European Commission launches tax probe into Apple, Starbucks and Fiat

The investigation will focus on transfer-pricing arrangements on corporate tax in Ireland, Luxembourg and The Netherlands

Associate Business Editor

Fiat, Starbucks and Apple all face investigations into their tax affairs by the European Commission.

The commission said it had also started infringement proceedings against the authorities in Luxembourg for failing to hand over information it had requested concerning Fiat.

Both the Netherlands, in relation to Starbucks, and Ireland, with Apple, have complied with its demands.

Brussels' action comes against a backdrop of mounting public anger over the complex structures used by multinationals to cut their tax bills and will also serve to heighten pressure on the three countries concerned, all of which have found favour with companies seeking to pay less tax.

European watchdogs are investigating the prices set for transactions between corporate subsidiaries – known as transfer pricing – approved by the Irish, Luxembourg and Dutch tax authorities and whether they resulted in favourable treatment for the three multinationals.

Tax bills can be reduced where a subsidiary in one country pays an artificially high price for goods or services to a subsidiary located in another. The practice can in effect shift tax from a high-tax regime to another offering lower rates. The EU says "market rates" should be charged. If investigators find that this is not the case, the countries could be found to have violated rules on the provision of state aid to companies, although legal analysts have said the EU could face a tough battle to prove a case.

The Irish Government, for one, has strenuously denied offering Apple any special treatment and Apple has always insisted it complies with all relevant rules and regulations and has not benefited from sweetheart deals.

Ireland has become a favoured destination for technology giants. It already charges corporations the very low rate of 12.5 per cent. Critics argue that it allows multinationals further concessions on top of that and its tax practices have proved to be a sore point with other EU members. A US Senate investigation last year claimed Ireland had given special treatment to Apple.

The commission vice-president in charge 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."

None of the countries concerned faces fines or financial penalties, but they could be forced to recover funds from the companies concerned if state aid is found to have been illegally given to them.

Fiat, ironically, shifted its domicile to the UK at the beginning of the year to take advantage of low corporate tax rates. The company also said in January it would register the holding of its newly created Fiat Chrysler Automobiles group in the Netherlands, cementing a politically sensitive shift away from its Italian home.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Mortgage Advisor - OTE £95,000

£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...

SThree: Trainee Recruitment Consultant

competitive: SThree: Are you passionate about sales?Do you have a keen interes...

Recruitment Genius: Loan Adviser - OTE £30,000

£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Day In a Page

Isis in Syria: Influential tribal leaders hold secret talks with Western powers and Gulf states over possibility of mobilising against militants

Tribal gathering

Influential clans in Syria have held secret talks with Western powers and Gulf states over the possibility of mobilising against Isis. But they are determined not to be pitted against each other
Gaza, a year on from Operation Protective Edge: A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians

Gaza, a year on from Operation Protective Edge

A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians
Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously

Illnesses, car crashes and suicides

Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously
Srebrenica 20 years after the genocide: Why the survivors need closure

Bosnia's genocide, 20 years on

No-one is admitting where the bodies are buried - literally and metaphorically
How Comic-Con can make or break a movie: From Batman vs Superman to Star Wars: Episode VII

Power of the geek Gods

Each year at Comic-Con in San Diego, Hollywood bosses nervously present blockbusters to the hallowed crowd. It can make or break a movie
What do strawberries and cream have to do with tennis?

Perfect match

What do strawberries and cream have to do with tennis?
10 best trays

Get carried away with 10 best trays

Serve with ceremony on a tray chic carrier
Wimbledon 2015: Team Murray firing on all cylinders for SW19 title assault

Team Murray firing on all cylinders for title assault

Coaches Amélie Mauresmo and Jonas Bjorkman aiming to make Scot Wimbledon champion again
Wimbledon 2015: Nick Bollettieri - Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!

Nick Bollettieri's Wimbledon Files

Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!
Ashes 2015: Angus Fraser's top 10 moments from previous series'

Angus Fraser's top 10 Ashes moments

He played in five series against Australia and covered more as a newspaper correspondent. From Waugh to Warne and Hick to Headley, here are his highlights
Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high