The great European tax disaster
After many years of seeing US companies harassed by the European Union financial and tax authorities, the US Treasury Department has finally lost its patience and wrote a harsh report accusing Brussels of being biased against US companies, and stating that the EU’s Competition Commissioner Margrethe Vestager was in danger of overstepping its bounds “beyond enforcement of competition and state aid law under the TFEU [Treaty on the Functioning of the EU] into that of a supra-national tax authority.”
Before anybody accuses me of defending tax dodgers, I should repeat what I have said on many occasions: companies are required to obey the law; but because Europe is a disaster area in legislative terms, it is possible to get round the law and pay ridiculously low levels of tax. Here are some of my articles about it:
This is clearly not a good thing. Companies should pay the taxes they are due for their activities in each country where they make a profit. But Europe has proved unable to establish a common tax policy and implement measures to prevent this happening.
In other word’s Europe’s problem isn’t US companies, but the fact that The Netherlands, Ireland, the Isle of Man, Jersey, Liechtenstein or Luxembourg, among other countries used as tax havens, each do their utmost to attract investment by offering low taxes. Picking out a company like Apple and forcing it to pay arbitrarily decided taxes will not solve anything, and only generate protest from the other side of the Atlantic.
In short: if a company obeys the law it should be left alone, if it breaks it, then apply a fine or a sanction. Companies are required to make money for their shareholders, obey the law to the letter. Everything else is hypocrisy and covering up incompetence.
The US authorities are right to protest: either Europe gets its tax act together, creating harmonized legislation, or it should accept that US companies are in fact obeying the law, laws that many European companies use to their advantage as well. It would appear that US companies are being singled out unfairly.
This ongoing tax shambles only illustrates once again that the current “half-way Europe” is a disaster that nobody knows how to solve.
(En español, aquí)
