A number of corporate giants have entered into tax arrangements with European Union (EU) member states, the latest being Amazon. Under EU rules, attracting business through utilization of low tax rates is not illegal, but special corporate tax breaks that are not available to all companies could result in unlawful state funding.

The Commission’s Findings

Transfer pricing, or the pricing of goods sold or services provided by one member of a related group to another, has been used extensively by Apple, Starbucks, Fiat, and most recently Amazon. The EU Commission is investigating a number of transfer pricing cases, most notably:

• Ireland’s transfer pricing practice relationship with Apple Inc.
• Luxembourg’s rejection that it has provided illegal tax benefits to companies like Fiat or Amazon

The commission has decided that tax evasion is at the top of their priority list.

For a more detailed explanation of these cases, please read our article, “EU plays hardball with transfer pricing probes into Amazon, Apple, Starbucks and Fiat”.