EU to Investigate Corporate Tax Codes in Ireland, Luxembourg, Netherlands
- Probe Follows Criticism in Europe of Low Tax Rates Paid by Global Corporations
- Apple used Irish tax laws to allow it to pay just a 3.7% tax rate on non-U.S. income during its last fiscal year.
By TOM FAIRLESS
Updated June 10, 2014 8:27 p.m. ET
BRUSSELS—European Union regulators are preparing to open a formal investigation into corporate-tax regimes in Ireland, Luxembourg and the Netherlands on Wednesday, according to a person familiar with the matter, amid concerns that multinational companies such as Apple Inc. AAPL +0.28% enjoy sweeter tax deals than are permitted under EU law.
The probe by the European Commission, the EU's executive arm, follows criticism in Europe of low tax rates paid by global corporations such as Amazon.com Inc., AMZN +1.54% Google Inc. GOOGL -0.62% and Starbucks Corp. SBUX -0.64% at a time of widespread austerity on the continent.
It is part of a broader crackdown on tax evasion and tax avoidance agreed to by EU leaders in the wake of the region's financial crisis, aimed at boosting national budgets and soothing voter anger over cuts to welfare programs.
The commission will announce a formal investigation into tax deals granted to multinationals at a news conference on Wednesday, the person familiar with the matter said Tuesday. The probe is likely to consider whether generous corporate-tax regimes in Ireland, Luxembourg and the Netherlands amount to illegal state aid.
If the commission's investigation establishes that companies received state aid, it could require that they pay it back. But in practice, such demands are uncommon.
...
The U.S. investigation found no evidence that Apple did anything illegal. And the Irish government last year denied it helps shelter some of the world's largest corporations from paying taxes, saying its long-standing low corporate-tax regime is transparent and doesn't make it a tax haven.
...
However, in a sign of Irish concerns about potential reputational damage following the U.S. Senate revelations, the government last year decided to close a loophole between Irish and U.S. tax codes used that effectively meant that a small number of companies, including Apple, could shift revenue into Ireland and out to other centers that rendered the revenue "stateless" or free of tax anywhere in the world. Ireland's government has said that such aggressive tax planning is unacceptable.
....
More at google.com |
