Posts Tagged ‘Luxembourg’

EU to unveil digital tax targeting Facebook, Google

March 21, 2018

AFP

© AFP/File / by Alex PIGMAN | The unprecedented tech tax offensive by the EU comes on the heels of a bad-tempered trade row between Washington and Brussels
BRUSSELS (AFP) – The EU will unveil proposals for a digital tax on US tech giants on Wednesday, bringing yet more turmoil to Facebook after revelations over misused data of 50 million users shocked the world.The special tax is the latest measure by the 28-nation European Union to rein in Silicon Valley giants and could further embitter the bad-tempered trade row pitting the EU against US President Donald Trump.

EU Economics Affairs Commissioner Pierre Moscovici will present proposals aimed at recovering billions of euros from mainly US multinationals that shift earnings around Europe to pay lower tax rates.

The transatlantic blow has been championed by French President Emmanuel Macron and will be discussed over dinner at an EU leaders summit on Thursday.

“This will be given top priority as tax file. There is a lot of political momentum on this issue,” an EU official said ahead of the announcement.

The unprecedented tech tax follows major anti-trust decisions by the EU that have cost Apple and Google billions and also caught out Amazon.

The commission’s tax, expected to be about 3 percent of sales, would affect revenue from digital advertising, paid subscriptions and the selling of personal data.

EU agencies are also set to tighten rules on data privacy, targeting tech firms. That file has come to the forefront following revelations that a firm working for Trump’s US presidential campaign harvested data on 50 million users of Facebook.

The EU tax plan will target mainly US companies with worldwide annual turnover above 750 million euros ($924 million), such as Facebook, Google, Twitter, Airbnb and Uber.

Spared are smaller European start-ups that struggle to compete with them. Companies like Netflix, which depend on subscriptions, will also avoid the chop.

Brussels is seeking to choke tax-avoidance strategies used by the tech giants that, although legal, deprive EU governments of billions of euros in revenue.

– ‘Hostile act’ –

Under EU law, firms like Google and Facebook can choose to book their income in any member state, prompting them to pick low-tax nations like Ireland, the Netherlands or Luxembourg.

As an example, Amazon operates across the bloc, but is headquartered in tiny Luxembourg, which has offered sweetheart tax deals that have allowed the firm low effective taxes.

The European Commission estimates that digital businesses pay an average effective tax rate of just 9.5 percent, compared with the 23.3 percent that traditional businesses pay.

These numbers are, however, disputed by the tech giants, which have debunked the tax as a “populist and flawed proposal”.

“At the very least, the tax is prone to be interpreted by the US as a hostile act in the already begun trade war,” wrote tax specialist Johannes Becker in a blog post tweeted by the Computer & Communications Industry Association.

Under the EU plan, revenue from the digital tax would be fairly distributed to where the companies actually operate, according to the level of activity in those countries and not the level of booked profit.

US Treasury Secretary Steven Mnuchin last week firmly warned Europe against jeopardising the major contribution tech firms make to US jobs and economic growth.

“The US firmly opposes proposals by any country to single out digital companies,” Mnuchin said.

The EU’s Moscovici sought to reassure that “these proposals are neither a response to a French request nor a response against the United States”.

The EU has been on tenterhooks amid fears of a global trade war since Trump this month suddenly announced steep duties of 25 percent on steel and 10 percent on aluminium.

The EU’s trade commissioner Cecilia Malmstroem is in Washington this week trying to get the bloc exempted. EU President Donald Tusk on Tuesday said the bloc’s response would be “responsible and reasonable”.

by Alex PIGMAN
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EU tells Poland time running out to restore rule of law

February 27, 2018

Reuters

BRUSSELS (Reuters) – Western EU states told Poland on Tuesday that time was running out for it to address concerns in a dispute over democratic freedoms, but held off from further action as a deadline for a response from Warsaw approaches.

Thousands of protesters took to the streets across Poland urging Duda to exercise his veto [Reuters]Thousands of protesters took to the streets in Poland last year

In a long-running and bruising clash, the executive European Commission has accused Poland’s nationalist Law and Justice (PiS) party of undermining the rule of law with reforms to the judiciary and state media since taking power in late 2015.

After repeatedly declining to backtrack on its judicial reforms, Warsaw has now sat down to negotiations as paralell talks on the bloc’s next joint budget starting in 2021 get under way.

