12 June 2014
The European Commission (EC) is investigating Apple, Starbucks and Fiat Finance and Trade for the amount of corporation tax they pay.
Three in-depth investigations will examine whether decisions by tax authorities in Ireland, The Netherlands and Luxembourg with regard to the corporate income tax to be paid by Apple, Starbucks and Fiat Finance and Trade, respectively, comply with the EU rules on state aid.
The EC has reviewed the calculations used to set the taxable basis in the three member states and, based on a preliminary analysis, has expresses concerns that the Irish, Dutch and Luxembourgish tax authorities could underestimate the taxable profit and thereby grant an advantage to the respective companies by allowing them to pay less tax.
The EC has been investigating certain tax practices in several member states, under EU state aid rules, following media reports alleging that some companies have received significant tax reductions by way of "tax rulings" issued by national tax authorities.
According to the EC, tax rulings as such are not problematic as they give a specific company clarity on how its corporate tax will be calculated or on the use of special tax provisions. However, tax rulings may involve state aid within the meaning of EU rules if they are used to provide selective advantages to a specific company or group of companies.
As such, general tax regimes of the three member states is not being called into question, but rather the possible selective tax advantages being given to the companies.
EC Vice President and head of competition policy, Joaquin Almunia said: ‘In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes. Under the EU's state aid rules, national authorities cannot take measures allowing certain companies to pay less tax than they should if the tax rules of the Member State were applied in a fair and non-discriminatory way.’