Company Tax Deals Across EU Face Scrutiny as Probe Widens
The European Union’s probe of tax deals expanded as the competition regulator asked all EU countries to give it information about financial agreements with multinational corporations.
The EU is seeking lists of every company granted a so-called tax ruling between 2010 and 2013, the European Commission said today in an e-mailed statement.
“We need a full picture of the tax-rulings practices in the EU to identify if and where competition in the single market is being distorted through selective tax advantages,” said EU Competition Commissioner Margrethe Vestager.
The former Danish economy minister, who took up her EU role on Nov. 1, inherited probes into Irish tax deals with Apple Inc. (AAPL), Luxembourg’s taxation of Amazon.com Inc. (AMZN) and Fiat Finance & Trade and Netherlands’ treatment of Starbucks Corp. The commission is in charge of policing state subsidies that skew competition and can request countries to claw back illegal aid.
The commission’s probes into corporate taxation have faced opposition. Irish Finance Minister Michael Noonan said last month that the EU case isn’t strong and he thought it would be dropped. Luxembourg is already challenging regulators’ demand for taxation documents in court.
The wider net may protect the regulator against claims that it was picking on a few countries, said Thomas Jestaedt, a lawyer at Jones Day in Brussels.
‘Somewhat Arbitrary’
“One of the main weaknesses of the commission initiative has been that the choice of countries and individual companies under scrutiny looked somewhat arbitrary,” Jestaedt said. “With the broadening of the review, the commission addresses these weaknesses.”
Tax issues have cast a shadow over the first few weeks of Jean-Claude Juncker’s tenure as president of the commission after a group of investigative journalists disclosed in early November that Luxembourg helped hundreds of companies shave tax bills. Juncker, who was Luxembourg’s prime minister for almost 19 years until late 2013, said last month that he had no involvement in the deals.
“Luxembourg has repeatedly stated that the analysis of matters relating to international taxation and tax rulings calls for a broad perspective, and cannot be limited to one country’s regulatory framework and practice,” Luxembourg Finance Minister Pierre Gramegna said in an e-mailed statement.
In response to the so-called LuxLeaks, Juncker has brushed off questions over whether he should step down, saying he’ll lead Europe’s fight against tax evasion. He proposed last month EU legislation to require EU governments to share tax rulings with each other.