EU ministers held their third debate on the matter in Brussels on Tuesday, with Germany and France warning Poland against using discussions with the Commission as a smokescreen.

“The clock is ticking. The European Commission and a series of EU members are very concerned about the rule of law situation, particularly the independence of the judiciary,” said Michael Roth, Germany’s minister for EU affairs.

“In recent days I have noticed positive signals of willingness (from Poland) to engage in dialogue. That’s an important point, but at the end it’s not about promises but concrete acts,” Roth told reporters.

Image may contain: 1 person, suit

Jaroslaw Kaczynski

Brussels has recommended that the bloc launch an unprecedented Article 7 punitive procedure against Warsaw – which could lead to suspending Poland’s voting rights in the EU – unless it concedes ground by March 20.

“JUDICIARY SHOULD BE INDEPENDENT”

Poland’s Deputy Foreign Minister Konrad Szymanski said Warsaw would soon publish an explanation of some 13 laws PiS has passed on the court system to demonstrate to other EU states it acted to rid Poland of the vestiges of communist rule.

“We expect member states to make their own assessment of this situation and really consider whether there is any serious risk of a serious breach of the rule of law. In our view, there is no such serious risk,” he said.

The Commission and the bloc’s founding members – which include the Netherlands, Belgium, Luxembourg and Italy as well as France and Germany – say the PiS measures risk undermining the EU’s internal market and judicial cooperation.

“The need for reform of the judiciary can never be an excuse to enhance political control over the judiciary. The judiciary should be independent. The separation of powers is a fundamental principle,” Commission deputy head Frans Timmermans said.

Timmermans said he would assess the new Polish document when it comes to see whether it was promising enough to continue talks, or else ask EU states to take action against Warsaw.

Stripping Poland of its voting rights is highly unlikely to occur because it would require unanimity, and Hungary’s Prime Minister Viktor Orban has promised to block any such action against his Polish ally.

But the dispute could badly hurt Poland if other member states move to cut vital funding in the looming budget talks. Poland is currently the biggest beneficiary of the EU budget.

Senior Polish officials have hinted Warsaw could tweak some of the new judiciary laws, though details have yet to be agreed.

The ministerial session on Tuesday ran for longer than planned, suggesting a lively discussion. Some of Poland’s fellow ex-communist neighbors said the Commission should not push Warsaw too hard.

“Today is no time for decisions,” said Deputy Prime Minister Ekaterina Zakharieva of Bulgaria, which holds the EU’s rotating presidency, adding that Poland’s willingness to enter again into talks with Brussels represented “huge progress”.

Macron: I Won’t Recognize Palestinian State in response to Trump’s recognition of Jerusalem

January 25, 2018

Breitbart

migrants

French President Macron

The Times of Israel reports: DAVOS, Switzerland — French President Emmanuel Macron said Wednesday that he would not recognize Palestine as an independent state as a reaction to US President Donald Trump’s declaration of Jerusalem as Israel’s capital.

“I will not take any decision in reaction to any decision,” Macron told reporters in response to a Times of Israel question on the potential recognition of a Palestinian state. The comments came during a photo op with Prime Minister Benjamin Netanyahu, ahead of their closed-door meeting at the World Economic Forum in Davos, Switzerland. The meeting lasted nearly an hour.

Several European nations, including Belgium, Luxembourg, Ireland, and Slovenia, are reportedly mulling recognizing an independent Palestine in response to Trump’s recognition of Jerusalem. The Slovenian foreign minister has already confirmed his country’s intention.

Read more here.

Tax Change Aims to Lure Intellectual Property Back to the U.S.

January 24, 2018

Tech firms and drug makers often hold foreign rights for their IP in a company based in a low-tax country

U.S. companies rich in intellectual property are looking at a new tax-friendly regime: the U.S.

A provision in the newly revised U.S. tax code slashes the income tax companies pay on royalties from the overseas use of intellectual property or so-called intangible assets, such as licenses and patents.

The new tax break, for what is dubbed foreign-derived intangible income, effectively reduces tax on foreign income from goods and services produced in the U.S. using patents and other intellectual property to 13.125% until the end of 2025, after which the rate rises to 16.4%. Previously, royalties paid to a unit in the U.S. would have been taxed similarly to other U.S. income, for which the top corporate tax rate was 35%. The new headline corporate rate is 21%.

