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Week Ahead (13 July)

Monday, 13 July - Economic and Monetary Affairs Committee to discuss developments on digital tax

The European Parliament’s Economic and Monetary Affairs Committee will meet today to exchange views on the latest developments in the area of digital taxation. The meeting is likely to focus on the prospect for a Europe-wide agreement on taxing digital transactions given the recent withdrawal of the United States from OECD-level negotiations on the issue.

The meeting comes as the US renews hostilities with France over its suspended digital tax. Last Thursday, Robert Lighthizer, the US Trade representative, said that he would announce "Certain sanctions against France, suspending them like they’re suspending collection of the taxes right now”. While not elaborating further, the comments have been understood as referring to the U.S. threat to impose retaliatory duties as high as 100 percent on as much as $2.4 billion worth of French goods, including wine, which was issued during the spat over digital taxation in January of this year.

In the US, a public consultation phase on several section 301 investigations closes on Wednesday, after which the US trade representative may present a list of goods which will be subject to tariffs.

Wednesday, 15 July - EU court to rule on Apple's €13 billion Irish tax bill

The EU General Court will deliver judgment on Ireland's appeal against a €13 billion fine imposed by the European Commission in 2016. Ireland was found to have granted tax benefits of up to €13 billion to Apple in what amounted to illegal state aid. The Commission found that Apple was required to pay substantially less tax than other similar businesses in Ireland as a result of the decisions by the revenue commissioners in 1991 and 2007. It is likely that whatever the judgment on Wednesday the matter will be appealed to the European Court of Justice.

Apple has come to the further attention of the European Commission’s Competition Directorate recently. DG COMP announced on 16 June that it had opened two formal antitrust investigations into tech giant Apple’s App Store rules and Apple Pay service.

Wednesday, 15 July – ESMA to publish investigation of supervisory failures associated with Wirecard

After a request from the European Commission, the European watchdog for markets, ESMA, opened an investigation as to whether there were supervisory failings when it comes to Wirecard. The report is due on Wednesday.

The investigation comes after Wirecard revealed a gap of 1.9 billion euros in its accounts. ESMA decided to conduct a review into whether BaFin correctly responded to allegations of the company’s mishandling of finances, and whether the German regulator did enough to protect investor confidence in EU markets. The Commission has also asked ESMA to report if there were any “legal or administrative obstacles” that prevented the enforcement of reporting requirements.

Thursday, 16 July – CJEU to decide on Schrems II

The landmark Schrems II decision is to be delivered on Thursday at the European Court of Justice (CJEU). The case, which saw the Irish Data Protection Commission (DPC) challenged for its failure to rein in Facebook for illegal data processing transfers to the US, will determine the future of transatlantic data transfers.

The CJEU could choose to invalidate one or both of the transfer mechanisms currently used by Big Tech companies based in Europe: the US Privacy Shield, or the Standard Contractual Clause (SCC) mechanism. It is increasingly likely that at least one of the mechanisms will be invalidated, as the EU Justice Commissioner Didier Reynders has admitted that his department are preparing for “alternative” means of transferring data.

The CJEU Advocate General also issued a preliminary report in December 2019, and while he did not explicitly invalidate the SCC, he said that it would ultimately need to be asked whether the country to which Big Tech companies sent the data – i.e. the USA – had sufficient protection provisions in place. This will see American law scrutinised to see how it measures up against protections offered to EU citizens under the GDPR.

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