Stay current on the latest developments from agencies including the CFPB, Federal Reserve, FDIC, and OCC to advise clients on real-life regulatory situations.
A recent EU court ruling for an obscure Slovak liquor maker over a government tax break could impact high-profile, high-dollar tax avoidance cases against U.S. companies like Apple Inc. and Starbucks Corp., antitrust lawyers told Bloomberg BNA.
Europe’s highest court Sept. 20 threw out the EU competition commission’s complaint against beverage maker Frucona Kosice, whose products include fruit brandies that are over 50 percent alcohol. The European Court of Justice said the commission didn’t have enough evidence to say that Frucona got anticompetitive special treatment from the Slovak government when it got a break on excise taxes.
The commission’s spokesman told Bloomberg BNA that “The commission takes note, and will carefully assess the Court of Justice’s judgment.”
There are other, bigger cases involving state aid currently on appeal to the EU courts. In the past year, the EU has accused a number of large, multinational corporations of illegally reaping billions in tax benefits. Subsidies or tax breaks that favor a specific company are illegal in the EU to keep member governments from picking favorites, like locally owned businesses or state-owned enterprises. The commission issued 13 state-aid decisions in September alone.
The important part of the Frucona decision lies in what the court said the commission needed to consider in making its determination, according to Squire Patton Boggs antitrust partner Oliver Geiss in Brussels, who assisted Frucona on its lengthy fight against the commission’s ruling.
The court left alone the commission standard for evaluating state aid, in which it looks to the “available information” in making its decision, Geiss said. But the court refined the meaning of “available information” to include “what is relevant and could have been obtained on request.”
In effect, the commission must undertake a reasonable investigation because their analysis should legally include anything they could have easily laid hands on, he said. The lower court threw out the commission’s complaint because it said investigators hadn’t obtained “additional information to verify and substantiate its conclusions.”
Geiss said that the case may have implications for the big pending state-aid cases, including any case where there is a dispute on the actual facts, because the commission has already concluded its investigations in those cases. Under the Frucona ruling, it’s an open question whether those closed investigations met the appropriate standard for considering “available information.”
The EU began focusing on state aid in 2013 when it assembled a task force to look into tax policies in member states and started attacking lax tax policies in some member states in 2014, beginning with an investigation into Ireland’s tax treatment of Apple. In addition to ordering Apple to pay back over 13 billion euros ($15.6 billion) in taxes to Ireland in 2016, the commission has also found violations by Starbucks Corp. in the Netherlands and Fiat Chrysler Automobiles NV in Luxembourg. Court appeals are pending in each of those cases, with Amazon Corp. and McDonald’s Corp. rumored to be the next commission investigations to lead to charges.
Frucona was in trouble and couldn’t pay its excise taxes. The local government in 2004 agreed to take payment of 35 percent of its almost $17 million tax bill. The EU competition commission decided that was illegal state aid and ordered Frucona to pay the whole original amount.
The company appealed, and the commission’s decision was thrown out in 2011. The commission issued a new decision in 2013 that again found a violation and ordered Frucona to pay up. The lower court threw out that decision in March, and the EU’s highest court affirmed the conclusion that the commission’s didn’t have sufficient facts to find that Frucona got a sweetheart deal.
To contact the reporter on this story: Eleanor Tyler in Washington at email@example.com
To contact the editor responsible for this story: Fawn Johnson at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)