The deduction is meant to induce companies with large U.S. operations and significant foreign income from patent royalties to base more of those assets in the U.S. Such companies, especially in technology and pharmaceutical sectors, often hold foreign rights for their IP in a company based in a low-tax country.

The new U.S. deduction comes as Ireland is set to phase out, by the end of 2020, the most storied version of this maneuver, the Double Irish—which has been used by large firms, including Facebook Inc., Google parent Alphabet Inc. and drugmaker Allergan PLC.

Previous Coverage

How Etsy Crafted a Tax Strategy in Ireland (Aug. 16, 2015)
Facebook May Owe Billions More in Taxes (July 28, 2016)
Ireland to Appeal EU’s Apple Tax Ruling (Sept. 2, 2016)
What Does Closing the Double Irish Tax Loophole Mean for Pharma (Oct 15, 2014)

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The Double Irish is a structure that allows companies to reduce taxable income by setting up two entities—an Irish-registered parent based in a tax haven such as Bermuda that houses a company’s foreign IP rights, and an Irish subsidiary, which licenses the IP and pays royalties in turn. Since Ireland doesn’t tax the royalties paid, the company’s tax bill is effectively reduced.

The structure was particularly attractive to U.S. companies, which could also stockpile foreign profits abroad without paying U.S. taxes—something they may no longer be able to do under the new code because it includes a set of minimum taxes on foreign income. Tax advisers estimate that hundreds of companies have used the Double Irish to move tens of billions of dollars a year to low- or no-tax jurisdictions.

The Google unit in Ireland that sells ads across Europe, for instance, has paid tens of billions of euros in royalty fees for the use of Google’s intellectual property to a unit in the Netherlands that then pays nearly all those fees to an Irish company that is managed in Bermuda, where there is no corporate income tax, according to corporate filings in the Netherlands and Ireland. In 2016, Google’s Dutch entity reported paying nearly €16 billion ($19.6 billion) to that unit, filings show.

Spokesmen for Google and Facebook declined to comment. Both companies previously have said they pay all taxes that they owe. An Allergan spokesman said the firm is committed to investing both in the U.S. and its operations in Ireland.

In recent years, pressure from countries in Europe and the Organization for Economic Cooperation and Development, a group of rich nations, has led to an update of tax rules that generally requires companies to keep their IP in places where they have substantial operations. That has led countries, including Ireland, to close loopholes that allowed structures like the Double Irish to exist and has set off a race among companies to find a new home for their IP.

For companies that produce much of their intellectual property on American soil, the U.S. is now an option, advisers say.

“Now the U.S. has to enter your consideration, absolutely,” said Anna Scally, head of the tech and media practice in Ireland for accounting firm KPMG. She added that firms are currently crunching numbers to find the best alternative locales that comply with tax rules. “It’s not a slam dunk,” Ms. Scally said of the U.S. “But it is an option.”

Many countries have updated their tax codes to comply with the new tax rules—and in hopes of drawing multinational companies to their shores.

Among the options for companies are locales such as Malta, which despite a high headline corporate tax rate gives significant tax breaks, including for royalties, and has a tax treaty with Ireland that would allow an Irish-registered company to be managed there after 2020, similar to the Double Irish, according to tax advisers. In a report last fall, the charity Christian Aid Ireland, which says it fights against tax injustice, dubbed the structure the “Single Malt.”

Other options include the U.K., the Netherlands and Luxembourg, which have enacted special low-tax regimes for some IP income, in the range of 10% to 15%. Advisers say Ireland remains a leading option even without the Double Irish because its corporate tax rate is 12.5% and many tech companies already have a large presence in that country.

The U.S.’s elevation as a tax-efficient locale may face challenges from other countries that claim the new foreign-derived tax deduction is an unfair trade subsidy, tax advisers say. Also, the effective FDII rate is set to rise to 16.4% in 2025—without taking into account additional U.S. state taxes—and could make the break less attractive.

The possibility of a political reversal has also made businesses more cautious, experts say.

“I don’t think any firm would be well served by betting the ranch on the stability of the new tax law,” said Edward Kleinbard, a former U.S. tax official who is now a tax professor at the University of Southern California law school.

