European Commission president Jean-Claude Juncker has stated that the Commission plans to propose a new directive regarding the automatic exchange of information on tax rulings between EU countries. This would build onto the OECD’s proposals and allow tax authorities to monitor each other’s behavior as well as ensure the sharing of information on taxpayer transactions. Mr. Juncker has also discussed a plan for an EU-wide law on tax information sharing with G20 leaders at the Brisbane summit in October 2014.
Tax rulings are ‘comfort letters’ from tax authorities giving specific companies clarity on how their corporate tax will be calculated or on the use of special tax provisions. Tax rulings are used in particular to confirm transfer pricing arrangements, which are the prices charged for commercial transactions between various parts of the same group of companies, particularly prices set for goods sold or services provided by one subsidiary of a corporate group to another subsidiary of the same group. Tax rulings may involve state aid within the meaning of EU rules if they are used to provide selective advantages to a specific company or group of companies.
The EC has in June 2014, published non-confidential versions of its decisions regarding the opening of investigations into the transfer pricing arrangements of the corporate taxation of Apple in Ireland, Starbucks in the Netherlands and Fiat Finance and Trade in Luxembourg.
In all three cases, the main question pertains to whether or not the companies have complied with the EU rules on state aid. The Commission’s investigations into certain corporate tax practices and their compliance of EU state aid rules have followed media reports alleging that some companies have received significant tax reductions by way of ‘tax rulings’ that are issued by national tax authorities.
