Apple's Cook holds surprise meeting with EU's Competition Commissioner

Friday 22 January 2016 18.45
Apple CEO Tim Cook was in Brussels yesterday to discuss tax arrangements
Apple CEO Tim Cook was in Brussels yesterday to discuss tax arrangements

Apple's chief executive Tim Cook made a surprise visit to Brussels yesterday to lobby the EU's competition chief, according to a report in the Financial Times.

This comes just weeks before the Commissioner is set to rule on a landmark case that could force the technology company to pay billions in underpaid taxes to Ireland. 

The EU's probe into Apple's Irish tax arrangements has become one of the most politically-charged cases pursued by Brussels since it took on Microsoft two decades ago. 

Coupled with its competition case against Google, it has sparked accusations in Washington that European Commissioner Margrethe Vestager is unfairly targeting the US technology sector. 

A spokesman for Ms Vestager confirmed she held a "private meeting" with Mr Cook, but gave no further details.

Apple also declined to comment on what took place at the meeting, the newspaper said. 

The Danish commissioner has rejected accusations of bias and argued that she is trying to ensure that EU countries do not give "sweetheart" tax deals to selected multinationals, which would be unavailable to competitors, simply to secure investment. 

Both the Government and Apple have argued that they have done nothing wrong, and Dublin has vowed to appeal any finding against it. 

The FT says that Mr Cook's personal intervention is a sign that Apple is worried about the direction of Ms Vestager's inquiry.

This is especially so after she ruled in October that Luxembourg and the Netherlands had provided improper tax benefits to the Italian carmaker Fiat and the US coffee shop chain Starbucks - the first such rulings in her expanding corporate tax probe. Those cases are now being appealed. 

Analysts believe the stakes could be enormous because of the huge sums of money that Dublin could be forced to recover from Apple. 

Bloomberg Intelligence estimates the potential clawback at around $8 billion, while JPMorgan has argued that Apple could have to pay $19 billion in a worst-case scenario. 

Lawyers in Brussels say that the European Commission is unlikely to set such a high recovery figure, but warn that it could still be the biggest sum ever involved in a commission decision. 

Because tax policy is technically a competence of the member states, the commission has taken a novel and contentious approach to tackling preferential tax deals by using powerful rules concerning illegal state aid. 

In effect, Brussels is arguing that tax rulings are a form of illegal subsidy that gives companies an unfair advantage over their rivals. 

However, people close to Apple and Ireland insist their case is very different from the previous ones. 

Apple stresses that it has a large presence in Ireland, and that its European headquarters are in Cork with 5,500 employees in the country - unlike some other multinationals, which occasionally have only nameplates to establish residency in tax havens.