U.S. companies are holding more than $2.6 trillion in profits across the globe and they haven’t paid U.S. taxes on it. Why is so much money offshore, and how could the tax code be changed to bring it back? WSJ’s tax reporter Richard Rubin dives in. Photo: Heather Seidel/The Wall Street Journal

Write to Sam Schechner at sam.schechner@wsj.com

 

https://www.wsj.com/articles/companies-explore-whether-u-s-can-replace-double-irish-1516789801

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America needs a solution to bring back stolen intellectual property
BY RILEY WALTERS, OPINION CONTRIBUTOR
The Hill
— 12/21/17 09:00No automatic alt text available.
America needs a solution to bring back stolen intellectual property
© Getty Images

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Intellectual property theft is a huge problem for America. The Commission on the Theft of American Intellectual Property estimates that it costs U.S. innovators and consumers hundreds of billions of dollars each year.
Innovation drives this economy. The nation’s future prosperity hinges on our ability to protect new ideas as they come along. But what can we do about intellectual property that’s already been stolen?

When addressing international theft, lawmakers often reference the Committee of Foreign Investment in the United States, an interagency group that reviews proposed foreign investments in domestic companies that might carry risks to our national security.
The committee, commonly referred to as CFIUS, is involved in protecting against the illicit transfer of intellectual property. It evaluates whether a proposed transaction is part of a foreign government’s industrial espionage efforts to obtain American commercial secrets.

President Trump’s recently released national security strategy states that the White House will work with Congress to strengthen CFIUS, but it doesn’t say how, or in what way. Moreover, it’s hard to see how even a seriously beefed up committee could bring back stolen intellectual property.

For starters, it has a specific mission. The committee doesn’t review all foreign investments. Only those that may adversely affect U.S. national security fall under its purview. Given the rising number of investments into the United States, the committee’s plate is already full.

Moreover, the committee has no authority to prevent theft when there is no foreign investment involved. Nor does it have any authority over — or power to bring back — what’s already been stolen. Frankly, that’s how it should be. But obviously, we need to do more to combat intellectual property theft.

Recently, the House Financial Services Subcommittee convened a hearing to explore just how the U.S. government should respond to the legal and illegal transfers of U.S. technology abroad.

The best way to deal with illegal transfers is also the most obvious: Uphold the rule of law by taking legal action against foreign companies that steal intellectual property from American companies. Several types of action are possible.

The federal government could punish thieves by limiting their access to U.S. financial markets, slapping them with fines, or both. Washington could further protect American intellectual authority by imposing penalties on customers of the thieves. These are companies and individuals that knowingly use stolen intellectual property.

The president already has the authority to sanction under the industrial espionage section of the International Emergency Economic Powers Act. The commission recommended using that authority back in February.

CFIUS doesn’t need to be reformed to deal with intellectual property that’s already been stolen. That is not and should not be its job. Yes, the committee needs more resources, but it needs them just to keep up with its existing responsibilities. Loading up this already overburdened committee with even more responsibilities is not the way to go.

In dealing with the transfer of technology abroad, the committee plays an important role in protecting intellectual property. But the committee is not the right mechanism for recovering the billions of dollars taken from Americans through intellectual property theft.

Riley Walters is a research associate for the economy and technology in the Asian Studies Center at The Heritage Foundation.

TAGS: DONALD TRUMP, INTELLECTUAL PROPERTY, UNITED STATES GOVERNMENT, BUSINESS

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Bitcoin: EU approves cryptocurrency clampdown to combat terrorism financing, money laundering

December 17, 2017

The European Union has agreed to implement stricter rules on exchange platforms that deal with virtual currencies, including bitcoin. The measure is part of an effort to prevent terrorist financing and money laundering.

A visual representation of the digital Cryptocurrency, Bitcoin (Getty Images/D. Kitwood)

The European Parliament and the European Council agreed to a new set of rules on Friday that target exchange platforms for bitcoin and other virtual currencies.

The new measures would require platforms that previously allowed users to remain anonymous to identify them.

Read moreA new legitimate era for Bitcoin

What do the new measures entail?

  • Requires platforms that transfer bitcoin and “wallet” providers that hold cryptocurrencies for clients to identify users
  • Limits use of pre-paid payment cards
  • Raises transparency requirements for company and trust owners
  • Allows national investigators more access to information, including national bank account registers
  • Grants access to data on the beneficiaries of trusts to “persons who can demonstrate a legitimate interest”

Read moreBitcoin energy boom stamps down colossal carbon footprint

Europe’s Justice Commissioner Vera Jourova hailed the new rules, saying: “Today’s agreement will bring more transparency to improve the prevention of money laundering and to cut off terrorist financing.”

