In all 24 official languages of the European Union, the description of EU Competition Commissioner Margrethe Vestager is similar: resolute.
Most recently, that feeling was expressed by the French legislature, when members of both houses and across the political spectrum quizzed her on the progress of various cases, including one against Luxembourg regarding French utility company Engie. Vestager (pronounced VEST-ayer) is protecting Europe from companies that avoid paying their fair share of taxes on profits generated in Europe, lawmakers said.
Her fans are equally vocal in the European Parliament, where members across party lines supported the decision earlier this year that Apple owed Ireland up to €13 billion in unpaid taxes.
Vestager's detractors are also voluble. Executives of American multinational companies, who previously enjoyed the comfort of quiet arrangements with the tax authorities in Ireland, the Netherlands, and Luxembourg, are especially irate. They say her decisions amount to retroactive changes to existing legal agreements. Tax certainty, a key issue for corporations involved in cross-border commerce, has been shaken.
"I take issue with those that say our decisions are retroactive. It's not retroactive, which would mean changing existing laws. We have not changed one period, not one comma in existing law," Vestager told Tax Analysts during a December meeting in her Brussels office.
The commission is simply reviewing tax rulings that were previously unknown, in the light of newly acquired information, Vestager said. The EU state aid laws date back to 1958, and they prohibit aid by member states that unfairly tilt the competitive playing field, she said.
"Our founding fathers -- they were very inspired by antitrust work and merger control as it was done in the U.S. The Sherman Act goes way back. They saw very clearly that you cannot have fair competition if you have the taxpayers picking up the bill," Vestager said, explaining that the EU's state aid rules were a third competition tool to keep member states working harmoniously within a single market.
The EU government does not have final authority on tax matters - - that is the prerogative of member states. It does, however, have the power to enforce fair competition, rule on mergers, keep cartels from forming, and decide whether member states have illegally helped one competitor over another.
Vestager's weapon of choice has been the application of rules forbidding member states from using special benefits, called state aid, to favor one competitor over another. State aid can be many things: cheap land, a low interest rate on loans, direct financial support, or special tax deals. She goes after them all. But it is in the cases against U.S. mega-corporations that have earned her recognition in the U.S.
Vestager's job is secure through her five-year tenure, which extends through 2019. It is possible for an EU commissioner to serve more than one term, but she has not indicated whether she would want to stay on or return to a post in the Danish government. At 48, she is hardly near the end of her career, unlike many who go to Brussels later in their political lives.
The Making of a Stateswoman
Trained as an economist at the University of Copenhagen, the former Danish minister of the economy and the interior, deputy prime minister, and leader of her centrist political party, the Social Liberal Party, was known for making some hard choices at home too. Vestager cut unemployment benefits, an unpopular move among trade unions. One labor group sent her a special token: a life-size white cast of a hand -- with an extended middle finger. She keeps it in her office as a reminder that disapproval should be acknowledged rather than avoided.
When she took over the office on the 10th floor of the European Commission, she had a giant mahogany desk removed, preferring to talk to guests over a narrow table. And although corporate leaders are welcome to visit, she has banned lobbyists from her office.
In Denmark, a popular television series, Borgen [ The Castle ], is based in part on Vestager, who admits that the lead actress spent time with her preparing for the role of prime minister in the show.
One episode bears the title "In Brussels, No One Can Hear You Scream," in reference to the view that an EU appointment can become a dumping ground for politicians at the end of their useful shelf lives. Not so for Vestager. She volunteered for the post.
"We [the Danish Cabinet] were discussing who we should send, and I thought, 'Let me go,'" Vestager said.
The show has been described as similar to a U.S. political drama, The West Wing, but when asked, Vestager is quick to point out one crucial difference between her and the lead character in Borgen: "I'm not divorced."
Raised by parents who were both Lutheran ministers, Vestager saw their ministry at work in their home as people came to them at all hours for help and counsel. According to a longtime friend, that environment influenced Vestager's strong sense of duty and responsibility. She is devoted to her family and friends, and likes to knit during meetings. She is far from being opposed to technology, as she frequently snaps photos at her own press conferences to share with fans on Twitter. In fact, she has praised the usefulness of the technology developed by the companies she is opposing, noting that "let me Google that" is a common phrase everyone understands and uses.
Always courteous but nevertheless unyielding, Vestager has stymied the best efforts of the tech world's giants to fight her decisions requiring that they pay up billions in overdue taxes. She was known as a tough negotiator, both in Denmark and as a member of the Economic and Financial Affairs Council.
