EU vs. Apple

The European Court of Justice in its judgment of 15 July 2020 ruled that the evidence provided by the European Commission was insufficient to show that Apple benefited from an artificial reduction in the tax rate in 2014, thus annulling the Commission’s mandate to Apple to pay in Ireland – a member state of the Eurozone and the EU, €13 billion in retroactive taxes.

By Trust Economics-https://trusteconomics.eu

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The Commission has two months to appeal the decision of the European Court of Justice. Competition Commissioner Margrethe Vestager continues her research for further evidence that will crush Apple.

State aid: Irish tax treatment of Apple is illegal
Photo by the website www.wikiwand.com

The problem is that member states like Ireland are in no way willing to sacrifice the well-paid jobs offered by multinationals in their territory (well-paid jobs are politically translated into votes) by adopting the Commission’s position that it wants to interfere in the tax affairs of these EU member countries, even if the fiscal indicators of member-countries such as Ireland show a bad situation that retroactive taxes would alleviate.

Ireland, for example, has a budget deficit of €30 billion or 10% of its GDP and would desperately need to collect that €13 billion in taxes.

European Court of Justice - Wikipedia
The Twin Towers of the European Court of Justice, in Kirchberg, Luxemburg City, Luxemburg
Photo by Author: Tercer, Source: Own work, Licensed CC0 1.0 Universal Public Domain

The EU Commission’s mistake is that it is trying to impose a commonly accepted digital tax across the EU on high-tech companies such as Amazon, Facebook, Twitter, Apple, etc. This shows a compulsive empathy and obsession on the part of the Commission against high tech companies.

In this way, the EU Commission manages to bring against its member states such as Ireland, which want a market economy with low tax rates, and let the fiscal commitments stemming from the Maastricht Treaty be violated.

The Commission’s right policy would be to impose a pan-European corporate tax common to all companies of any size operating in the EU and independent of the industry to which they belong.

In this case, there would be no empathy for digital companies and this policy would be more acceptable to all member states, including Ireland, as it would not separate companies according to the industry in which they belong.

The obsession to pay taxes in a “brutal” way to companies such as Apple shows the result of inefficiency and obsession against these companies. But this is not how the business world and the Republics work.

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