Rights group Transparency International said the deal was a “breakthrough” but noted that certain loopholes remain, including a “lack of public access to information on the beneficiaries of trusts and similar arrangements.”

The EU lawmaker in charge of the issue, Dutch politician Judith Sargentini, noted that certain EU member states opposed the new measures as they were concerned they might have a negative impact on their economies. She said the opposing countries included Britain, Malta, Cyprus, Luxembourg and Ireland.

Read moreTrading in bitcoins may be coming soon to Goldman Sachs

Why the change is happening now: The changes were put forward by the European Commission, the EU’s executive arm, in the wake of the terror attacks in Paris and Brussels in 2015 and 2016, with officials saying bitcoin and other cryptocurrencies were being used to finance terrorists. It took more than a year of negotiations for the new measures to be approved.

Exchange rate Bitcoin to US-Dollar: December 11 2016 - December 10 2017

The bitcoin boom: The new EU measures have also come as bitcoin’s prices have surged over 1,700 percent since the start of the year — a development that has helped grant legitimacy to the virtual currency while also sparking fears that the bitcoin bubble could soon burst.

Preventing money laundering: In the wake of the Panama Papers and Paradise Papers leaks, the EU has vowed to do more to crack down on tax avoidance and money laundering. The leaks detailed how numerous politicians and celebrities funneled their money into shell companies in tax havens.

New revision: Friday’s deal revises the EU’s “Fourth Anti-Money Laundering Directive” which was enacted in 2015. At the time, it was the most sweeping anti-money laundering directive to take effect in Europe, creating a register of owners of companies for national authorities to access.

What happens next: The new rules must now be formally adopted by the EU’s member states and then turned into national laws within the next 18 months.

http://www.dw.com/en/bitcoin-eu-approves-cryptocurrency-clampdown-to-combat-terrorism-financing/a-41820170

Amazon is ordered to pay nearly $300 million by EU over ‘illegal tax advantage’

October 4, 2017

  • Amazon has been ordered to pay 250 million euros ($294 million) to Luxembourg after the European Commission found that the online retailer had received illegal tax benefits.
  • The Commission says Amazon received tax advantages between 2006 and 2014 in the country without any “valid justification.”
Image may contain: 1 person, suit and closeup
Getty Images
Jeff Bezos, chief executive officer of Amazon

Amazon was ordered to pay 250 million euros ($294 million) to Luxembourg on Wednesday after the European Commission said the online retailer had received illegal tax benefits.

According to regulators, Amazon received tax advantages between 2006 and 2014 in the country without any “valid justification.”

“Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon’s profits were not taxed,” Margrethe Vestager, the EU’s commissioner for competition, said in a statement.

 

“In other words, Amazon was allowed to pay four times less tax than other local companies subject to the same national tax rules. This is illegal under EU state aid rules. Member states cannot give selective tax benefits to multinational groups that are not available to others,” she added.

From June 2014, Amazon changed the way it operates in Europe and the new structure is outside the EU Commission’s authority on state aid.

In the period investigated, Amazon was shifting its profits from a company that was subject to tax in Luxembourg to another one that wasn’t subject to tax, known as the “holding company.” The latter had no employees, no offices and no business activities.

Luxembourg is due to receive the amount created by the aid, though there are no fines under EU law. Luxembourg authorities said they have taken notice of the decision and will “use appropriate due diligence to analyze the decision.”

EU Commissioner for Competition Margrethe Vestager addresses a press conference on two state aid cases at the European Commission in Brussels on October 4, 2017.

Emmanuel Dunand | AFP | Getty Images
EU Commissioner for Competition Margrethe Vestager addresses a press conference on two state aid cases at the European Commission in Brussels on October 4, 2017.

“The decision of the Commission refers to a period going back to 2006. Over time, both the international and the Luxembourg legal frameworks have substantially evolved,” they said.

Amazon said in response to the commission’s decision that it believes it did not receive any special treatment from Luxembourg and that it paid tax in “full accordance with both Luxembourg and international tax law.”

“We will study the Commission’s ruling and consider our legal options, including an appeal. Our 50,000 employees across Europe remain heads-down focused on serving our customers and the hundreds of thousands of small businesses who work with us,” the online retailing giant said in a statement.

Tensions between Europe and US

The European Commission opened its investigation into Amazon and Luxembourg’s tax arrangements in October 2014.

