Brussels rebuffs U.S. attack on EU tax investigations

[August 25, 2016]  By Julia Fioretti

BRUSSELS (Reuters) - The European Commission rebuffed an attack by the U.S. Treasury on its investigations into alleged sweetheart tax deals between companies such as Apple and McDonald's and European governments, saying there was no anti-U.S. bias.

The U.S. Treasury Department published a white paper on Wednesday that voiced concern at the EU executive's tax investigations, saying they departed from international taxation norms and would have an outsized impact on U.S. companies.

The European Commission said it treated all companies equally.

"EU law applies indiscriminately to all companies operating in Europe - there is no bias against U.S. companies. This is very clear if we look at the facts: In October 2015 the first state aid decisions on tax rulings concerned a European company, Fiat, as well as a U.S. company," a Commission spokeswoman said.

It is not the first time the United States has criticised the EU's tax investigations. In February U.S. Treasury Secretary Jack Lew wrote to European Commission President Jean-Claude Juncker urging him to reconsider the EU's approach.

In the white paper, the U.S. Treasury Department said the Commission's approach departed from prior EU case law and undermined OECD guidelines on transfer pricing - the setting of prices for the transfer of goods or services from one subsidiary to another - which critics say is used to reduce tax liabilities in relatively high-tax countries.

In addition, the EU should not seek to recover taxes from companies retroactively, the Treasury Department said, because it was a departure from prior practice.

"Imposing retroactive recoveries would undermine the G20’s efforts to improve tax certainty and set an undesirable precedent for tax authorities in other countries," the white paper said.

A sign for the U.S. fast food restaurant chain McDonald's is seen outside one of their restaurants in Sint-Pieters-Leeuw, near Brussels, Belgium December 3, 2015. REUTERS/Yves Herman

The Commission spokeswoman said EU state aid rules forbid national governments from giving tax benefits to selected companies that are not available to others.

"These state aid rules and the relevant legal principles have been in place for a long time," she said.

The European Commission accused Ireland in 2014 of dodging international tax rules by letting Apple shelter profits worth tens of billions of dollars from tax collectors in return for maintaining jobs. Apple and Ireland reject the accusation. A ruling is expected in the autumn.

The EU launched an investigation into tax deals between McDonald's and Luxembourg in December last year.

(Reporting by Julia Fioretti; Editing by Adrian Croft)

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