EUROPEAN Union antitrust regulator Joaquin Almunia launched an investigation today into tax deals that Apple, Starbucks and Fiat work with European countries.
Commissioner Almunia said it appeared the arrangements were not proper and violated competition law, but the companies and countries involved — the Irish Republic, the Netherlands and Luxembourg — must be given a chance to respond.
“In the current context of tight budgets, it is particularly important that large multinationals pay their fair share of taxes,” he said.
Apple has a deal with tax authorities in Ireland, Starbucks with the Netherlands and Fiat’s financing arm with Luxembourg as part of their strategy to minimise their tax burdens.
Commissioner Almunia said that while such agreements were permissible in theory, they would be improper if they gave the companies an advantage over competitors.
The named companies have been frequent targets of criticism for paying low taxes in countries where they operate.
Apple pays less than 2 per cent tax in Ireland — far less than the standard 12.5 per cent corporation tax — after it obtained a better rate through negotiations with the government.
In June last year the BBC reported that Starbucks had paid just £8.6 million in corporation tax in Britain over 14 years and nothing in the last four years — despite annual sales of £400m in 2012-13.
The countries have also been criticised — Ireland for its low tax rates, the Netherlands and Luxembourg as homes for shell companies, and all three for secrecy.
Commissioner Almunia said the three investigations were part of a wider look into tax rules in 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.
Ireland's government was quick to respond with a spokesman claiming that it is “confident there is no state aid rule breach in this case and we will defend all aspects vigorously.”
Mr Almunia said the issue in question involved transfer pricing — where a company allows one part of its operation to charge another for goods or services across countries in order to shift profits to where tax is lower.