Lunes 05/11/2018.

| Economikon

Interview with Margrethe Vestager


EU considering Green's report on Intitex tax schemes for 600 million

  • In a phone interview with Te Interesa, European Commissioner of Competition Margrethe Vestager confirms they are considering Green Party report on alleged tax elusion by Spanish Inditex 
  • She also confirmes Ireland is already recovering part of 13 billion of Apple due taxes.

Te Interesa: I would like to start with Apple and Ireland. Yours is a pretty small team, 19 people. How do you “dare” to take on this big corporations? Do you really think they are going to pay, or are they going to use their huge amount of lawyers to find a way out?

Margrethe Vestager: Well, first of all, I am in a long line of commissioners, with Mario Monti being one of the very important ones, when it comes to State Aid in terms of fiscal aid. I think it is an important part of the job, because if you want a leveled playing field, then you can’t have some companies allowed by Member States not to pay taxes, while others will have to pay theirs.

The second thing is that when one disagrees in the outcome of the case, there is a very fundamental respect in Europe for the rule of law, and what we see right now is that the Irish authorities are in the process of recovering the unpaid taxes…

Te Interesa: They already are?

Margrethe Vestager: Yes, they are already. They will then be placed on a closed account, where they cannot be touch, until we know the result of the appeal and the decision of the European courts.

Te Interesa: And what about Apple. Does Apple have anything to say in all this? Do they have any option to sue?

Margrethe Vestager: Well, the appeal is with the Irish Government, as I have understood, so it is one and the same court process.

Te Interesa: Whataboutcountries like Spain that own a chunk of that money? Can they claim it? Can you help then in doing so?

Margrethe Vestager: It depends on the Apple organization. The very basic principle of taxation in Europe is that profits are being taxed where profits are being made. And what we have seen is that maybe a situation where national tax authorities should reconsider if Apple organization have developed from being merely a distribution system to a system where value is also being created in member States.

Te Interesa: A report from European Green Party in December exposed an alleged tax scheme by Inditex. Do this type of reports, made by a third party, get consider by your team? Are you actually considering the report?

Margrethe Vestager: Well, to give you an example, we have now an open case with McDonalds and its tax rulings in Luxembourg. That investigation actually started with information provided by a number of unions. It didn’t come out to be exactly their worries that became our concern, but it was on their admission of facts that we started to look into the case. Right now we are in the process of going through a report made by the Greens in the European Parliament concerning Ikea. We have taken no decision yet if we should open a real investigation or not.

Te Interesa: Are you looking into it as any other report?

Margrethe Vestager: Yes, we do that, because it obviously if people have a concern outside of our organization, we go through it, with an open mind. If it is something to worry about we open an investigation.

Te Interesa: So we could say that you are looking into the Green Party’s Inditex report, but with no decision yet?

Margrethe Vestager: Exactly.

Te Interesa: Google, Apple, Microsoft, Amazon, Starbucks, McDonalds… It seems that there is a lot of American companies being investigated by your team. And there is a concern that we start fighting the American companies in Europe. Tim Cook [Apple CEO] said all this is “political bullshit”. How do you respond to that accusation that you are taking on American companies specifically?

Margrethe Vestager: Firstof all, you find also European multinationals in our casework. For instance in the European case, where Belgium set up a full scheme, specially design for multinationals to pay lower taxes than standalone companies. In there you find a lot of European multinationals. Second, this is not against businesses, this is against a behavior. A behavior that you pay less taxes than your competitors and other companies in the country. Of course I understand people don’t share our conclusions, which is why the appeals come very often, and the courts will hear nothing about politics. They want the facts of the case we have found, the evidence we found… There is no room for politics in these cases.

Te Interesa: But do they [American companies] do these tax schemes more frequently, from your experience?

Margrethe Vestager: It somehow depends. We found also some European companiesthat do tax rulings, because, you know, almost every member State will do tax rulings. But some of the tax rulings that we see are jobs well done. The tax ruling reflects the situation in the marketplace, when they do into company sales and buying’s. I don’t really know if there is a pattern that because you are American it is more often that you get into this situation, but what we can see is the number of cases that we have, the most obvious cases, it has been with US companies.