Apple CEO Tim Cook met with her to protest the ruling that Ireland had granted his company some €13 billion in illegal state aid. Suffice to say it was not a comfortable meeting of the minds. Cook characterized her decision as "political crap."
Vestager countered that the EU was simply acting to follow up on information divulged at a U.S. Senate hearing that disclosed the tax schemes of the world's most profitable company. Had the Irish tax rulings not been kept secret until then, the EU would certainly have objected sooner, she said.
Let the Sunshine in
Both journalists and whistleblowers are to be thanked for the efforts made to bring tax rulings out of dark corners, Vestager says. And she is in favor of public country-by-country reporting by corporations.
"It's not that difficult. In the U.S., you have the information gathered in Form 10-K. We just want to know a few things: the number of employees; what you do; what is your turnover, profits, taxes being paid," Vestager said.
A predecessor in her post, Mario Monti, former prime minister of Italy, started investigations on inequitable tax rulings, but was blocked by the secrecy with which some EU member states have cloaked their tax rulings, she said.
Others, including U.S. Treasury Department officials, have complained that she is targeting U.S. companies. They point to ongoing investigations of tax rulings given to Amazon and McDonald's.
Yet the Belgian government has been reprimanded for offering sweetheart deals to mostly European multinationals. Fiat, an Italian company, has also faced censure for state aid received from Luxembourg.
Critics claim that she is out to destabilize the use of transfer pricing, pointing to the decision in the Starbucks case in the Netherlands, which hinges on the value of Starbucks' coffee roasting techniques.
Not true, Vestager says. "We have a thousand cases on the working table," she told Tax Analysts. "What we see is that some tax rulings are very well done. We see that the OECD principles are followed, that the transfer pricing methods that approximate a market situation are well documented. Tax rulings can be confirmatory, one person asks a question, gets an answer, and the next person who asks the question gets the same answer."
However, when transfer pricing does not match a market reality, and becomes a convoluted method to reallocate profits, it is totally unacceptable, she says.
Asked how companies can gauge whether tax rulings will be challenged, Vestager has a simple rule: "If it sounds too good to be true, it probably is."
Apple's tax rate of 0.005 percent, based on a "so-called head office" that had no employees, activities, or location, is just not feasible, she maintains.
Vestager welcomes the legal appeals, made by both Apple and by Ireland, which she believes will give even further credence to the thorough work done by her staff. Also pending are appeals on the multimillion-dollar Starbucks and Fiat cases.
She credits the simultaneous release in many countries by the International Consortium of Investigative Journalists of information on both LuxLeaks and the Panama Papers with creating a new interest in tax transparency. "All of a sudden, there is a different kind of pressure on politicians, who then say, 'We have to do something about this.' Now we can move ahead on how to deal with taxation in a more and more globalized world," she said.
"I think the timing was very beneficial; very soon thereafter you had the OECD recommendation, with the base erosion and profit-shifting project. The OECD leadership in this area allowed member states to say, 'This is complete, this is the way we want to go,'" she said.
Ms. Vestager Goes to Washington
Vestager traveled twice to the U.S. in 2016, to meet with congressional and Treasury officials. "I very much appreciated the meetings, the two rounds, with the American officials. They have seen a lot, they know a lot. I learned something about the U.S. system as such. When you are actually together, you listen in a different way than to what people tell you secondhand. We didn't agree about the Apple case, but they were still very good meetings. They are very experienced, knowledgeable people. They have one perspective, I have another perspective," she said.
She is planning a return trip in 2017, but has not expressed an opinion on working with the incoming administration of President-elect Donald Trump.
Just before the release of the Apple decision, the U.S. Treasury issued a white paper that condemned state aid investigations of U.S. companies. Although Congress has requested that Treasury look into any means available that would discourage the use of the state aid tool by the commission, Vestager is unfazed.
In particular, it strikes her as unlikely that the U.S. would impose a penalty under IRC section 891, which permits the president to double the tax rates imposed on U.S.-source earnings of citizens of a country that is subjecting U.S. citizens or corporations to discriminatory tax, which could start a trade war with the European Union.
"It [section 891] goes back to 1938, it has never been used by anyone, and there have certainly been a lot of [trade] conflicts in the time between," she observed.
"We have the power to ask for recovery. This is basically the only tool we have to reinstate competition, to recover the illegal state aid. It is not a fine. This is unpaid taxes," she said.
Teri Sprackland is a reporter with Tax Notes International.