On 24 August 2016 the US Treasury published a detailed White Paper in which it warns the EU Commission of the implications its State aid investigation and decisions have for the US government and US companies.
The US Treasury claims that the Commission’s actions undermine the United States’ efforts in developing transfer pricing norms and implementing the OECD BEPS project. Also, that the Commission’s actions call into question the ability of Member States to comply with their bilateral tax treaties obligations with the US. The US Treasury argues that the Commission has departed from its long-standing methodology in a way which companies could not have anticipated and that it should not seek retroactive recoveries of tax under its new approach as it would be inconsistent with EU legal principles.
In the White Paper, the Treasury criticises the Commission’s new approach in State aid cases stating that the Commission now finds advantage and selectivity if it disagrees with the Member State’s application of the arm’s length principle. This shift in approach, according to the US Treasury, has expanded the role of the Commission’s Directorate General for Competition ‘beyond enforcement of competition and State aid law into that of a supra-national tax authority’.
The US Treasury has warned that if the Commission continues on this path, it will consider ‘potential responses’.
The full report can be found here.
This article appears in the JHA August 2016 Tax Newsletter, which also features:
