EU: Small EU team leads tax battle against corporate giants

In an office block in one of Brussels’ less fashionable districts, the 10 Competition Directorate staff from across the bloc have spent two years poring over hundreds of deals agreed between companies and member-states’ tax authorities.

Their findings were the basis on which the European Commission, the EU’s executive arm, last week ruled that Starbucks Corp and Fiat Chrysler Automobiles NV benefited from illegal tax deals with the Dutch and Luxembourg authorities. The EU said these deals represented unfair state aid that gave the companies an unfair advantage and ordered the countries to reclaim €20mil-€30mil from each.

The Commission continues to investigate other rulings including one Luxembourg gave Amazon.com Inc and rulings Ireland gave Apple Inc, that allowed those companies to earn billions of dollars tax free. If Commission rulings are executed, it could force a sea change for hundreds of multinationals operating in Europe, whose strategies to avoid tax have triggered public anger since the global financial crisis of 2007-2009 left governments strapped for cash.

Headed by Max Lienemeyer, who specialised in competition and trade law before joining the Commission in 2003, the team of Eurocrats has been initiating cases, scrutinising inter-company transactions, and negotiating with companies and governments, to decide whether so-called “transfer prices” allowed the companies to unfairly reduce their tax bills.

Scrutinising corporate tax arrangements is a painstaking task that is usually undertaken by experienced tax investigators.

Full content: The Economic Times

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