EU Seeking Back Taxes From Apple; Who's Next?
The European Union ruled on Tuesday that Ireland's tax arrangements with Apple Inc. (NASDAQ: AAPL) are not compliant with EU laws. As a result, the company must pay $14.5 billion in back taxes it owes the Irish government.
The EU has been investigating multi-national companies operating within its jurisdiction that may be receiving favorable tax rulings, or "sweetheart deals."
It is impossible to estimate how large of a tax bill other companies benefiting from favorable tax codes will receive, if any. Nevertheless, here is a summary of some of the notable companies known to be subject to investigations by the EU.
Starbucks And Fiat Chrysler
Starbucks Corporation (NASDAQ: SBUX) calls Netherlands its European hub. The European Commission ruled that Starbucks artificially inflated the internal price in which a Dutch roaster bought coffee beans from another Starbucks company in Switzerland. Reports initially surfaced that Starbucks would be handed a tax bill of just 30 million euros ($33.5 million). However, the company may still be paying a low tax rate in the Netherlands, which creates the possibility of more future probes.
Fiat Chrysler Automobiles NV (NYSE: FCAU) was also accused of setting up an internal financing subsidiary in Luxembourg and approached the government's tax authorities for assurances that a tax structure wouldn't be challenged.
According to Forbes, the EU handed both Starbucks and Fiat a penalty of 20 to 30 million euros ($22 million to $33.5 million).
Amazon is alleged to be taking advantage of favorable transfer pricing arrangements, which in the eyes of the EU could represent a form of state aid.
French investigators raided Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL)'s Paris headquarters in May of this year over an ongoing tax related case. Although in this instance it appears the EU isn't directly involved in the matter, this could change quickly.
Also notable is the fact France said in 2014 that Google owes the state around $1.79 billion in back taxes, and the government heavily criticized the company for its use of aggressive tax optimization.
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