The European Union’s antitrust regulator has launched an investigation into tax deals that Apple, Starbucks and Fiat struck with some European countries, the start of a wider push to keep multinationals from taking advantage of loopholes. \u00a0EU antitrust commissioner Joaquin Almunia said Wednesday a preliminary probe by his office has found the arrangements are improper, though the companies as well as the countries involved \u2014 Ireland, the Netherlands and Luxembourg \u2014 must be given a chance to respond.<\/p>\n
“We have reason to believe at this stage that indeed in these specific cases the national authorities have (failed) to tax part of these multinationals’ profits,” Almunia said at a press conference in Brussels.<\/p>\n
Apple has a deal with tax authorities in Ireland, Starbucks has one in the Netherlands and Fiat’s financing arm has one in Luxembourg as part of their strategy to minimize the taxes they pay.<\/p>\n
Almunia said that while such agreements are permissible in theory, they would be improper if they give the companies an advantage over competitors who can’t benefit from the same deal. \u00a0“Aggressive” tax planning by multinationals erodes countries’ tax bases. \u00a0Nine other countries are under preliminary investigation.<\/p>\n
The countries named Wednesday have been criticized \u2014 Ireland for its low tax rates, the Netherlands and Luxembourg as homes for shell companies, and all three for a lack of transparency.<\/p>\n
Three investigations involve ‘transfer pricing’ \u2014 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.<\/p>\n
For instance, if Starbucks were to sell its coffee beans to subsidiaries around Europe at a higher than market price, that would increase profits in the Netherlands and decrease them elsewhere. If it receives a tax break in the Netherlands, it would have an unfair competitive advantage.<\/p>\n
The Commission said transfer pricing is permissible if the prices a company charges its subsidiaries conform to market rates.<\/p>\n
The European Union’s antitrust regulator has launched an investigation into tax deals that Apple, Starbucks and Fiat struck with some European countries, the start of a wider push to keep multinationals from taking advantage of loopholes. \u00a0EU antitrust commissioner Joaquin … Continue reading ![\"Picking](\"http:\/\/www.w-t-w.org\/en\/wp-content\/uploads\/2014\/06\/Picking-Your-Most-Favorable-Country-300x212.jpg\")
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