Strength in numbers: Luxembourg and Ireland team up to defend their competitive tax regimes

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Strength in numbers: Luxembourg and Ireland team up to defend their competitive tax regimes
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Ireland and Luxembourg are two small countries with similarly competitive tax regimes and a common cause in fending off what they perceive as an agenda by the European Commission to crack down on their approach to attracting multinational investment.

Both are veterans of many such battles who feel they are sticking up for each other as fellow small member states, by showing up to provide mutual support.

Apple also argued that the commission had relied on principles of international taxation and disregarding Irish tax law. “It’s national law that is critical, not what the commission would like national law to be,” as Apple’s senior counsel Daniel Beard put it. She argued that such deals gave unfair advantages within the single market, and could therefore be challenged under EU competition rules. It was a novel approach that was not without its critics, who saw this as an indirect way to attack low-tax jurisdictions within the single market, with the backing of the larger countries who felt these arrangements were conning them out of their rightful tax intake.

But legal objections by the companies concerned and the EU member states that were host to them led to the ongoing court battles – and delivered a string of bruising defeats to the commission. And Ireland has committed to raising its minimum tax rate for large multinational companies to 15 per cent, under the international OECD tax deal, which also aims to reform how taxation obligations are determined in the digital age.

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