EU Probes Tax Affairs of Apple, Starbucks

European Union regulators said they have opened formal investigations into the tax practices of Apple Starbucks and a Luxembourg-based division of Fiat, as part of a broader probe into whether multinational companies have enjoyed sweeter tax deals than are permitted under EU law.

The European Commission, which acts as the region's central antitrust authority, said it would examine whether generous tax arrangements granted to global corporations in three EU countries -- Apple in Ireland, Fiat Finance and Trade in Luxembourg and Starbucks in the Netherlands -- amounted to illegal state aid.

“In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes," said EU antitrust chief Joaquín Almunia.

The commission has requested information from two other EU countries -- the UK, in relation to Gibraltar, and Belgium -- as part of the same broad investigation, Almunia said. At issue are so-called transfer-pricing arrangements, under which companies can redistribute profit within a group by charging for goods or services sold by one subsidiary to another, typically located in different countries. Experts say transfer pricing can help companies to minimize their tax bills.

Almunia said that such arrangements could violate EU rules on state aid if certain companies are allowed to engage in transfer pricing that doesn't reflect market terms.