The European Commission has told Ireland it might investigate more companies in a probe into the nation’s tax practices, after announcing a formal probe into Apple Inc’s Irish subsidiaries, a person familiar with the matter said on Friday.
The EU is investigating whether Ireland, Luxembourg and the Netherlands have attracted investment and jobs by helping big companies avoid taxes in other countries, including EU members.
Corporate profit-shifting has come under the international spotlight in recent years following reports of how companies such as Apple and Google Inc use complex structures to slash their tax bills.
The commission suspects that Ireland was too lenient in rulings it gave to Apple that helped the company shield tens of billions of US dollars in profit from tax. It has asked Dublin for information on the rulings it gave Apple.
Commission officials said they believed other companies had also benefited from similar treatment and want Ireland to change its approach so companies cannot shift so much profit through Ireland into tax havens.
“The commission has told Ireland it may go after other companies if it does not fix the problem,” the source said.
Apple has denied receiving selective treatment from Irish authorities. Ireland, the Netherlands and Luxembourg said any tax rulings they give are in line with international practices.
Pushed by France and Germany, Brussels is keen to clamp down on what it sees as unfair tax competition across the bloc.
“Member states’ tax incentives should never be used to lure profits away from where they should rightfully be taxed,” European Commissioner for Taxation and Customs Union, Audit and Anti-Fraud Algirdas Semeta told a meeting of EU finance ministers in Luxembourg on Friday, according to the text of his speech published by the EU.
“We must verify that the principles of fair play are not being undermined,” the text said.
If the commission can prove Ireland approved tax treatments that diverge from international rules, it could deem any corporate tax savings to be a subsidy which must be halted or repaid.
An Irish finance ministry spokesman said the ministry had no knowledge of the EU threat.
“We have provided information to the commission for the information-gathering exercise and in relation to any case, it regards one company and one company only and we have not been informed of anything in addition to that,” he said.
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