EU examining member states' corporate tax arrangements

BRUSSELS Thu Sep 12, 2013 7:33am EDT

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BRUSSELS (Reuters) - The European Union's competition authority is looking into corporate tax arrangements in several member states and has requested information from at least the Netherlands, Ireland and Luxembourg, officials said on Thursday.

EU state-aid rules are designed to prevent unfair practices, although it is not clear that countries offering favorable tax terms to companies or industries would violate such rules.

While a preliminary step, the move by the European Commission, the EU's competition authority, forms part of wider efforts by European and U.S. authorities to shed more light on international tax policy. Depending on what the requests for information produce, a formal investigation could follow.

"The Commission is simply gathering information about tax rulings. Requests for information have been sent to several member states," Antoine Colombani, the European Commission's spokesman on competition issues, said.

Sources confirmed that information requests had been sent to at least the Netherlands, Ireland and Luxembourg.

The Commission's move follows revelations about the tax-planning practices of major corporations such as Apple (AAPL.O), Google (GOOG.O) and Starbucks (SBUX.O) that have allowed the companies to pay minimal tax despite multi-billion dollar revenues and profits.

Ireland, the Netherlands and Luxembourg all have specially structured corporate tax arrangements, but so do other EU member states. In the majority of member states, the effective corporate tax rate is nearly always lower than the nominal rate, which is usually the result of "sweeteners" in the tax code.

Ireland said it was not aware of any formal state-aid enquiry by the Commission and said it had an open and transparent tax system.

"Ireland, like all member states, from time to time receives queries from the Commission on a variety of issues, including tax, and we always cooperate fully with such requests," the finance ministry said in a statement.

The Luxembourg finance ministry said it regularly received tax-related requests from the Commission, but was not aware of a formal EU enquiry.

"There has been no questioning about Luxembourg tax relationships with a specific company," the ministry said in an emailed response to questions.

A spokesman for the Dutch finance ministry said: "In general we do get enquiries (from Brussels) about all kinds of matters, about tax matters, finance ministry matters, quite often, but these are confidential."

(Additional reporting by Sam Cage in Dublin, Sara Webb in Amsterdam and Phil Blenkinsop in Brussels; Writing by Luke Baker; Editing by Susan Fenton)

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