Ms Margrethe Vestager:

I thank the members of the joint committee, especially the Chairman, Deputy John McGuinness, for inviting me. This year we will celebrate the signing of the Treaty of Rome 60 years ago. Competition rules, including state aid rules, have been part of the treaty from the very first day. I have the privilege of dealing with legislation dating back to the very early days of the European Economic Community, now the European Union. The reason it goes back so far is that the founders knew that there could not be a successful single market without a level playing field and fair competition. They knew that without state aid rules, companies based in smaller countries might find it difficult to compete if they had to compete with companies from bigger countries with deep pockets which would be willing to let taxpayers to pick up the bill. Every small country realises it cannot hope to win a subsidy race against bigger countries. When Ireland and Denmark joined the European Union in 1973, they entered an organisation which they knew would give small countries a fair chance of making it. The founders also knew that without state aid rules, governments would be able to use subsidies and special tax breaks to create barriers between countries. State aid rules have helped to make the Single Market what it is - an open and fair market. Efficiency, skills, innovation and tradesmanship decide if a country makes it. They are the keys to success. Ireland which has a highly educated workforce and a welcoming business environment has understood better than any other country during the decades how to turn membership of the Single Market into prosperity and economic well-being.

In these days, I think that we all, at least I do, feel the uncertainty coming from the political situation, in particular Brexit. I do not think that it can be in doubt that the Single Market, with 27 strong members in it, will continue to be the basis of our prosperity, because the Single Market is the jewel of our co-operation. It must not only be, but also remain and develop, as a market where small, medium and big companies compete on equal terms and are being treated equally as well as the countries whose flags they carry. This is why enforcing state aid rules is as important today as it was when the treaty was signed when it came into force almost 60 years ago.

Our decisions on tax rulings are being appealed by companies and Governments involved, so it would not be appropriate for me to go into the details of the legal arguments at this point. This is now before the European courts. I am very glad to have this chance to explain how we have gone about our work on aid and tax rulings. The European courts made it clear back in the 1970s that preferential tax treatment could be state aid in the same way as grants given in cash because both undermine the level playing fields by giving companies benefits that are not available to other companies. The Commission gave guidance back in 1998 on when corporate taxation can lead to state aid and the European court confirmed in 2006 that dealings between group companies had to be on market terms to avoid state aid. The rules on state aid and special tax treatments have been clear for quite some time.

What has changed recently is that multinational companies have been pushing the boundaries of aggressive tax planning. Since that came to light, we have investigated tax ruling practices all over Europe. Our investigation into the Irish tax rulings began in 2013 after Apple told a US Senate hearing about what it called a tax incentive arrangement with Ireland. That gave reason to ask questions here in Europe and also started the Apple case. Now our work on tax rulings has gone far beyond the Apple case and far beyond Ireland. We have asked every member state, big as well as small, for information on tax rulings and we have followed up with in-depth investigation in the most serious cases. This investigation has been carried out with the full involvement of the companies and the governments concerned. They have led to four decisions so far involving aid to Fiat in Luxembourg, to Starbucks in the Netherlands, to a number of large companies in Belgium, and to Apple here in Ireland. Those decisions should help the Single Market to work better by giving all companies, big and small, a chance to compete on equal terms. We will continue our work to make sure that there are effective deterrents against corporate tax planning practices that are against state aid rules.

That being said, two things are important. First, tax rulings are completely legal. We hold nothing against tax rulings as such. They can give companies the clarity that they need and they can tell them how certain tax rules are being applied. The only thing we want to ensure is that they are not being used as a tool to give selective advantage, for example to rubber-stamp a way of allocating profits that do not match economic reality.

Second, these cases do not mean that the Commission is claiming authority in tax matters as such, internationally or nationally. That is not our business. Ireland has the sovereign right, like any other member state, to determine its own corporate tax system and set its own corporate tax rate. What we are dealing with is special treatment for certain companies. Fighting aggressive tax planning practices should make countries such as Ireland and others an even better place in which to invest. Ireland has a highly skilled workforce and very modern infrastructure, just to mention two of its benefits. It has chosen, as is the sovereign right of the Irish Parliament and Government, to set a low corporate tax rate. Enforcing state aid rules means that Ireland and other member states can also offer a place in the Single Market that is open and fair at the tax rate they decide to set.

I hope I have not wasted members' time or spoken for too long. I am very happy to have had the chance to make this opening statement. I look forward not only to taking members' questions but also to hearing their points of view. I may be even able to answer some of their questions, but that remains to be seen.