Brussels, Belgium — The European Union (E.U.) is investigating lucrative tax breaks individual member countries such as Ireland, the Netherlands and Luxembourg have been giving major global companies including Starbucks and Apple. Media reports indicate the E.U. is focusing on whether certain tax loopholes these countries have provided some corporations qualify as “state aid,” which is prohibited under E.U. bylaws.
Countries do not face fines or legal action if any tax breaks are found to be in violation of E.U. rules, but they could be required to rescind the breaks and make the companies in question pay the additional tax.
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. In a statement, Apple said it has not received any special treatment from Irish authorities in how it conducts business and pays taxes there.