EC INVESTIGATES TRANSFER PRICING ARRANGEMENTS ON CORPORATE TAXATION IN LUXEMBOURG AND IRELAND

Recently, the European Commission (EC) has published two main decisions taken last June to undergo investigations into transfer pricing arrangements on corporate taxation of Apple in Ireland and Fiat Finance and Trade in Luxembourg.

The European Commission’s crackdown on the deal between Irish tax authorities and Apple Inc. represents a leap forward in the growing global war on tax avoidance by multinational companies. Governments facilitating tax deals are now becoming a target.

The Commission utiliseda new tool for limitingGovernments’ ability to negotiate favorable tax deals. As reported, the Commission said that the agreement with Apple constituted “state aid,” violating Europe’s rules prohibiting countries from giving anti-competitive advantages.

The next review from the Commission, which is expected shortly, will be on Starbucks Corp.’s taxable profits in the Netherlands.