Te Interesa: Coming back to Spain. I guess the hottest case was the one already set up by the Luxembourg court, about the help Spain gave big corporations to big companies to by companies abroad. We have to get back a lot of money. Is there any other big case regarding Spain you are concern? It seems Spain is a little bit out of the radar.

Margrethe Vestager: No, we don’t have any big tax cases in Spain, and we have been trying to stablish a radar, as you say it, asking every member State to report on whether they are doing tax rulings or not, to give us a list of all companies that have a tax ruling. That list is to get a sample to get a better knowledge on how tax rulings are used in Europe. And I think it is good news that a lot of those tax rulings are very well done, there is no concern that State Aid is being involved. That is comforting, at least that for some of the companies, to know they have a tax ruling, but is one that is well done.

Te Interesa: Did Madrid respond to that inquiry already?

Margrethe Vestager: Oh, yes, it was done last yearandwe have gotten all the answers we asked for.

Te Interesa: And you are happy with the answer given.

Margrethe Vestager: As far as it stands now, yes.

Te Interesa: How is Brexit going to impact EU competition?

Margrethe Vestager: It is very difficult to say anything about the consequences, since it hasn’t happened yet. The culture of fairness, fair competition, and leveled playing field is very well consolidated in Europe. I don’t feel being threatened by a country leaving the Union, even though the British have always been known for having sort of a competitive mindset…

Te Interesa: They also have these Libor case… some people say British don’t actually respect the rules that much, maybe with them out we will have a fairer market.

Margrethe Vestager: It isvery hard to judge… It depends very much on the behavior of the business, if they respect the rule of law or they try to find corners.

Te Interesa: What’s the next big thing for your department, for competition in Europe, the next big aim?

Margrethe Vestager: It is hard to put it like that, because the most important thing that we can do is basically to make sure that consumers can see that they are not being cheated by companies. And I think that it is an ongoing job. I am afraid we won’t be able to say: that’s it, the European market is fair. It is an ongoing business to enforce laws to make sure that consumers and businesses they are in a fair situation.

Te Interesa: It is indeed, and some people say that your predecessor opened a lot of cases but closed not that many… Are you trying to close cases faster enough?

Margrethe Vestager: I agree with you. It is very important to close cases, because it is by closing them you make people see how they shall behave. So yes, for me, you have to open cases in order to close them, but it is important to be able to close them as well. Also, because the longer it takes the bigger the risk someone is suffering the wrong behavior of some companies. Tax payers not having their contribution from their companies in the State budget, competitors not having a fair chance if there is a cartel case to present their products to customers. Which is why speed is also important. Which is why we try to work as fast as possible.

Te Interesa: When you talked about this 0,005% of real taxes paid by Apple in 2014, it was sad to see big corporations don’t paying anything. Do you think it can create a moral hazard, people saying: well, if they don’t pay, why shall I pay?

Margrethe Vestager: Yes, to some degree there is a risk of the sort. But there is a chance that people will think as well: well, know they have a strong focus on paying taxes, because it is also in the legislature procedure, a focus on that. So maybe we are better off if we actually pay our fair share of taxes. Because I think in parallel there is a strong trend for corporate social responsibility, for making sure you have compliance systems within your company, to make sure you comply with regulation. Also, you are much more vulnerable to what your customers think about you. Maybe ten years ago, when social media was not so strong, and when there wasn’t not that strong media attention to these issues. And also because of the economic backbone of Europe, which is small and medium size companies as businesses: they create jobs, they pay their taxes.

Te Interesa: What can be donein the European Union to improve the situation? If you could ask for a single change that will change a lot of things regarding this tax avoidance, what would you ask for?

Margrethe Vestager: I would ask for public country by country reporting. I think we have agreed that tax authorities will automatically share tax rulings, we have agreed that tax authorities will automatically share it on a company basis. It is very important for tax authorities to do their job, for the Commission to do their job, for you in the media to be able to follow, and for citizens to be able to know if a company is having employees and activities in your country, making a profit in your country, that they also paid taxes in your country.

Te Interesa: Any request to the Spanish government in particular? Anything to improve?

Margrethe Vestager: We have this proposal on the table. My colleague Pierre Moscovici now is discussing in the Council among ministers of finance, and I very much hope we can have this, because it will give us a new situation, also for Europe, to be leading also an international coalition to make sure that there is no one globally who offers ways to avoid paying taxes.



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