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EU is investigating Tax Breaks for US Multinationals

Author: Donald Scarinci

Date: June 16, 2014

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The U.S. has spent a lot of time talking about its own tax laws in relation to large multinationals that repatriate abroad in order to duck its 35 percent income tax rate, but so far little has been said about these companies’ new host governments.

This seems to be changing now that the European Union has opened an investigation into the tax arrangements had between countries like Ireland and the large multinationals that they attract, according to The New York Times. The inquiry is being led by Joaquin Almunia, the EU’s competition commissioner, and covers Apple’s arrangement in Ireland, Starbucks’ in the Netherlands and Fiat Finance as well as Trade in Luxembourg.

“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 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.”

Ireland has become the tax-haven of choice for multinational tech giants to hang their hats as a result of its low 12.5 percent corporate tax rate and its habit of providing them with further concessions, The New York Times explained. This strategy allows Ireland to attract revenue and jobs from giant, profitable companies that otherwise may have gone elsewhere.

For its part, Ireland maintained that Apple received no special tax deal, which would be illegal under EU law, according to the news source. Further, the country expressed its intention to vigorously defend itself, if necessary in European Court. Apple echoed the statement.

If you have any questions about this post or would like to discuss your company’s tax,trust, and estate matters , please contact me, Frank L. Brunetti at ScarinciHollenbeck.com. 

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