserving this as a great place to live.
That is my opinion, especially as a woman. In world history, you could not hope to find a better place to live as a woman! I know we have problems and I am not suggesting that everything is fine. But sometimes we tend to forget that Europe is also a wonderful place.
The EU is very much a man’s world. How come people listen to you as a woman? What’s your trick?
I have no trick, it’s just me! For many years, I’ve had the privilege to have power. And I think that if you have power you should also let people know a bit about who you are. And try to be slightly more personable than a suit!