December 17, 2014 / 10:52 AM / 5 years ago

Regulators extend tax probe to all 28 EU nations

BRUSSELS (Reuters) - European Union competition regulators have asked all 28 member countries for details of tax deals made with companies between 2010 to 2013, broadening their investigation into corporate tax avoidance.

Competition European Commissioner-designate Margrethe Vestager of Denmark addresses the European Parliament's Committee on Economic and Monetary Affairs, at the EU Parliament in Brussels October 2, 2014. REUTERS/Eric Vidal

The move by the European Commission follows ongoing inquiries into Luxembourg’s tax rulings for carmaker Fiat Chrysler and online giant Amazon, coffee chain Starbucks Corp’s Dutch deal and iPhone maker Apple’s Irish arrangement.

Tax avoidance, while not illegal, has in recent years galvanized authorities into taking action to try to ensure that multinational companies pay a fair share of their profit.

“We need a full picture of the tax rulings practices in the EU to identify if and where competition in the single market is being distorted through selective tax advantages,” European Competition Commissioner Margrethe Vestager said in a statement.

The Commission, which has been looking into deals granted by Luxembourg, Ireland, the Netherlands, Britain, Cyprus, Malta and Belgium for 18 months, probably wants to show that it is playing fair, said Hans Gilliams, a partner at law firm Eubelius.

“I suspect the Commission wants to avoid being accused of partiality, to avoid Luxembourg and other countries saying that they have been singled out,” he said.

Luxembourg Finance Minister Pierre Gramegna welcomed the move. “The analysis of matters relating to international taxation and tax rulings ... cannot be limited to one country’s regulatory framework and practice,” he said.

He voiced support for efforts by the new Commission, run by former Luxembourg prime minister Jean-Claude Juncker, to promote greater coordination among member states on corporate taxation.

International criticism of Luxembourg’s role in sheltering major companies from global taxes has overshadowed Juncker’s arrival in office.

Gilliams said the bloc-wide investigation could also be useful in resolving the issue on a pan-European level.

“On the basis of this, they can determine a common approach,” he said.

It is not clear however if the Commission can extract information from countries which are not currently in their sights if they do not have any evidence of wrongdoing.

Luxembourg said such requests are fishing expeditions and incompatible with the rights of defense. Europe’s second-highest court will hear its challenge on Jan. 8.

Additional reporting by Alastair Macdonald; Editing by Keith Weir

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