Posted by Christie Malry on October 7, 2014 at 10:11 pm
So, some tax campaigners have been celebrating the news that the EU is to investigate Luxembourg's deal with Amazon that saw the multinational bookseller pay a special low rate of tax in the country. According to the campaigners, this allowed Amazon to avoid paying tax in the UK 1.
In supporting the EU's action, one is recognising that EU tax law takes precedence over national tax law. So countries do not have absolute liberty to set their tax policies as they might wish. They must obey EU law, or risk seeing it overturned upon challenge.
Then cast your mind back to Vodafone. In the case of Vodafone, tax campaigners were arguing that the UK should be able to set whatever tax law it likes, with no consideration of whether this might be permissible under EU law. Vodafone said that the UK must respect EU law and was working its way through the courts to force the UK to comply. The precise bit of law was the UK CFC legislation, which sought to bring vast swathes of foreign-source profits into the scope of UK tax. The EU said no; in the EU at least the UK may only tax profits that are earned in the UK.
One cannot logically deny Vodafone its appeal and support the EU action in respect of Amazon. Anyone who blithely claims both Vodafone and Amazon are guilty of avoidance is, I would suggest, guilty of some flaky thinking. Because you need to apply EU law in one case and completely deny it in the other.