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U.S. demands EU reconsiders tax probes of its companies

BRUSSELS (Reuters) – U.S. Treasury Secretary Jack Lew called on the European Union to reconsider tax probes targeting U.S. companies on Thursday, arguing that such moves represented disturbing precedents.

Lew made the plea in a letter to European Commission President Jean-Claude Juncker and EU antitrust chief Margrethe Vestager, a copy of which was seen by Reuters.

“While we recognize that state aid is a longstanding concept, pursuing civil investigations – predominantly against U.S. companies – under this new interpretation creates disturbing international tax policy precedents,” Lew wrote.

“We respectfully urge you to reconsider this approach.”

The European Commission has been pursuing so-called sweetheart tax deals involving U.S. firms such as Apple and McDonald’s in several EU countries, which Vestager says give them an unfair advantage in breach of state aid laws.

Amazon is also in the EU’s crosshairs, while Starbucks faces back taxes of up to 30 million euros. Apple Chief Executive Tim Cook last month personally lobbied Vestager on the tax case involving Apple and Irish authorities.

European Commission spokesman Ricardo Cardoso acknowledged receipt of the letter, in which Lew said the Commission appeared to be targeting U.S. companies disproportionately and warned they may be more heavily penalised than other companies.

Lew said regulators were going after income which EU countries are not entitled to tax under international rules, and that such action could undermine bilateral tax treaties.

Cardoso denied any bias against U.S. companies, saying EU laws apply to all companies doing business in Europe.

“In its state aid decisions on tax rulings to-date, the Commission has ordered member states to recover unpaid taxes mostly from European companies,” he said.

Last month, Vestager ordered Belgium to recover about 700 million euros from 35 multinational companies including Anheuser-Busch InBev, BP < and BASF because of their participation in an illegal tax scheme.

Cardoso said the Commission does not apply its rules retroactively, that it had been in contact with U.S. authorities on several occasions and would give any clarifications required.

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