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Having had a chance to gather my thoughts, some considerations on the political dynamics coming out of the Apple case below.
TL;DR: It’s about to get
TL;DR: It’s about to get
First off, there´s an element of surprise in the Court´s decision, or more precisely in the content of the decision. That places new and unexpected political pressure on EU actors to *do something*.
You might have expected Apple to win, but definitely not so comprehensively. Despite years of inquiry, and documented poor procedure by the Irish Revenue, the Commission could not come close to the evidence base required to show illegal state aid.
On the law, this makes an appeal hard, although political investment almost demands it - see @AislingTax https://mnetax.com/eu-court-reaches-surprising-conclusions-in-apple-state-aid-case-39426 and @SteveDalytax https://taxatlincolnox.wordpress.com/2020/07/16/case-note-on-apple-an-unexpected-outcome/
So what will the Commission do? It will, unquestionably, come out swinging. Significant political resources have been put into building stronger, more progressive EU work on corporate tax avoidance and tax havens in recent years. https://twitter.com/phdskat/status/1283331436922183682
Here, political activism by the Commission has been key to the EU´s rise in international tax policy, alongside the European Parliament,
and critical European politicians, operating in an increasingly accommodating political environment. https://osf.io/preprints/socarxiv/tn329/
and critical European politicians, operating in an increasingly accommodating political environment. https://osf.io/preprints/socarxiv/tn329/
Of course, it took less than two hours from the judgment for the Commission to launch its first response: its new "Package for fair and simple taxation" https://ec.europa.eu/taxation_customs/general-information-taxation/eu-tax-policy-strategy/taxation-package_en
And indeed, the Commission has already said it will use all the tools available to them, stressing the urgency of reform.
"This ruling makes even more urgent and clear the need for corporate tax reform", said @VDombrovskis. https://www.law360.com/tax-authority/international/articles/1292187
"This ruling makes even more urgent and clear the need for corporate tax reform", said @VDombrovskis. https://www.law360.com/tax-authority/international/articles/1292187
In particular, Commission will start a new dogfight with EU Member States, trying to circumvent their *key* constraint - the unanimity requirement on EU tax matters - by invoking a hazy Single Market provision. More innovative, aggressive EC activism. https://www.ft.com/content/d1fffd14-c68c-11ea-9d81-eb7f2a294e50
Beyond the Commission, the Apple loss is likely to (re)ignite the case for individual countries to introduce special taxes on (US) digital firms, and to crack down on tax havens more broadly.
That fight has already developed into an explosive global stand-off, as @martinhearson and I have laid out over at @monkeycageblog: https://www.washingtonpost.com/politics/2019/07/18/europe-is-targeting-big-tech-with-new-taxes-its-straining-transatlantic-alliance/
No doubt the Apple case will further escalate both EU-US and intra-EU conflict on tax matters, as @Aidan_Regan writes: https://www.washingtonpost.com/politics/2020/07/15/apple-wont-have-pay-nearly-15-billion-european-taxes/
This has serious repercussions for discussions ongoing at the OECD/G20 for years, to find a new global agreement on taxing the digital economy, which is supposed to resolve transatlantic tensions.
As Europe (and increasingly the rest of the world) proposes new digital taxes, the US retaliates with tariffs, and threatens to walk away from negotiations - a vicious circle of political escalation. https://www.nytimes.com/2020/06/17/us/politics/us-digital-tax-talks.html
So the Apple case is huuuge. It will likely reverberate in:
- more aggressive short- and medium political initiative from the EU
- more impetus for countries to adopt special digital taxes
- increased risk of global tax conflict scuppering OECD/G20 agreement.
/ends
- more aggressive short- and medium political initiative from the EU
- more impetus for countries to adopt special digital taxes
- increased risk of global tax conflict scuppering OECD/G20 agreement.
/ends
