The European Union Commission's antitrust regulator is investigating deals that Apple, Starbucks and Fiat struck with tax authorities in several European countries to see whether they amount to unfair state aid.
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The multinationals have agreements with tax authorities in Ireland, the Netherlands and Luxembourg as part of their strategy to minimize the taxes they pay.
The EU antitrust commissioner, Joaquin Almunia, said Wednesday that while such agreements are permissible in theory, they would be improper if they give the companies involved an advantage over competitors.
The companies named have been frequent targets of criticism for paying low taxes in some places they operate.
The countries have also been criticized — Ireland for its low tax rates, the Netherlands and Luxembourg as homes for shell companies, and all three for secrecy.
"In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes," Almunia said in a statement.
Corporate tax shifting is rising to the top of public agendas as countries around the world observe multinationals that operate within their borders pay little or no tax.
Apple has a deal with tax authorities in Ireland, Starbucks in the Netherlands and Fiat's financing arm in Luxembourg as part of their strategy to minimize the taxes they pay.
3 investigations just a start
Almunia said the three investigations announced Wednesday are part of a wider look into tax rules in various EU countries and "aggressive" tax planning by multinationals, which he said erodes countries' tax bases. He named Belgium as another country whose tax rules his office is examining.
"Why three companies today? Because we are starting," he said at a press conference in Brussels.
Ireland was quick to respond, issuing a statement that it is "confident that there is no state aid rule breach in this case and we will defend all aspects vigorously."
The Netherlands also replied that it has not broken EU rules.
Apple said on Wednesday it has not received any selective tax treatment from the Irish authorities, while Starbucks said it complied with all tax rules. Fiat declined comment.
Almunia was at pains to say he is not criticizing the countries' overall tax regimes. He said the issue in question involves 'transfer pricing' — where a company allows one part of its operations to charge another for goods or services in one country in order to shift profits where it wants.
For instance, Starbucks might charge its own subsidiaries a license fee for using its logo. If it keeps its European licensing arm in the Netherlands and then funnels all the licensing fees there, it could have high profits there and low profits elsewhere.
The Commission said that sort of strategy is only allowable if the prices a company charges its subsidiaries conform to market rates. Otherwise, the companies could lowball their overall taxable profit, giving them an advantage.