BRUSSELS — The European Union’s top antitrust official opened an investigation on Wednesday into the way countries including Ireland provide tax arrangements that enable big multinational corporations like Apple to reduce their tax bills worldwide.
The inquiry by Joaquín Almunia, the European Union’s competition commissioner, if it leads to changes, could undermine tax strategies pursued by many American technology companies that have their international headquarters in Ireland and in other countries in the bloc.
The inquiry also covers Starbucks in the Netherlands and Fiat Finance and Trade in Luxembourg.
Ireland has become a preferred place for giant tech companies to place their international headquarters, largely because of concessions from the government allowing businesses to obtain even further breaks on corporate tax rates that, at 12.5 percent, are already low.
“In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes,” Mr. Almunia said in a statement. “Under the E.U.’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,” he said.
European Union officials said the inquiry would examine “transfer pricing arrangements validated” in the three countries involved.
The investigation represents a particular threat to a business model finessed by Ireland, which has used its tax strategies and light-touch regulation to attract major multinationals, providing prestige and jobs that might otherwise end up elsewhere in the European Union.
“The company in question did not receive selective treatment and there was no ‘special tax rate deal,’” the Irish government said in a statement on Wednesday, apparently referring to Apple. “We are very confident that we will successfully defend our position as Ireland does not have a statutorily binding tax ruling system,” the statement said.
“Our technical experts do not believe that there is any state aid. We will now turn to providing our detailed, technical legal rebuttal of the Commission’s position and if necessary will defend our position in the European Courts,” the statement added.
Similar tax inducements offered by the Netherlands and Luxembourg are also expected to be examined by European Union officials, who have previously said that tax avoidance and evasion in the European Union costs governments huge sums each year. In March, Mr. Almunia’s officials threatened to take Luxembourg to court to force it to provide information to let them assess whether certain tax practices were in breach of the bloc’s so-called state aid rules.
There are no fines in such state aid cases, which are mainly aimed at stopping unfair competition between states within the European Union. But if the commission finds that illegal aid was given, governments found to have doled out the unfair subsidies can be ordered to recover the money from recipient companies.
The effort by the Brussels authorities is part of a global crackdown on loopholes that have allowed giant companies like Apple and Starbucks to use complex tax structures to pay small amounts of tax on operations outside the United States. The maneuvers, say critics, allow corporations to operate as virtually stateless entities.
Apple, despite being among the most profitable American companies, has avoided billions in taxes in the United States and around the world through a web of complex subsidiaries, according to lawmakers in the United States. In another widely cited example, Starbucks has paid low corporate taxes in Britain despite operating several hundred stores in that country.
The Irish government’s handling of corporate taxation has become a delicate matter between Dublin and Washington.
In a report last year, the United States Senate Permanent Subcommittee on Investigations identified Apple subsidiaries that have no “tax residency” in Ireland, where they are incorporated, or in the United States, where the executives who manage those units are based. The subcommittee said that Apple had “exploited a difference between Irish and American tax residency rules” but had not broken any laws.
Apple’s chief executive, Tim Cook, later defended the company’s tax strategy in testimony before Congress, saying that profits made in the United States were taxed in the United States and that the company had a significant employee base in Ireland.
Irish tax practices are also highly sensitive in Europe.
The French authorities have expressed outrage at how corporate tax avoidance puts an unfair burden on citizens and ordinary workers, while the authorities in Italy have reportedly looked into whether Apple had avoided Italian taxes by filing returns through a subsidiary in Ireland.
Last Friday, according to the Irish Echo newspaper, the Irish prime minister, Enda Kenny, said that Ireland’s tax structure would be defended “very strongly,” should any European Union inquiry be initiated.
Although Ireland has undertaken steps to modify its tax codes, it has also responded to recent criticism by citing loopholes in other countries’ tax policies and by drawing attention to the lack of uniformity in international taxation principles.
American businesses have long complained about the corporate tax rate they pay at home, arguing that in today’s global marketplace, they are left at a competitive disadvantage. Many companies aggressively seek loopholes that lower their actual tax rates well below the 35 percent statutory rate.
The move by Brussels is part of increased scrutiny on tax codes around the world, partly as governments seek new sources of revenue to pay for expanding social services and aging populations.
Many governments are pressing for policies to prevent corporations from seeking countries with the lowest taxes and then finding ways to book their profits there, even when much of the money is made elsewhere.
Among the ideas under consideration are strict rules for defining where a company has a permanent presence and measures to limit the practice of so-called transfer pricing — the shunting of profits and losses between subsidiaries by disguising them as internal corporate payments for goods or, as is increasingly common, for copyright or patent royalties.
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