US treasury secretary Jack Lew visits Brussels today for talks with Margrethe Vestager, competition commissioner.
The meeting comes amid transatlantic tension over the European Commission’s long state-aid inquiry into Apple’s tax arrangements in Ireland. Ms Vestager’s investigations continue. She had informal discussions on Tuesday with Irish finance minister Michael Noonan on the margins of a regular EU meeting in Brussels.
Observers in Brussels had predicted a ruling some time this month, not least because the affair has now rumbled on for three years. But there is now the prospect of a deferral.
All signs point to a decision in September at the earliest, when politics resumes after the summer holiday – even Brexit has not stopped that Brussels tradition.
Although the precise reasons for the delay are unclear, Mr Lew’s involvement demonstrates that rather more is at stake than a simple confrontation over one company’s tax affairs.
Taxing times
The commission is examining whether two Irish tax rulings illegally conferred selective advantage to Apple, a claim rejected in forthright terms by the authorities in Dublin and by the company itself.
JP Morgan has suggested the business could be on the hook for $19bn in back taxes but Dublin has declared it would challenge any adverse ruling in the European courts.
Enter Mr Lew, who has urged commission chief Jean-Claude Juncker to reconsider the Apple inquiry and investigations into other US groups such as Starbucks, Amazon and McDonald’s.
The treasury secretary’s claim that Brussels was disproportionately targeting US companies met a cold response from Ms Vestager, who says she has a non-discriminatory application of tax law. They will have plenty to discuss today.
Yet the basic questions remain. Will the commission confirm preliminary rulings that Apple’s arrangements broke the law? If so, how much tax will it have to pay? Crucially for Mr Lew, would such a ruling have implications for the taxation in the EU of other US groups?
Any adverse decision would present difficulty for weakened Irish premier Enda Kenny, who is under pressure to declare a date for his departure. It would be very difficult for his government to insist it did not want to receive billions in back taxes pending an appeal.
Then there is the US election. Given Washington’s interest in the case, the commission would have to move pretty quickly after the summer to avoid an incursion into the latter phase of the US presidential election campaign.
The commission is perceived to have delayed the ruling ahead of the Irish election in February. But any delay for the US election would postpone the denouement until 2017…
