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Commission concerned about "backdoor" tax advantages in Ireland, says Vestager

The European Commission does not have an issue with Ireland's 12.5% corporate tax but wants to ensure that tax rulings are not used to give selective advantage to companies "through the backdoor", competition commissioner Margrethe Vestager has said.12 Oct 2016

Speaking to Irish Economic and Monetary Affairs Committee members in a hearing on competition policy, Vestager discussed the Commission's recent decision that Apple should pay €13 billion plus interest in unpaid taxes to Ireland, the European Parliament said in a statement.

The Commission said in August that Ireland must recover the tax, in the largest proposed recovery order seen by the EU.

Vestager acknowledged that it is inconvenient to have to ask someone to give something back, but "this is something you have to live with", she said.

The European Commission does not have direct authority over national direct tax systems. However, under EU rules it is unlawful for any EU country to give financial help to selected companies in a way which would distort fair competition. If an APA contravenes market principles so as to confer a selective advantage, it could be considered to be state aid.

The Commission said that the APAs allowed Apple to establish the taxable profits for two Irish incorporated companies of the Apple group, Apple Sales International and Apple Operations Europe in a way "that did not correspond to economic reality".