Apple Inc., Amazon See Mounting Tax Investigations In European Union

Apple, Amazon and two other multinational corporations face an accelerated investigation into their tax arrangements with European governments, European Union authorities said Thursday. Margrethe Vestager, the EU’s chief antitrust officer, told lawmakers that 15 countries are now cooperating with the inquiry, giving the regulators the tools needed to probe the alleged sweetheart tax deals to “a deeper level.” The investigation could find the companies in question liable for hefty back taxes.

The development, first reported by the Wall Street Journal, comes as the EU attempts to crack down on tax avoidance throughout the bloc. Regulators last year shared suspicions over Apple’s baroque tax arrangements in Ireland and Starbucks’ self-described “attractive” deal with the Netherlands. Authorities estimated last year that Apple may owe as much as $8 billion in back-taxes.

Online retail giant Amazon and automaker Fiat’s finance arm attracted scrutiny for their tax agreements with Luxembourg, a country that has faced widespread criticism after a series of leaks revealed the 300-plus major corporations that funnel profits through the tiny state. Many of those deals were hammered out while Jean-Claude Juncker, now president of the EU’s executive arm, was prime minister of Luxembourg.

“It is only fair that subsidiaries of multinational companies pay their share of taxes and do not receive preferential treatment which could amount to hidden subsidies,” said Joaquín Almunia, EU’s vice president for competition policy, last year.

Large U.S. tech companies have attracted particular attention from EU antitrust and tax authorities. “We feel that they have now grown so big that they think they can use their strengths to close competition,” Vestager said in June. “No matter your ownership, no matter your size, you have to play by the rulebook.”

The rules in question concern EU member states’ alleged breaches of the single-market principle. Though the EU itself does not levy taxes, it oversees individual countries’ tax laws to ensure they are not doling out selective advantages to specific firms.

In order to probe whether deals in Luxembourg and elsewhere were unfair, the EU antitrust division requested that member states provide copies of 10 to 12 tax rulings, documents that spell out companies’ expected future taxes.

Until this week, several countries had dragged their feet in complying with the request. Luxembourg held out until December, while Poland, Estonia and the Czech Republic only just relented.

Vestager, who is leading the probe, has provided no timeline for completion of the investigation.