Brussels opens investigation into Ireland’s multinational tax deals

Brussels is investigating Ireland over its tax deals with multinationals, paving the way potentially for a formal investigation into illegal sweeteners.

Europe’s top competition authority has asked the Government to explain its system of tax rulings and give details of assurances given to several specific companies. Luxemburg and the Netherlands are also underinvestgation. Companies which the authority asked for details about include 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.

This request represents the opening step of an informal investigation. It does not mean the European Commission has identified wrongdoing.

If the Commission finds cause for concern, it will open a formal investigation and start a process that could force Ireland and the other countries to recoup all the lost revenues from any outlawed tax deals. A Commission spokesperson said: “At the moment, we are simply gathering information on tax rulings.”

The Hague, Dublin and Luxembourg have all been forced to counter claims that they are acting as tax havens, giving big corporations a base to reduce their tax bill worldwide. The rulings under scrutiny give assurances to companies – sometimes in advance of a decision to relocate – over how their tax affairs will be treated.

The Department of Finance said it was not aware of a formal EU state aid inquiry but said it received queries from the Commission “from time to time” on a range of issues including tax.

A US Senate committee accused Ireland of acting as a conduit for Apple's earnings so it could sidestep large tax payments around the world. The report claimed Dublin allowed Apple to apply a corporation tax of 2 per cent or less, well short of the usual 12.5 per cent rate. Ireland strongly rejects allegations of a "special deal".
– Copyright The Financial Times Limited 2013