Irish Economy
European Commission is investigating Ireland, Netherlands, Luxembourg over multinational tax deals
By Michael Hennigan, Finfacts founder and editor
Sep 12, 2013 - 8:36 AM

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Irish Government's foolish tax letter to US senators

The European Commission is investigating Ireland, the Netherlands and Luxembourg over tax deals with multinationals, a move that could lead to a formal investigation into illegal sweeteners.

The Financial Times reports that Europe’s competition directorate has asked the Irish government to explain its system of tax rulings and to provide details of assurances given to several specific companies.

The FT said that Luxemburg and the Netherlands are also under investigation and the Commission is seeking details about arrangements with companies including Apple and Starbucks, according to sources.

The move threatens to open a new front in the global clampdown on tax evasion through enforcing the EU’s state aid rules, which ban serious distortions of competition through tax breaks to certain groups.

The US Senate Permanent Subcommittee on Investigations said last May that Apple told it that it had obtained this special rate of a maximum 2% through negotiations with the Irish government.

Since 2003 the effective rate on profits has been 2% or less - - in one year, 2011, it was 0.05%.

Apple Inc. used Irish companies, which it regarded as 'stateless,' to avoid paying corporate taxes to any national government on tens of billions of dollars in overseas income over a period of four years, according to a report published by the panel. However, even though stateless, the Apple companies have secret agreements with Ireland's revenue authorities to also partly operate as resident companies and be subject to the low rate.

The Irish government denied that a low rate was agreed but it did not rule out special arrangements.

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