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... and what's the view from Dublin?

By Brendan Keenan

Published 13/09/2016

As they themselves would say, the Americans have skin in this game. Tens of billions of dollars worth of skin. But there may also be genuine puzzlement on the other side of the Atlantic about the ramifications of EU state aid rules in the wake of the Apple ruling.

Delaware is a banking haven, Texas eschews income tax, California outlawed lead emissions and changed global car technology. The idea a federal agency would decide whether all of this is fair would seem bizarre, quite apart from being unconstitutional.

The European Union would not survive US-style state freedom on taxation, grants and labour law - a point Ireland may have missed as its corporation tax regime became ever more distorted. But the union may also not survive giving too much ground to the richer states' terror of poorer ones eating their investment lunch. Anyone who doubts that possibility was not in Ireland last week.

It need not have been like that. State aid rules at their simplest say governments must not give selective advantage to particular companies or sectors. That's quite a restriction, but there is more.

In the commission's definition, profits must be allocated within the different parts of a company in a way that reflects "economic realities". That is a very big restriction indeed. It is the one which the US may find most difficult to swallow, and it is the one on which the Apple appeal is likely to turn.

That, however, is a tax arrangement, not a competitive stitch-up.

The precedents are there. The commission might like to ponder the connections between Brexit and rulings such as the one preventing Scotland introducing minimum pricing for alcohol.

In summary, the European Court of Justice held minimum pricing restricts trade and distorts competition. There is no arguing with that, but the implication is that EU law is being broken even if the purpose is not to confer advantage on one company over another but to promote the public good.

Belfast Telegraph

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