Are Transfer Pricing Arrangements (APA) « State Aid »? In Some Instances According to the EU

Par Robert Robillard - 17 novembre 2014

Voir le site EN FRANÇAIS

RBRT Inc. Transfer pricing, tax treaties and other international tax matters

Gratte-ciel

For pdf format: click here

From the EU website, it all started on June 11, 2014:

« State aid: Commission investigates transfer pricing arrangements on corporate taxation of Apple (Ireland) Starbucks (Netherlands) and Fiat Finance and Trade (Luxembourg)

The European Commission has opened three in-depth investigations to examine whether decisions by tax authorities in Ireland, The Netherlands and Luxembourg with regard to the corporate income tax to be paid by Apple, Starbucks and Fiat Finance and Trade, respectively, comply with the EU rules on state aid. The opening of an in-depth investigation gives interested third parties, as well as the three Member States concerned, an opportunity to submit comments. It does not prejudge the outcome of the investigation.

[…]

According to Article 107(1) of the Treaty on the Functioning of the European Union (TFEU), state aid which affects trade between Member States and threatens to distort competition by favouring certain undertakings is in principle incompatible with the EU Single Market. Selective tax advantages may amount to state aid. The Commission does not call into question the general tax regimes of the three Member States concerned. »

And then on October 7, 2014:

« State aid: Commission investigates transfer pricing arrangements on corporate taxation of Amazon in Luxembourg

The European Commission has opened an in-depth investigation to examine whether the decision by Luxembourg’s tax authorities with regard to the corporate income tax to be paid by Amazon in Luxembourg comply with the EU rules on state aid. The opening of an in-depth investigation gives interested third parties and the Member States concerned an opportunity to submit comments. It does not prejudge the outcome of the investigation. »

See the public 40-page decision released by the EU in the Starbuck’s case here.

In the news, Reuters (Foo Yun Chee and Tom Bergin) tells us:

« EU says Starbucks’ ‘very low’ Dutch tax deal may be illegal

(Reuters) – A tax deal the Netherlands cut with Starbucks Corp (SBUX.O) may be illegal state aid, European Union regulators said on Friday, part of a crackdown on members attracting investment by helping companies to avoid tax.

Luxembourg, Ireland, Malta, Belgium, Cyprus and Gibraltar are also facing scrutiny over tax deals they have struck with multinational companies. »

However, how can this be since:

« Deputy Finance Minister Eric Wiebes said that the Starbucks deal « is fully in line with international transfer pricing standards, is consistent with the policy framework applied by the government in its efforts to create an attractive business climate ». »

We will have to wait and see how this one plays out, politically that is, in the coming months… More « decisions » are yet to come…

For pdf format: click here

Robert Robillard, CPA, CGA, MBA, M.Sc. Econ.
Transfer Pricing Chief Economist, RBRT Inc.
514-742-8086; robert.robillard « at » localhost
www.localhost

About RBRT Inc.: click here / (en français ici)

RBRT Inc. is all about transfer pricing. We specialize in transfer pricing, tax treaties and other international tax matters. Our services include transfer pricing documentation (transfer pricing policies and procedures, BEPS and C-doc), transfer pricing dispute resolution, tax treaty matters including double tax relief, tax treaty-based returns and waivers, advanced pricing agreement (APA), value chain management and TP planning, transfer pricing training. The information in this blog post is general information only. Data and information come from sources believed to be reliable but complete accuracy cannot be guaranteed. RBRT Inc. and the author are not responsible or liable for any error, omission or inaccuracy in such information. Readers should seek tax advice and tax counsel from RBRT Inc. as required.