The European Commission is vigorously pursuing its attack on low-tax countries, despite the slap-down it received when the EU’s second-highest court quashed its €14.3 billion lawsuit against Apple on July 16.

The Commission argued that Apple was receiving unfair state aid, under the terms of the Treaty that founded the EU. The court, however, said that the EU did not prove its case.

At that time, the Commission said that it would “reflect on future steps.”

But the Commission did not take long to reflect. On 31 August 2020, the Commission published the opening of the official procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union (state aid), against Belgium related to a series of regimes benefiting more than 20 multinational companies.

“We have every reason to believe that despite the Apple debacle, the Commission will continue its aggressive effort against the schemes of Member States offering preferential tax regimes to multinationals under the state aid legislation which gives to it the full executive power to pursue without needing the legislative approval of the Member States,” comments Antigoni Pafiti, an associate with the Elias Neocleous law firm in Brussels.

“But the publication of the official procedure in Belgium — post Apple — demonstrates that the Commission, after some eventual adjustments, sticks to its strategy. One should remember that the Commission has won some of the cases against Member States on this basis, having cut deals with multinationals on taxation,” Pafiti points out.

The Commission had already notified Belgium of its decision to initiate the procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union with a letter dated 16 September 2019 (i.e. before the Apple Judgment).

The press release accompanying the letter addresses the issue of “excess profit” tax rulings issued by Belgium between 2005 and 2014 in favour of Belgian companies belonging to multinational groups. Most of these multinational groups are headquartered in Europe.

Belgian company tax rules require companies, as a starting point, to be taxed based on profit actually recorded from activities in Belgium. However, the Belgian “excess profit” tax rulings, relying on the Belgian income tax code (Article 185 §2, b of the ‘Code des Impôts sur les Revenus/Wetboek Inkomstenbelastingen’), allowed multinational entities in Belgium to reduce their corporate tax liability by so-called “excess profits” that allegedly result from the advantage of being part of a multinational group.

“The Commission argues that the excess profit measures provide for a reduction of a company’s taxable base, although there is no legal basis to do so in Belgian tax law. The “excess profit” measures therefore favour them as compared to all other corporate taxpayers in Belgium, who are taxed, as a starting point and notwithstanding possible adjustments provided by law, on their accounting profit,” Pafiti explains.

“On the other hand, even if Article 185(2)(b) BITC could be said to provide a basis to exempt profit allegedly derived from synergies and economies of scale, which the Commission contests, the Commission provisionally considers the measures to discriminate in favour of them, since the ‘excess profit’ exemption is not available to all corporate taxpayers that generate what Belgium deems to constitute ‘excess profit,” Pafiti adds.

So one should understand the Commission’s strategy as an effort to try the limits of the state aid tool in the Court. “Every inch that the Commission gains in this way is considered to be pure benefit, given the very limited competence the Treaties give to the Commission on corporate taxation,” she adds.

The Commission is trying to address a serious challenge. Jurisdiction shopping to get the best tax rate has become endemic among major corporates. In the UK, more than 50 per cent of the subsidiaries of foreign multinational companies reported no taxable profits, according to a 2019 study by Oxford university research fellow Katarzyna Bilicka, the Financial Times reports. In the US, 91 companies on the Fortune 500 index, including Amazon, Chevron, and IBM, paid an effective federal tax rate of zero in 2018.

The European Union’s (EU) top diplomat and France called on Thursday for Washington to reverse its sanctions on International Criminal Court (ICC) prosecutor Fatou Bensouda and another member of the ICC, calling the measures “unacceptable and unprecedented”.

The U.S. blacklisted Bensouda on Wednesday over her investigation into whether American forces committed war crimes in Afghanistan, under sanctions authorised by President Donald Trump in June that allow for asset freezes and travel bans.

Sanctions were also imposed on Phakiso Mochochoko, the Head of the Hague-based ICC Jurisdiction, Complementarity and Cooperation Division.

““The sanctions … are unacceptable and unprecedented measures that attempt to obstruct the court’s investigations and judicial proceedings,” Josep Borrell said in a statement.

Washington should “reconsider its position and reverse the measures it has taken,” he added.

