SNP MEPS push EU Commission for investigation into Google tax deal

The SNP's Members of the European Parliament have today written to European Commissioner Margrethe Vestager repeating calls for a full EU investigation into the tax payment settlement between HMRC and Google UK.

The Scottish National Party in Westminster had already raised concerns that - due to the lack of transparency - it is unclear whether the settlement represents a fair deal for UK taxpayers and whether it is within the boundaries of state aid regulations and European Commission rules on the use of complex methodologies by Member States' tax authorities.

SNP MEP Alyn Smith said:

“The European Commission is in the best position to provide independent verification of whether the tax deal that Google has negotiated with HMRC is fair and represents good value for the UK taxpayer and so we have called on the Commissioner to begin this investigation.

"A question also remains unanswered as to whether this deal breaches EU regulations on calculating the tax liabilities of large corporations, and whether the agreement could be seen as illegal state aid distorting competition. The Commission has clear views that complex methodologies should not be employed by tax authorities but, as it stands, we have no clarity at all about how this deal was calculated."

SNP MEP Ian Hudghton said:

"Commissioner Vestager has a reputation for pursuing tax transparency -  late last year the Commission ruled that tax deals in Luxembourg and the Netherlands were illegal under EU state aid rules. - and so I hope she will take up this case with equal gusto and provide the UK public with the independent clarity we need."

Text of the letter to Commissioner Margrethe Vestager:

Dear Commissioner Vestager,

We are writing as Members of the European Parliament, and of the Scottish National Party, concerning the deal agreed between the United Kingdom’s tax authority, the HMRC, and Google UK, announced by the Chancellor of the Exchequer George Osbourne last week.

We believe this agreement may not be in line with Article 107(1) of the Treaty on the Functioning of the European Union on state aid provisions. This arrangement could be seen as an illegal state aid distorting competition and going against the European internal market. The criteria for you to launch investigations seem to have been met, as the deal could potentially deprive the UK of state resources - which it should have collected over the past 10 years - and possibly provides a selective economic advantage for Google UK, which is not paying the fair amount of taxes it should have paid over this period. Such an advantage may have an effect on competition with other companies, especially SMEs, and may affect trade between the UK and its other European partners.

We raise this issue in light of the recent decisions made by the European Commission on 21 October 2015 which concluded that both Luxembourg and the Netherlands granted selective tax advantages to Fiat Finance and Trade and Starbucks, which were illegal under EU state aid rules. The Commission has since pledged to continue pursuing its inquiry into tax rulings practices in all EU Member States.

Therefore, considering the lack of transparency in the settlement reached between HMRC and Google UK, and the growing concerns of an opaque methodology having been employed, it is our view that an independent verification of this settlement would establish confidence that the settlement is compliant with state aid regulations and is a fair deal for the taxpayers of the United Kingdom.

We would be grateful for your view on this matter, and an indication of whether you might choose to scrutinise this settlement in closer detail.

Yours Sincerely,

Ian Hudghton MEP
Alyn Smith MEP

Scottish National Party