LONDON/BRUSSELS – The European Commission raised pressure on Ireland, the Netherlands and Luxembourg over their corporate tax practices, saying it was investigating deals the countries have cut with Apple, Starbucks and Fiat.
Starbucks told a UK parliamentary investigation in 2012 that it received a tax deal in the Netherlands which allowed it to enjoy a “very low” tax rate, while a U.S. Senate probe last year revealed that Apple had sheltered tens of billions of dollars in profits from tax by using Irish companies that had no tax residence anywhere.
Apple in the United States entered into deals with the Irish subsidiaries whereby the Irish units received the rights to certain intellectual property that were subsequently licensed to other group companies, helping ensure almost no tax was reported in countries such as Britain or France.
Apple’s Irish arrangement helped it achieve an effective tax rate of just 3.7 percent on its non-U.S. income last year, its annual report shows – a fraction of the prevailing rates in its main overseas markets.
The Group of 20 leading nations has launched a drive to develop new rules to tackle abusive transfer pricing and other forms of corporate profit shifting.
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