Luxembourg and U.S. technology companies have been at the center of the commission’s probes into tax affairs and antitrust. Last year, the EU ordered Ireland to recover 13 billion euros in taxes from Apple. The commission is also looking into the tax deal between McDonald’s and Luxembourg .

The EU has promised to scrutinize tax arrangements between large mulitnationals and the bloc’s member states. This case is likely to increase tensions between Europe and the U.S. After the commission’s decision on Apple, Chief Executive Tim Cook denounced it as “total political crap.” The Amazon tax ruling is also set against a push by President Donald Trump to come up with a money repatriation plan for U.S. companies with big cash piles abroad.

At the heart of the EU’s investigation into Amazon is its network of subsidiaries in Europe and so-called transfer pricing. That is the price of goods that one subsidiary of a company sells to another subsidiary under the same corporation. This in itself is not illegal. But what is illegal is if this transfer of goods is mispriced, therefore affecting the profits a company makes, and subsequently how much tax it pays.

In 2004, Amazon restructured its operations to create Amazon EU Sarl, which was its European operating headquarters. Amazon EU Sarl pays a royalty to the parent company in Europe for use of intellectual property. But that parent company is a limited liability partnership, which is not subject to corporate tax in Luxembourg.

EU chief under pressure

The Amazon ruling could be embarrassing for Jean-Claude Juncker, president of the European Commission, who was Luxembourg’s prime minister from 1995 to 2013.

At the opening of these investigations, many European policymakers asked for Juncker’s resignation. However, he denied any involvement in the tax arrangements, saying that the prime minister doesn’t have enough power to restrict the work of tax authorities.

Correction: This story has been revised to correct the amount in U.S. dollars that Amazon has been ordered to pay.

https://www.cnbc.com/2017/10/04/amazon-eu-tax-bill-luxembourg-deal.html

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Transatlantic tussles: EU cases against US firms

October 4, 2017

AFP

© AFP/File | The EU says Apple owes Ireland 13 billion euros in back taxes
BRUSSELS (AFP) – The EU’s decision to slap Amazon with a multi-million euro tax bill and take Ireland to court for not complying with a landmark case against Apple are the latest in a string of competition cases against US firms.

Here are the main European Union competition investigations targeting the US that Silicon Valley and Washington have slammed as unfair.

– Google –

In June, the EU hit Google with a record fine of 2.4 billion euros ($2.7 billion) for skewing search results in favour of its own shopping service.

This is only one of three concurrent investigations into the US web giant, which controls about 90 percent of the search market in Europe.

In April 2016, the commission also opened a probe into whether Google gives unfair prominence to its own Android apps such as search, maps and music streaming in deals with mobile manufacturers that include Samsung and Huawei.

Then in July last year, Brussels targeted Google’s advertising business, saying it had restricted some websites from displaying ads from competitors.

In all the cases, Google risks a fine of 10 percent of worldwide global sales for one year.

– Apple –

Brussels came down hard last year on the world’s most valuable company, Apple, ordering it to repay Ireland a record 13 billion euros ($14.3 billion) in back taxes.

The August 2016 ruling found that Apple had benefited from a series of Irish sweetheart tax deals that were illegal.

The US Treasury Department roundly rejected the reasoning of the commission’s decision, and Apple and the government of Ireland both filed appeals.

In the wake of the LuxLeaks tax scandal the EU launched further inquiries into the practice of countries offering extremely low corporation tax rates in an effort to attract multinationals.

– Amazon –

Brussels on Wednesday ordered Amazon to pay 250 million euros in back taxes linked to an “illegal tax break” that Luxembourg granted the internet shopping giant.

The case hinges on the belief that a tax deal between Luxembourg and Amazon in 2003 constituted illegal state aid, giving the company an unfair advantage over competitors.

– Starbucks –

In October 2015 the EU ordered US coffee maker Starbucks to repay the Netherlands 30 million euros in back taxes.

– McDonald’s –

The EU launched a formal investigation in December 2015 into tax deals between US fast food giant McDonald’s and Luxembourg, saying its preliminary assessment was that the arrangements breached state aid rules.

The case against McDonald’s stemmed from a complaint by trade unions and the charity War on Want that accused McDonald’s of avoiding around one billion euros ($1.1 billion) in taxes between 2009 and 2013, by shifting profits from one corporate division to another, and paying no local tax in Luxembourg.

– Microsoft –

In a historic case in March 2013, the European Commission fined US giant Microsoft 561 million euros ($638 million) for failing to comply with an order to provide clients with a choice of internet browsers for Windows 7, as it had promised to do.

