EU tax plan will mean no repeat of Apple case - Moscovici

Pierre Moscovici

Sarah Collins in Brussels

European Commission tax chief Pierre Moscovici has urged Ireland to support a corporate tax overhaul that he said would avoid a repeat of the Apple case.

Speaking to the Irish Independent after the launch of his proposal for a common consolidated corporate tax base - a new standardised way for large multinationals to calculate and pay their EU taxes - Mr Moscovici (inset) said Ireland was moving away from its "previous reputation".

"I understand the sensitivity of the Irish Government, but I think that we need to discuss that in a smooth way, a serene way, a constructive way," Mr Moscovici said. "Ireland has made considerable progress towards a tax governance which is more transparent, and tried to move away from a previous reputation," Mr Moscovici said.

"What we want to do is create a framework which prevents future Apple cases, and it's in the interest of all countries, including Ireland, to go that direction," he said in Brussels yesterday.

He was speaking after the Commission unveiled a new system for calculating the corporate tax bills of large multinationals - those with global revenues over €750m - that operate in the EU.

It has also put forward a formula to decide where in the EU those taxes should be paid, by treating all the companies in a group as one and sharing out the tax take where the group's sales, assets and payroll are based.

It will not touch tax rates, but only the way taxes are computed and paid, with Mr Moscovici insisting again that "we are not trying to create a minimum tax rate".

But critics, including Irish MEP Marian Harkin - who tackled Mr Moscovici about the issue in the European Parliament this week - say the move might shrink Ireland's tax revenues by forcing companies to pay their tax bills in larger countries.

The European Commission admits Ireland's corporate tax revenues would shrink by 0.14pc of the size of the economy - equal to roughly €300m - as a result of the proposal, but says Luxembourg and the UK would suffer more.

"My commitments to the Irish Government and to Michael Noonan are very clear, and I repeat that again: this project is for more clarity, more transparency, more efficiency, more fairness; it doesn't plan to hurt the attractiveness or the competitiveness of any country," Mr Moscovici said.

Ireland has long opposed EU tax harmonisation, and previous plans have been dropped.

The Commission says this time it's different: the proposal has been split in two, leaving the controversial "consolidation" or sharing out of multinationals' tax bills to a later stage. He also believes the public mood has shifted in favour of a corporate tax clampdown following the Panama Papers and a spate of other tax scandals.

"I think there is a reasonable basis for consensus if there is not too much ideology in the reactions here or there," Mr Moscovici said, adding that he was "ready to take on board those concerns from the Irish authorities which I anticipate, imagine and understand".