The U.S. sanctions reflect the Trump administration’s view that the tribunal threatens to infringe on U.S. national sovereignty.

They are the latest move by Washington to go against the stance of long-standing European allies, which have largely supported American policy and whose trade and security ties are intertwined with the U.S.

The EU condemned Trump’s decision to halt funding to the World Health Organisation in April and said the U.S.’ withdrawal from other treaties and accords undermined Western priorities.

Similarly, France called on the U.S. to withdraw sanctions on ICC prosecutor Bensouda.

French Foreign Minister Jean-Yves Le Drian said on Thursday that the measures announced were “a grave attack against the court … and put into question multilateralism and the independence of the judiciary.”

Le Drian pledged France’s unwavering support for the court and its staff.

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BRUSSELS: The European Union will defend the International Criminal Court against attempts to undermine it, a spokesman for the bloc said on Thursday after Washington slapped sanctions on the Hague-based tribunal’s top prosecutor.

US Secretary of State Mike Pompeo on Wednesday announced sanctions against ICC chief prosecutor Fatou Bensouda and another senior court official, Phakiso Mochochoko, over a war crimes probe into US military personnel in Afghanistan.

Washington has long rejected the ICC’s jurisdiction over US citizens, but the court’s investigation into allegations of atrocities in Afghanistan has seen President Donald Trump’s administration turn low-level opposition into a concerted campaign against the institution. “The International Criminal Court is facing persistent external challenges and the European Union stands firm against all attempts to undermine the international system of criminal justice by hindering the work of its core institutions,” Peter Stano, spokesman for EU diplomatic chief Josep Borrell, told reporters.

“We are committed to strengthen our support to the ICC because this is key factor in fighting against impunity. We are standing by the ICC and we are not happy to see steps which are going against the activities of the ICC.

“Pompeo has dismissed the ICC as a “kangaroo court” and the US insists it has its own procedures for investigating allegations against its troops.

The European Union has added lithium, used in batteries that power electric vehicles (EVs), to a list of critical materials as part of a strategy to reduce its reliance on imports.

The group of 27 nations will need about 60 times more lithium and 15 times more cobalt for EV batteries and energy storage by 2050, analysts estimate. The EU’s demand for rare earths, used in high-tech devices and military applications, is predicted to increase 10-fold over the same period.

The European Commission, the EU’s executive arm, said on Thursday that the coronavirus pandemic had highlighted the world’s increasing reliance on electronics and technology for remote work, education and communication.

As a result, shortages of the key elements needed to manufacture those items threaten to undermine critical industries and expose the bloc to supply squeezes from China and other resource-rich countries, the Commission said.

“We have to drastically change our approach,” vice-president Maros Sefcovic said in a statement. “We cannot allow to replace current reliance on fossil fuels with dependency on critical raw materials.”

The E.U. imports around 98% of rare earths from China. Turkey supplies 98% of its borate and Chile meets 78% of Europe’s lithium needs. South Africa provides 71% of its platinum, and Brazil supplies 85% of its niobium, a crucial part of steel alloys used in jet engines, girders and oil pipelines.

“We cannot afford to rely entirely on third countries,” European industry commissioner Thierry Breton said. “By diversifying the supply from third countries and developing the EU’s own capacity for extraction, processing, recycling, refining and separation of rare earths, we can become more resilient and sustainable.”

The Belgium-based body, which first drew up an inventory of critical raw materials in 2011, in response to soaring commodity prices, also added bauxite and titanium — used in aerospace and for orthopaedic implants — and strontium — an ingredient for EV magnets — to the list. The body also eliminated helium from the group of 30 materials.

As part of the strategy unveiled on Sept. 3, the European Commission vowed to create a raw-materials alliance by year-end.

The coalition will include industry members, investors, the European Investment Bank, E.U. countries and others that can help secure raw mineral supply chains.

The Commission also plans to promote the recycling of vital elements, particularly rare earths. It said that while recycling works well in Europe, less than 1% of products containing the components are actually recovered.

The activity would drive investment and innovation within Europe, it noted.

The commission also said it wants to start a partnership with Canada and interested African countries next year.

— This article first appeared in MINING.com.