European Union officials said Wednesday they had launched an investigation into whether Ireland and two other member nations were providing improper tax breaks to Apple Inc., Starbucks Corp. and Fiat Group.
The announcement came as the U.S. and other fiscally challenged countries have been trying to crack down on corporations funneling profits through foreign subsidiaries to avoid or reduce tax payments.
“In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes,” said Joaquin Almunia, vice president in charge of competition policy for the European Commission.
The investigation will determine whether tax breaks provided by Ireland to Apple, the Netherlands to Starbucks and Luxembourg to Fiat constitute improper “state aid” to the companies, he said.
“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 nondiscriminatory way,” Almunia said.
Apple in particular has been criticized for funneling profits through Irish subsidiaries.
A Senate investigation last year concluded that Apple executives negotiated a special low tax rate with the Irish government that allowed the company to avoid paying at least $15 billion in U.S. taxes on $44 billion in foreign income from 2009 to 2012.
“I don’t know how you got to have Apple to have so much of their business in Ireland; we thought they were a Californian company,” an Irish newspaper quoted California Gov. Jerry Brown as saying on Friday during an event for Irish startups doing business in San Francisco.
“When you look at their tax returns, they’re really an Irish company … it’s called creative accounting,” the Irish Independent quoted Brown as saying at the event, which included the Irish prime minister. A Brown spokesman said he was joking.