Brussels – Major multinational retailers such as Starbucks and Apple will have to start paying higher taxes in Europe, thanks to a move by the European Union (E.U.) to end certain tax breaks it has now defined as “state aid,” which is prohibited by E.U. bylaws. These breaks, which member nations including Ireland, Luxembourg, and Netherlands have used to allow some types of profit to be classified as tax-deductible debt, had come under fire from other E.U. nations and the U.S.
Apple has avoided paying billions of dollars in taxes by operating a variety of subsidiaries in the E.U., and Starbucks pays a low corporate tax as a result of moving its European headquarters to the U.K. E.U. states that currently offer the tax breaks do not face any punishment or fines, but must start collecting the additional tax on profits by the end of 2015. Apple has previously said in a statement it did not receive any special treatment from Irish authorities in how it conducts business and pays taxes there.