EU decisions on tax-sweetener cases expected in ‘the next months,’ Koopman says
29 April 2015. By Matthew Newman.
The European Commission’s probes of potentially illegal government subsidies for multinational companies — including Apple and Amazon.com — are “approaching the end,” with rulings planned for this summer, a senior commission official said today.
The commission has advanced investigations into tax sweeteners in Ireland, Luxembourg and the Netherlands to the alleged benefit of Apple, Amazon, Starbucks and Fiat’s finance arm.
Gert Jan Koopman, deputy director-general for state aid, said that the investigations were almost complete and that final decisions will be made on whether the countries’ so-called “tax rulings” break EU law. These decisions can be appealed at the EU courts in Luxembourg, he said.
“We aim at taking decisions over the next months, so over the summer,” Koopman said during a conference* in Brussels, reiterating recent comments from antitrust chief Margrethe Vestager. “We’re approaching the end of our work in this field.”
The EU regulator has also widened its net in looking for tax advantages given to multinationals. In December, the commission sent questionnaires to all EU countries, seeking feedback on their use of tax rulings.
Koopman said the governments’ responses have prompted the commission to look into other cases. He wasn’t more specific.
“We’re looking at a number of cases and issues that come out from that,” Koopman said. “Obviously from that basis we’ll take further action as and when necessary. It’s too early to draw any conclusions from just four cases. There are other cases that we’re looking at it.”
In February, the EU regulator also opened an in-depth probe into Belgian tax rulings that allow multinational companies to reduce their fiscal burden. The four investigations close to completion focus on whether the countries’ tax authorities gave special treatment to certain companies. The commission is analyzing whether governments have correctly implemented international guidelines on how multinational companies should transfer profits between entities in different countries, Koopman said.
The probes are looking into whether tax authorities properly verified whether the companies’ profit transfers were in line with “market terms” under international guidelines. These “transfer pricing” guidelines were agreed by the Organization for Economic Cooperation and Development, Koopman said.
Under the OECD’s arm’s-length transfer-pricing guidelines, companies should treat intragroup transactions in the same way as they handle those with independent companies.
“We’re not vetting whether countries or rulings comply with OECD transferpricing guidelines as such,” he said. “That would be an awkward activity for the commission to be engaged in. What we’re actually looking at is whether the arm’s length [principle] is laid down sufficiently in the national law or is being implemented in a compatible manner in the [tax] ruling at hand.”
“From a state-aid point of view, tax administrations must verify that the transfer pricing mirrors market terms,” he said. “The tax authorities should check whether the result corresponds with market principles. It’s not just the fact of taking note that there’s a report by a consultancy. This is something where this is an active duty and responsibility of the tax authorities.”
“Decisions will follow in the coming months,” Koopman said. “They will provide some clarity as to how we appreciate this from a state-aid point of view.”