It also fined the company 899 million euros in 2008, subsequently reduced to 860 million euros, for failing to comply with an order to share product information with rivals so that their software could work with Windows.

– Facebook-

The EU in May fined US social media giant Facebook 110 million euros ($120 million) for providing incorrect and misleading information on its takeover of WhatsApp, imposing its biggest penalty for such a breach.

The admonishment came after EU regulators cleared the then $19 billion Facebook acquisition of WhatsApp in late 2014, a decision that faced criticism in Europe.

– Intel –

Intel, the world’s biggest chipmaker, was fined a record 1.06 billion euros in May 2009. The EU says it abused its stranglehold on the semiconductor market to crush its main rival, AMD.

EU orders Amazon to pay Luxembourg tax bill

October 4, 2017

AFP

© AFP/File / by Alex PIGMAN | Europe’s competition chief Margrethe Vestager accused tiny Luxembourg of an illegal deal with internet shopping giant Amazon to pay less tax than other businesses

BRUSSELS (AFP) – The EU turned the screw on US tech giants Wednesday, ordering Amazon to repay Luxembourg 250 million euros in back taxes and referring Ireland to the top EU court for failing to collect billions from Apple.

Europe’s competition chief Margrethe Vestager accused tiny Luxembourg of an illegal deal with internet shopping giant Amazon to pay less tax than other businesses.

The two cases are part of a wider offensive by the EU on Silicon Valley behemoths as Europe seeks ways to regulate them more tightly on issues ranging from privacy to taxation.

“Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon’s profits were not taxed,” Vestager said in a statement.

The tax demand comes a year after the hard-charging Vestager ordered tech icon Apple to repay 13 billion euros ($14.5 billion) in back-taxes to Ireland in a decision that shocked the world.

In a sign that it was not letting up, the EU on Wednesday referred Ireland to the EU’s highest court for failing to collect the bill.

“The European Commission has decided to refer Ireland to the European Court of Justice for failing to recover from Apple illegal state aid,” the EU’s anti-trust regulator said in a statement.

For its part, Amazon rejected the charges and said it would “study the commission’s ruling and consider our legal options”.

“We believe that Amazon did not receive any special treatment from Luxembourg and that we paid tax in full accordance with both Luxembourg and international tax law,” it said in a statement.

– Silicon Valley targeted –

Vestager’s announcement comes days after the EU said at a special digital summit that it was drawing up a special tax targeting Google and Facebook, a policy championed by French President Emmanuel Macron.

Launched three years ago, the European Commission’s probe into Amazon’s deals with Luxembourg was part of several investigations into sweetheart tax arrangements between major companies and several EU countries.

The commission — the EU’s powerful executive arm responsible for policing its competition rules — opened the probe in 2014 in the belief that Luxembourg’s tax favours to Amazon constituted “state aid” that distorts competition.

Many came in the wake of the “Luxleaks” scandal which revealed details of tax breaks given by the tiny but wealthy duchy of Luxembourg to dozens of major US firms.

The revelations came as a particular embarrassment for European Commission President Jean-Claude Juncker, who was prime minister of Luxembourg at the time when the tax deals were made.

In similar cases, Vestager decided against the tax deals for coffee-shop chain Starbucks by the Netherlands and Italian automaker Fiat by Luxembourg — both companies were ordered to pay roughly 30 million euros.

The Amazon case hinges on the belief that a tax deal between Luxembourg and Amazon in 2003 constituted illegal state aid, giving the company an unfair advantage over competitors.

Once found at fault, a country must recover the amount granted in illegal state aid, potentially a huge amount of money given that some of the tax deals date back many years.

Amazon has sharply rejected the allegations, arguing that it employs 1,500 people in Luxembourg and that its business remains unprofitable in Europe.

Vestager’s biggest decision was by far against Apple in Ireland, which shocked Washington. The iPhone maker, as well as Ireland, have appealed the decision.

by Alex PIGMAN

Copenhagen Joins Battle to Lure Financial Firms From London After Brexit

September 29, 2017

LONDON — Denmark’s business minister was meeting financial technology firms in London on Friday as part of a two-day drive to lure them from Britain after Brexit.

Copenhagen faces fierce competition from Frankfurt, Paris, Luxembourg and Dublin in the battle to attract firms needing an EU base after Britain leaves the bloc in 18 months’ time.

