Comment by rbehrends | Hacker News Reader

Comment by rbehrends | Hacker News Reader

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This is not how this works at all. The issue at hand is "illegal state aid". Briefly, in the EU, member states may not unfairly favor local businesses by subsidizing them [1]. This includes subsidies via tax breaks that favor some companies over others.

Now, you can have reasonable disagreement about whether those tax breaks are indeed illegal state aid or not (in the case of Apple in Ireland, reasonable arguments have been advanced for both sides). But this is not about plundering US companies: it's about large companies not getting special favors from the state. The tax breaks would not be owed to the EU, but to the member state that gave them the illegal tax break.

The Volkswagen situation is different, as this is not about antitrust law, and the EU has much less power outside antitrust cases [2]. That does not mean that the European Commission hasn't tried to exert political pressure on Volkswagen [3] and the member states [4], but it is bound by the powers granted by the EU treaties.

[1] There are exemptions in the treaties, such as for charities or in response to a crisis or natural disaster. It also only affects state aid that distorts or risks distortion of competition.

[2] European carmakers have been hammered hard in the past for antitrust violations, too, such as: http://europa.eu/rapid/press-release_IP-16-2582_en.htm

[3] http://www.politico.eu/article/how-not-to-lobby-juncker-the-...

[4] https://www.reuters.com/article/us-volkswagen-emissions-eu/e...

>But this is not about plundering US companies

Starbucks, Apple, Amazon, McDonald's...do you notice a pattern? The suggestion that the Commission is not targeting big US companies is comical (especially in the light of similar actions with other justifications, like the 2.7b fine on Google for their shopping search), as is their interpretation of both tax law and illegal state aid.

The commission doesn't even challenge the transfer pricing laws, they just interpret them differently and based on their interpretation they decide that the tax authorities have granted a selective advantage. The procedure is completely arbitrary as its entire basis is the disagreement between the commission and the tax authorities. Given the complexity of corporate structures and tax law, and the inherent ambiguities of things like transfer pricing, such disagreements can be generated wherever the commission wants to find them. If they wanted to target Chinese companies it would be trivial to conjure up similar issues.

It's particularly ironic that a law against selective treatment of corporations is being used to selectively punish some of them.

> Starbucks, Apple, Amazon, McDonald's...do you notice a pattern? The suggestion that the Commission is not targeting big US companies is comical, as is their interpretation of both tax law and illegal state aid.

If you selectively only pick the cases against US companies because that's what you hear about in the US media, but ignore the cases against EU companies, then I can see how you can get that impression. But it's not really the full picture.

More importantly, and regardless of what you think of the merits, the EU is not the beneficiary, since those tax breaks are to be paid to the respective member state. The benefit for the EU – one way or another – is a more competitive environment, not the money it does not even get. So, "plundered" is an inaccurate term either way.

And you hear a lot about big US companies, because (1) smaller US companies are less likely to operate in the EU and (2) US antitrust law has been watered down since the late 1970s (starting with Bork's "Antitrust Paradox"), leading to a concentration of corporate power that's simply not present in Europe [1]. As a result, antitrust cases against EU companies tend to be more about collusion, while antitrust cases against US companies in the EU tend to be more about abuse of a dominant market position.

[1] See, for example, OECD self-employment rates and how America is near the bottom: https://data.oecd.org/emp/self-employment-rate.htm

Do you have any idea of a good data source showing the total amount of state aid fines imposed by the EC? One source I've found [0] suggests that total state aid fines by the Commission from 2005-2015 were somewhere on the order of 2.5 billion euro, which is dwarfed by the 13-15 billion euro fine Apple is facing. But I may be misreading the report I found/missing some better data.

[0] rlegutko.pl/download/en-nieuczciwa-konkurencja-polityka-insight-270320171.pdf, see Chart 8 on page 18.

There is no such thing as a fine for state aid. Member states are required to recover illegal state aid from the beneficiaries, with interest.

Recovery of state aid is uncommon, since most governments simply seek approval for exemptions beforehand (such as the UK for Hinkley Point) and so there are relatively few large incidents of illegal state aid. Especially as it's rare for a government to throw that much money at a single company without great need, illegal or not.

Thanks, that's helpful. Although, from your answer I take it that U.S. companies are, in fact, the major subjects of these high-profile EC enforcement actions and there are not actions of similar magnitude against EU companies that I've missed. (That could be entirely just and appropriate, of course.)

It's mostly Apple that's an outlier here, with €13 billion owed (contingent upon the ECJ not overturning that), and that's over a period of 12 years.

Amazon has to pay back €250 million, which is a pittance compared to their annual EU revenue of over €20 billion, and that was originally triggered by the LuxLeaks revelations, which are also hitting (say) IKEA, which is reportedly being investigated for over €1 billions in illegal tax breaks [1].

One interesting aspect of the Apple case is that the American federal government may not actually mind Apple getting slapped around a bit; Apple not repatriating its foreign profits has been an issue for quite some time, and that only works out for Apple because Apple can park those in tax havens abroad.

[1] http://www.reuters.com/article/us-eu-ikea-taxavoidance/eu-re...

No, all states have been found guilty of those ilegal aids, but they were not so high as Apple in Ireland

Apple, Amazon, etc., are not USA companies - they're based in Ireland, Luxembourg, etc..

These companies have the same names as USA corporations but they're not the same corps legally,are they, otherwise they'd be based in Delaware or wherever they falsely claim to be based in USA?

You're probably right. The EU had no idea they were related or under the same leadership as the US companies. /s

Except effectively the EU decided to change how they interpret tax law specifically for Apple and Amazon [1]

[1] https://www.treasury.gov/resource-center/tax-policy/treaties...

Well, do you think that IKEA and FIAT are American companies, too? Both are having their tax deals investigated as well.

You could make a good case that the European Commission choose to do this as part of an approach to reform the taxation of multinational entities within the EU. But they didn't single out Apple and Amazon specifically.

Quote from the article, please?

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