4 ms·

The actual problem here is that no, it's not EU law. The EU has a fixed set of "competencies", i.e. areas of law it controls. Taxation is very very explicitly

The actual problem here is that no, it's not EU law. The EU has a fixed set of "competencies", i.e. areas of law it controls. Taxation is very very explicitly not one of them. Member states did not ever sign up to letting the EU Commission control their local tax rates. The EU is now trying to work around the treaty-defined limits on its own power by redefining low tax rates as "aid". Beyond the Orwellian doublethink required to define taxation as aid, this is a problem because if it's allowed to define tax rates France and Germany don't like as "state aid" then the EU has effectively increased its own powers far beyond what the treaties were written to allow, without any kind of democratic process or even consent of the national leaders.

mthoms 10y ago
AFAIK all large trade treaties have such a clause and it does come up quite often in disputes (See NAFTA for example). It's what the elected representatives of the Irish people signed up for.
summarite 10y ago
It is well in the commission's responsibilities to ensure countries don't help companies avoid taxes on other countries, that is a natural element of free trade deals.
ThePhysicist 10y ago
It is simply not true that there is no legislative basis for the EU prosecuting Ireland. The relevant document is the "Treaty on the Functioning of the European Union", especially article 107 (http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A12008E107 http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A1...), which is quite explicit about what is allowed and what is not in terms of government subsidies: "Save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market." Taxation is explicitly mentioned in the text as a form of subsidy, hence the EU does not overreach when it tries to enforce the regulations that the member states have agreed upon. It is of course debatable when a taxation is too low, but an effective tax rate of 0.005 percent provides enough evidence of a hidden subsidy to justify the punishment (IMHO).
- zigzigzag 10y ago
  Thanks for the link. Like a lot of EU law, that text is so vague as to be meaningless. Perhaps this counts: 3. The following may be considered to be compatible with the internal market: aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment ... aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest; Or perhaps it doesn't, given that this is stated as "may be incompatible" not "shall be incompatible". Though I did get a laugh out of the explicit exception for Germany that can only be removed if the Commission allows. Like I said - as written this text could be seen as forbidding even very basic things like VAT, as it doesn't apply to all types of goods or applies at different rates and thus "favours certain undertakings".
  - ThePhysicist 10y ago
    The exception for Germany is to account for subsidies that are given to East Germany, which had to be "pulled" to the level of the West after the reunification, but which still lags behind even to this day. BTW the commission is currently pursuing Germany for being too lax with Volkswagen after Dieselgate (and I'm happy they do this). So, for me the fact the EU commission can do this is one of the positive sides of the European Union.

mthoms 10y ago

AFAIK all large trade treaties have such a clause and it does come up quite often in disputes (See NAFTA for example). It's what the elected representatives of the Irish people signed up for.

summarite 10y ago

It is well in the commission's responsibilities to ensure countries don't help companies avoid taxes on other countries, that is a natural element of free trade deals.

ThePhysicist 10y ago

It is simply not true that there is no legislative basis for the EU prosecuting Ireland. The relevant document is the "Treaty on the Functioning of the European Union", especially article 107 (http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A12008E107 http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX%3A1...), which is quite explicit about what is allowed and what is not in terms of government subsidies: "Save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market." Taxation is explicitly mentioned in the text as a form of subsidy, hence the EU does not overreach when it tries to enforce the regulations that the member states have agreed upon. It is of course debatable when a taxation is too low, but an effective tax rate of 0.005 percent provides enough evidence of a hidden subsidy to justify the punishment (IMHO).

zigzigzag 10y ago
Thanks for the link. Like a lot of EU law, that text is so vague as to be meaningless. Perhaps this counts: 3. The following may be considered to be compatible with the internal market: aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment ... aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest; Or perhaps it doesn't, given that this is stated as "may be incompatible" not "shall be incompatible". Though I did get a laugh out of the explicit exception for Germany that can only be removed if the Commission allows. Like I said - as written this text could be seen as forbidding even very basic things like VAT, as it doesn't apply to all types of goods or applies at different rates and thus "favours certain undertakings".
- ThePhysicist 10y ago
  The exception for Germany is to account for subsidies that are given to East Germany, which had to be "pulled" to the level of the West after the reunification, but which still lags behind even to this day. BTW the commission is currently pursuing Germany for being too lax with Volkswagen after Dieselgate (and I'm happy they do this). So, for me the fact the EU commission can do this is one of the positive sides of the European Union.