EU widens corporate tax rulings probe
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Brussels has widened a probe into corporate tax rulings to include all 28 member states amid heightened scrutiny of sweetheart tax deals granted to businesses by national governments.
The European Commission, the EU’s executive arm, has demanded to see a list of all tax rulings given to companies between 2010 and 2013 from every member state.
Previously, the commission had asked to see tax rulings from just six: Cyprus, Ireland, Luxembourg, Malta, the Netherlands and the UK. It had also requested further information from Belgium and nine others over the use of “patent boxes”, which allow companies to pay less tax on revenues from intellectual property.
The decision to expand the probe comes after a leak of hundreds of tax rulings granted by Luxembourg, which revealed that some multinationals were paying as little 1 per cent in tax by funnelling profits through the Grand Duchy.
The leak, which unveiled the tax schemes of more than 400 of the world’s biggest companies including Disney and Ikea, caused added furore since the bulk of these deals were agreed while new European Commission president Jean-Claude Juncker was the Grand Duchy’s prime minister. Mr Juncker has sought to distance himself from the affair, telling MEPs in November that he was not the “architect” of Luxembourg’s tax system.
In a statement on Wednesday, the commission said that “a number of member states seem to allow multinational companies to take advantage of their tax systems”. Margrethe Vestager, the commissioner responsible for competition policy, added: “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.”
The commission did not make clear whether it would demand to see individual tax rulings as part of this investigation, although it has done so in the past.
Ireland, the Netherlands and Luxembourg are already facing state aid probes into allegations that they gave unfair advantage to Apple, Starbucks and the financing arm of Fiat, respectively. In October, the commission launched a separate investigation into Amazon’s dealings with the Grand Duchy.
Luxembourg has defended itself against accusations that it is a tax haven by arguing that other countries granted similar tax deals to companies. The Grand Duchy is fighting demands to hand over documents relating to the tax ruling investigation. A spokesperson for the commission said: “The commission remains in contact with Luxembourg and expects them to reply.”
