Fans of European competition policy will know that ‘state aid’ rules are a key pillar of ensuring European markets remain open and competitive and are not distorted by government subsidy. Some of the most recent developments in state aid investigations concern whether European government tax rulings for multinationals might constitute state aid, and provide an unfair advantage.
People are speculating about the wider impact from the recent rulings on state aid by Competition Commissioner Margrethe Vestager. Apart from the tax arrangements between Luxembourg and Fiat, and between the Netherlands and Starbucks, do they affect anyone else?
It seems likely these rulings will have a much wider impact on tax and investment policies in Europe, between Europe and its trading partners, and on the business climate. But what might those impacts be?
The first concern is the uncertainty about Europe as a place to invest and do business. Companies may fear retroactive decisions coming back to haunt them years later. After all, no company expects a fresh tax demand of up to €30m years that contradicts what the taxman previously told them to pay.
These rulings also drive straight at the heart of one of the most jealously guarded competences of European Union member states: tax policy.MORE »