Planning Prohibited

By Global Tax Weekly

The EU Commission’s rather curious attack on countries hosting multinationals smacks of politicking, although the machinations of the Berlaymont (have they finished extracting the asbestos yet?) make the word Byzantine seem like an exercise in transparency. At all events, Ireland has hit back quickly and effectively, sensing yet another concealed attack on its low tax rate, which probably does make up a certain proportion of the Commission’s logic. The other two countries in the Commission’s sights, Luxembourg and the Netherlands, are also “the usual suspects,” with low-tax credentials. It may be significant that the Commission has chosen to act in this way at the end of its current term, possibly wishing to send a pro-OECD message to show that it has taken the BEPS initiative seriously, and it is not difficult to imagine that the OECD, which has seen its BEPS project considerably undermined in the last couple of weeks, particularly from the USA, has played a part in asking the EU to take action before it is paralyzed for several months by the nomination process for new Commissioners and the EU’s top jobs, which looks to be more than usually protracted on this occasion. It’s notable also that of the three multinationals being picked on, two are American (it’s true that Apple and Starbucks are the two most obvious BEPS targets), while Fiat, the third, has strong US connections, and can’t any longer be regarded as a truly European company. You see how impossible it is to understand Commissioner Almunia’s actual motivation? The one thing you can be sure of though is that the Commission is against low taxation, so inasmuch as I am giving Ireland a bouquet, the EU will descend yet another notch in my fiscal bestiary. “Some multinationals are using tax planning strategies,” says Almunia. Shock! Horror! What did he expect? And that, in a nutshell, sums up the EU’s problem: it only pretends to support business.

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