EU may place Facebook’s tax affairs under the microscope

9 Nov 2018

EU competition commissioner Margrethe Vestager. Image: Jose Manuel Ribeiro/EC Audiovisual Service

The EU is said to be considering an investigation into Facebook’s European tax arrangements.

The tax affairs of large global tech companies have long been an area of interest for the EU, particularly competition chief Margrethe Vestager. According to a report from Politico, Vestager is reportedly examining whether the European Commission (EC) has grounds to open a probe into the European tax arrangements of Facebook.

Documents relating to Facebook taxes obtained

A former Irish civil servant told Politico that Vestager’s investigative team had obtained documents relating to Facebook’s tax arrangements in Ireland as part of a trawl dating from the Apple tax investigation.

The examination of Apple’s tax deals in Ireland saw the company pay €13bn plus interest in funds into an escrow account. The EU had ruled that the tech giant had benefited from unfair tax incentives from the Government in Ireland, something both parties disputed.

Another source told Politico that they believed Vestager’s team would not be able to dig up enough material to justify opening a formal investigation into tax practices at Facebook.

EC continues to ask questions

During a press conference at the Web Summit in Lisbon this week, Vestager was asked about a specific Irish tax arrangement that lets investors lower their tax burden by offsetting intellectual property asset costs. She said: “We continue to ask questions. We’re asking member states for evidence of tax rulings about specific cases. So far, we have no specific criticism of any legislation from the Irish Republic.”

A spokesperson from the Irish Department of Finance said that the EC had been gathering information from all member states on tax affairs since 2014, having examined more than 1,000 rulings across the EU. They added: “This exercise has been ongoing since this time and has not been limited to Ireland. Ireland has always cooperated in respect of these requests and will continue to do so.”

Last year, Facebook announced it would begin booking international advertising revenue locally, as opposed to redirecting it via its EMEA headquarters in Dublin city centre.

Ellen Tannam was a journalist with Silicon Republic, covering all manner of business and tech subjects