Vestager was also in the Global Tax 50
The EU competition commissioner has had a busy year
scrutinising the tax affairs of multinational enterprises and
member states. She tops this year's Global Tax 50 list for her
most notable decision concerning Apple's tax rulings with
The case, where Vestager said that Ireland had granted
illegal tax benefits to Apple and ordered the company to pay
€13 billion ($14.5 billion) in back taxes, sparked a major
discussion around the topic of fair taxation. It also led to
outbursts by US politicians who accused Vestager of preying on
US multinationals in a number of state aid cases spanning the
past two years.
Both Apple and Ireland are appealing the order to pay back
taxes. Apple CEO Tim Cook called the decision "total political
crap" and said "they just picked a number from I don't know
"It is 100% legitimate to tax profit where it is generated.
From our perspective, it is irritating when American companies
pay less in taxes than European ones," Vestager told Germany's
Handelsblatt newspaper after announcing the Apple
State aid issues have been a big talking point throughout
2016, and Apple was not the only company that had its
operations investigated by the European Commission. Over the
past year, the former Danish economy minister also looked into
Luxembourg's tax treatment of Amazon, GDF Suez (now Engie) and
McDonald's, among other cases. Some of these companies are
still under investigation and a decision is pending.
Vestager has been targeting illegal state aid involving tax
rulings since the beginning on the year. On January 11 2016,
she started by declaring that the Belgian 'excess profits' tax
scheme was illegal under EU state aid rules. The practice
reduced the corporate tax base of several multinational groups
by between 50% and 90% to discount for so-called "excess
profits" that allegedly resulted from being part of a
multinational group. The arrangement had been in place since
2005 and at least 35 multinational groups benefited, mainly
from the EU, on the basis of a binding tax ruling. Vestager
said that the scheme allowed companies to pay substantially
less tax simply because they were a multinational business.
Belgium was ordered to reclaim around €700 million ($781
million) in unpaid taxes from the multinationals. However, the
matter did not end there. Chemical manufacturer BASF and other
multinational companies have taken the case to court, accusing
the Commission of exerting an "excess of power" and unfairly
using state aid rules to prohibit the excess profits system.
The case will continue into 2017.
Throughout 2016, several high-profile politicians and
business leaders have voiced their concerns that the Commission
seems to be applying the state aid concept every time it sees
that profit is going un-taxed and that this is not actually
what the state aid rules are for. The argument is that state
aid is meant to be used in situations where one jurisdiction
grants tax or other benefits that depart from the
jurisdiction's normal reference system. Vestager's predecessor
Neelie Kroes also attacked the Commission's decision in the
Apple case for this reason, and said that state aid rules
should not apply to tax matters. "EU member states have a
sovereign right to determine their own tax laws. State aid
cannot be used to rewrite those rules, however, the current
state aid investigations into tax rulings appear to do exactly
that," Kroes wrote in the Guardian newspaper.
Nevertheless, Vestager has the ability to shape the
reputation and image of the Competition Commission, and she has
left her mark on the institution like none of her predecessors.
Vestager has made it her mission to ensure that the tiniest of
companies can stand a chance against their bigger counterparts,
and whether the rest of the tax world agrees with Vestager or
not, she has undeniably put fair taxation higher up on the
agenda and left some multinationals trembling with the fear
that they may be next on Vestager's list of investigations.