Apple, Starbucks and Fiat. The European Commission has opened three investigations to assess whether the decisions of the tax authorities of Ireland, the Netherlands and Luxembourg respectively on the income taxes of the three companies are compatible with EU rules. Brussels suspects that some rules have deliberately favored some companies, taking the form of state aid.
The Commission believes that the rules in question may underestimate taxable income and therefore guarantee advantages for the respective companies, allowing them to pay less tax. This issue only concerns agreements on the tax base, not on the applicable tax rate.
The provisions on tax matters (tax ruling) that have come under the scrutiny of the EU are used in particular in the case of transfer pricing agreements with reference to the prices attributed for commercial transactions between the various parts of the same group of companies and, specifically , at prices set for goods sold or services provided by one subsidiary of a group to another subsidiary.
Transfer pricing influences the allocation of taxable income among the various subsidiaries of a group located in different countries. If tax authorities, by accepting the calculation of the tax base proposed by a company, demanded a remuneration from a subsidiary or branch consistent with market values reflecting normal conditions of competition, this would rule out the presence of State aid . If, on the other hand, the calculation were not based on a remuneration in line with the market, this could lead to a more favorable treatment of a company compared to the treatment reserved for other taxpayers and therefore constitute the situation of State aid.
In particular, the Commission will examine the rules issued by the Irish tax authorities in calculating the taxable income allocated to the Irish branches of Apple Sales International and Apple Operations Europe. The legislation of the Dutch tax authorities on the tax base in the Netherlands of the manufacturing activities of Starbucks Manufacturing EMEA BV and, finally, the tax rules issued by the Luxembourg authorities for the calculation of the tax base of the financing activities of Fiat Finance will also be examined by the Commission and Trade.
