Vulcan Insight

Vestager vs Multinational Corporations

27 September 2019

The European Commission has lost its case against Starbucks. In 2015 Competition Commissioner Margrethe Vestager ordered the Netherlands to recoup millions in unpaid taxes from the multinational. This decision was one of the first from the European Commission against a company of such scale after the LuxLeaks in 2014. The court has maintained a second decision issued in 2015 that led to Luxembourg recovering €23.1 million from Fiat Chrysler. Both of these judgements can be appealed at the European Court of Justice.

Challenges have been piling up at the EU courts since state-aid investigators started work in 2013 to unearth what they deemed to be the most problematic examples of otherwise legal individual tax agreements, known as tax rulings, doled out to companies by member countries. Finding itself at the receiving end of most of the EU’s decisions since then, Luxembourg was ordered to recoup 250 million euros from Amazon in2017 and 120 million euros in back taxes from energy utility Engie SA, France’s former natural-gas monopoly, previously known as GDF Suez, last year.

As the incoming Vice-President of the European Commission with a portfolio covering the Digital Strategy of the European Union, Vestager must be careful not to multiply the number of defeats for the European Commission. To help her in this new role, she has appointed Kim Jørgensen, former Danish Ambassador to the EU as her head of Cabinet.

Another high-profile case on the table is the €13 billion back-tax bill Apple has to pay to Ireland. This case has been the highlight of antitrust chief Margrethe Vestager’s five-year crackdown on U.S. tech giants. Apple said it is the world’s biggest taxpayer, urging EU judges to overturn the 2016 order by the European Commission Apple, which made a reputation on smashing industry conventions, “follows the rules” and the EU was wrong to claim that profits should have been taxed in Ireland instead of the U.S. where Apple products are developed.