Apple isn't the only giant US company being scrutinized for its overseas taxes
Apple CEO Tim Cook REUTERS/Lucy Nicholson
Apple (AAPL) dominated the news Tuesday after the European Commission said it must pay back $14.5 billion plus interest in back taxes to Ireland.
But Apple isn’t the only US corporation to face scrutiny from the European Union, which is questioning the legality of tax breaks EU member countries give to big foreign companies to entice them to do business there.
Last October, the European Commission ruled that a tax arrangement between Starbucks (SBUX) and the Netherlands was illegal, forcing the Seattle-based coffee giant to pay back $32.7 million. The Netherlands filed an appeal this January, although it could be at least another year-and-a-half before any resolution.
For Amazon (AMZN) and McDonald’s (MCD), European tax investigations are ongoing. Both corporations may be in hot water over tax situations with Luxembourg, the small European country bordered by Belgium, France and Germany.
In October 2014, the European Commission began an investigation into Amazon’s tax arrangements with Luxembourg, claiming a tax ruling from 2003 favoring Amazon may also be in violation of the trade bloc’s rules.
“Based on a methodology set by the tax ruling, Amazon EU Sàrl pays a tax deductible royalty to a limited liability partnership established in Luxembourg but which is not subject to corporate taxation in Luxembourg,” part of the commission’s press release reads, adding that most European profits of Amazon are recorded in Luxembourg but not subject to corporate taxation in that country.
Amazon declined to comment when reached by Yahoo Finance. It’s also unclear when the European Commission will finally offer a ruling for the Seattle-based company.
McDonald’s, meanwhile, came under scrutiny in December 2015, when the European Commission declared the European franchising side of the corporation “has not virtually paid any corporate tax in Luxembourg nor in the US” since 2008 for royalties paid by franchisees operating restaurants in Europe and Russia. The commission has not made a decision in the case of McDonald’s, either.
McDonald’s did not immediately return Yahoo Finance’s request for comment.
As The Wall Street Journal pointed out Tuesday, Facebook (FB) may not be immune to scrutiny in the months to come. The No. 1 social network, like Apple, has significant operations in Ireland, including a new headquarters and data center outside Dublin, and the European Commission may very well investigate whether Facebook’s local tax arrangements are similar to Apple’s.
“We pay all taxes required by law everywhere we operate,” a Facebook spokesperson told Yahoo Finance.
In Apple’s case, the European Commission declared the Irish government had broken state aid rules by forming an arrangement with Apple that allowed the company to significantly reduce its tax bill.
“Member States cannot give tax benefits to selected companies — this is illegal under EU state aid rules,” Margrethe Vestager, the European competition commissioner, said in a statement.
As Yahoo Finance managing editor Sam Ro points out, it’s unclear whether Apple will be responsible for paying the entire $14.5 billion sum, whether Apple will do so do in one lump sum, or whether the figure will be reduced.
https://www.yahoo.com/finance/news/amazon-mcdonalds-starbucks-eyed-over-eu-taxes-225354808.html