Just when you thought the European Union was down, it’s delivered a blow that shows you can’t count it out, writes Ian Wishart.
In taking a bite out of Apple, the beleaguered bloc has gone where the US feared to tread and demonstrated it still has clout when it comes to taking on corporate giants.
The move is a powerful reminder to the UK that in patrolling the terms of access to its half a billion consumers, the EU punches its global weight. There’s something else as well. By ordering the world’s richest company to pay Ireland a record €13bn in back taxes, it’s given the UK a chance to reinvent itself as a fiscal paradise for multinationals in a post-Brexit world.
“EU rules will not be binding in the UK and it’s interesting to see how it will affect firms,” said Georgios Petropoulos, research fellow at the Brussels-based policy group Bruegel. “Will firms from Ireland prefer to move to the UK where the European Commission does not have any power to prosecute them there?”
While the EU flexes its muscle, the UK is trying to work out how it can participate in the single market as an outsider. The 28-nation alliance may clash on a medley of issues from budgets to immigration, but its executive arm is consistent about coming down hard on anything that smacks of state aid or unfair competition.
For evidence, look no further than its antitrust fights with Microsoft in the 1990s, which it won, or those against Google. Then and now, the European Commission seems undeterred by what wealth tech giants bring to the economy. Europe is Apple’s biggest market after the US and China.
“This is another example of how the EU helps to stand up to massive corporations,” said Susan Kramer, the economic spokesperson for the UK’s Liberal Democrats.
“It’s perfectly possible for a company like Apple to bully Ireland, or even the UK, into sweetheart deals — but the EU acts as a referee.”
The readiness to force US firms to pay up strikes a different, more populist note, at a time when the EU has rarely had so little support among voters from London to Athens.
Home to 500m consumers, the EU will remain a big market with or without the UK, its second biggest economy. For Kramer, a pro-EU voice, the case of Apple underlines the risk that Britain will become “a multinational tax haven cut adrift in the mid-Atlantic”.
Apple is just the latest company to fall foul of the European regulator, which has gone where the US has feared to go.
Rather than issue fines for illegal state subsidies, the EU can order nations to claw back aid, such as unpaid taxes, from the recipients. In January, the commission ordered Belgium to recover about €700m in what it called illegal tax breaks to 35 companies including BP.
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