“That’s a tough game,” Danish business minister Brian Mikkelsen said in a telephone call from Level39, the fintech hub in London’s Canary Wharf financial district.

Image result for London's Canary Wharf, photos

London’s Canary Wharf financial district

“We are going to make it cheaper and easier to be in Denmark.”

Denmark, which has already begun a review of regulation and taxes to remove burdens on financial companies and staff, is meeting 25 firms in London, including Morgan Stanley, JP Morgan, Goldman Sachs, State Street and BlackRock.

“We would like to be the northern European hub for the financial sector,” Mikkelsen said.

He said Denmark will launch a “sandbox” to allow fintech firms to experiment with new apps on actual customers without having to go through burdensome licence applications and regulatory approvals first.

Sandboxes were spearheaded by Britain’s Financial Conduct Authority and are being quickly copied across the world by governments keen to attract fintech firms along with the jobs and growth prospects they bring.

Mikkelsen said no financial firm from Britain had applied for a licence in Denmark, which is mainly focussing on fintech and asset managers, rather than seeking big lenders, pitting it against smaller rivals such as Dublin and Luxembourg, rather than Paris or Frankfurt.

“Our aim while we are here is the asset managers and fintech start ups. We have a very well educated and flexible labour force and in Denmark we are very digitised.”

(Reporting by Huw Jones)

Leaked UK memo accuses Paris of wanting to sink City of London

July 17, 2017

AFP

© Leon Neal, AFP file picture | The City of London financial district, including the Gherkin (right) and the ‘Walkie Talkie’ (front) towers.

Text by FRANCE 24 

Latest update : 2017-07-17

France is pushing for a hard Brexit in a bid to weaken the City of London, the British finance sector’s EU frontman warned in a leaked report published on Sunday.

“They are crystal clear about their underlying objective: the weakening of Britain, the ongoing degradation of the City of London,” Jeremy Browne, a former government minister who is now the City’s Brexit envoy, said in a memo.

The leaked report, published by the Mail on Sunday tabloid, was written as a summary to ministers of a trip made by Browne to France in early July.

“The meeting with the French Central Bank was the worst I have had anywhere in the EU. They are in favour of the hardest Brexit. They want disruption,” he said.

Browne acknowledged there may be political benefits to France of playing “bad cop” in the negotiations on Britain’s withdrawal from the European Union, which began last month and resumed in Brussels on Monday.

But “we should nevertheless have our eyes open that France sees Britain and the City of London as adversaries, not partners”.

According to Browne, this approach was not confined to a few officials, but was a “whole-of-France collective endeavour, made both more giddy and more assertive by the election of (Emmanuel) Macron” as president in May”. Aside from his meeting with the French Central Bank, he did not specify which other officials he had spoken with.

Browne added that “every country, not unreasonably, is alive to the opportunities that Brexit provides, but the French go further”.

He said they are “seemingly happy to see outcomes detrimental to the City of London even if Paris is not the beneficiary”.

Many cities in running to replace London

Paris is competing with Amsterdam, Dublin, Frankfurt, Madrid and Luxembourg for an expected shift in finance jobs out of London as a result of Brexit.

With Britain at risk of losing the “passporting rights” financial firms use to deal with clients in the rest of the bloc, employees in direct contact with customers may need to be based on EU territory in future.

The day after Britain voted to leave the EU in June last year, Valérie Pécresse, the head of the Paris regional government, sent out hand-signed letters to 4,000 small, medium and large international enterprises in London, underscoring the benefits of moving their businesses to Paris.

And in October, Paris’s financial centre La Défense launched the PR-campaign “Tired of the fog? Try the frogs” aimed at attracting companies across the Channel. In November, the city of Paris, the Paris regional government and the French chamber of commerce also set up a so-called “Brexit cell”, dubbed Choose Paris Region, a team exclusively dedicated to responding to queries — many of them anonymous — from companies considering a potential move from London to Paris in the light of Brexit.

Earlier this month, French Prime Minister Édouard Philippe laid out a raft of measures aimed at boosting Paris’s attractiveness, including eliminating the top income tax bracket.

Browne, who was an MP for the pro-European Liberal Democrats until 2015, served as a junior foreign office minister in former prime minister David Cameron’s coalition government.

He was appointed special representative to the EU by the City of London Corporation, which represents the financial sector, in September 2015.

(FRANCE 24 with AFP)