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EU may open more tax state aid cases, says commissioner

The European Commission will continue enquiries into tax ruling practices in all EU member states and may open new cases if it sees "indications" that rules are not being complied with, European commissioner for competition Margrethe Vestager has said. 22 Oct 2015

Vestager issued a statement after the Commission announced its decisions on tax advantages granted to Fiat in Luxembourg and Starbucks in the Netherlands. The Commission decided that tax rulings issued by the Netherlands to Starbucks and Luxembourg to Fiat Finance and Trade constituted selective tax advantages that are unlawful under EU state aid rules.

"The decisions send a clear message: National tax authorities cannot give any company, however large or powerful, an unfair competitive advantage compared to others. For most companies, especially the small and medium-sized, I hope this is a reassuring message – for those who have paid their fair share in tax," Vestager said.

Luxembourg and the Netherlands must now recover the unpaid tax, to remove the unfair competitive advantage that they have enjoyed, she said.

"We will not stop there. We continue the enquiries into tax rulings in all EU member states. [ … ] More cases may come, if we have indications that state aid rules are not being complied with," Vestager said.

"I believe that we need a more fundamental shift in corporate philosophies – if it isn’t part of it already, paying one's fair share of tax should be firmly integrated in a company's corporate social responsibility," she said.

Decisions are awaited in two further cases being investigated by the Commission in relation to rulings given to Apple in Ireland and Amazon in Luxembourg. These decisions are expected soon but Vestager gave no indication of when these would be published.

"In terms of timing, I stand by what I have said before: fast is always better than slow, but best of all is to be just. When a case is ready, we will take a decision," she said

"Of course, each case is assessed on its merits, so today's decisions do not prejudge the outcome of these ongoing probes," Vestager said.

State aid expert Caroline Ramsay of Pinsent Masons, the law firm behind Out-Law.com, said that although the current cases have focused on US companies, "the next wave of state aid cases may well throw the spotlight on European companies."

Tax expert Heather Self, also of Pinsent Masons, said that the decisions would have repercussions for a large number of companies, as many multinationals have favourable tax rulings, particularly in Luxembourg.

"Any company that has a favourable tax agreement with Luxembourg in the past should seek advice and review it. They may wish to consider a compromise now rather than wait to be on the receiving end of a full EU investigation," Self said.