Apple Under Investigation in Europe

The European Commission announced on Wednesday its plans to investigate several firms for possibly receiving special treatments from specific member states of the European Union in regards to taxes. The companies in question are Apple and its dealings in Ireland, Starbucks in the Netherlands and Fiat Finance and Trade in Luxembourg, the European Commission said in a statement.

"It is well known that some multinationals are using tax planning strategies to reduce their global tax burden," the European Commission said. "These aggressive tax planning practices erode the tax bases in our Member States." Apple has been under scrutiny for its tax practices before.

In May of last year CEO Tim Cook defended the company's tax practices in front of the U.S. Senate Permanent Subcommittee on Investigation, which has also accused Apple of using "loopholes" and tax shelters to save money on taxes. "Apple pays all its required taxes, both in this country and abroad," the company said at the time.

The European Commission is going to investigate whether Apple was receiving "favorable" treatment by Ireland, however. "This is the problem, because such treatment would constitute state aid within the meaning of our Treaty rules," the Commission said. "And such aid is in principle incompatible with the Single Market, because it would give these companies an unfair advantage and would distort competition. Today, we are opening these three formal investigations because we have reasons to believe at this stage that in these specific cases the national tax authorities have renounced to tax part of these multinationals' revenues by allowing them to lower their taxable profits."