EU braced for legal challenges over tax probes

The European Union’s new anti-trust chief said the EU is braced for a legal battle with governments embroiled in its probe of sweetheart tax deals for multinationals from Apple to Amazon.

Margrethe Vestager said the process needs to be legally watertight as officials investigate whether deals handed out to companies by Ireland, Luxembourg and the Netherlands were a form of illegal state subsidy.

Governments would like to challenge the EU and “of course the casework has to be very very thorough”, she said yesterday.

Ms Vestager, the EU’s competition commissioner since November 1, inherited probes into Irish tax deals with Apple, Luxembourg’s taxation of Amazon and Fiat Finance & Trade, and Netherlands’ treatment of Starbucks Corp.

Finance Minister Michael Noonan said last month the EU case isn’t strong and he thought it would be dropped.

Luxembourg is already challenging regulators’ demand for taxation documents in EU courts.

Ms Vestager said she would also examine information on companies’ secret deals with Luxembourg published by a group of investigative journalists.

The Grand Duchy last week charged a Frenchman with stealing documents on taxation arranged for multinational companies by PricewaterhouseCoopers LLP.

While the documents show Luxembourg issued tax rulings to hundreds of companies “it’s not only a question of whether anyone could get a tax ruling or not, it’s a question of whether it’s selective” and “some companies could have something that others couldn’t”.

EU regulators are focused on “getting insight on a much more thorough and detailed level” about how the tax rulings were used and what mechanisms were deployed by companies to exploit them, she said.