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EU to Publish Details of Apple, Fiat Tax Avoidance Investigations

European Union regulators are expected to make their case as early as Monday as to why tax deals granted to Apple Inc. and Fiat SpA violated EU law. The announcement marks the next formal step in the regulator's push against alleged tax avoidance by multinationals.

The European Commission, the EU's central antitrust authority, began its investigation in June to determine whether tax deals granted to Apple in Ireland, Fiat's finance arm in Luxembourg and Starbucks Corp. in the Netherlands amounted to illegal state support for the companies.

The commission plans to explain why it believes that two tax deals agreed to between Apple and the Irish government in 1991 and 2007 amounted to illegal state aid.

Apple will have 30 days to respond to the EU's decision.

The commission will also publish its opening decision struck by Fiat in Luxembourg. The decision regarding Starbucks remains unclear.

A spokesman for the Irish government said it is "confident that there is no breach of state-aid rules" in the Apple case. Ireland "has already submitted a formal response to the commission earlier this month, addressing in detail the concerns and some misunderstandings," he said.

The companies could be required to return any unpaid taxes, according to tax experts. It isn't clear how large these sums would be.

The publication will highlight the supposed illegal tax benefits offered to multinationals in several EU countries.

The investigation has had its sights set on "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.

While this sort of arrangement isn't necessarily illegal, it may violate EU rules if tax authorities allowed specific companies to charge prices internally that didn't reflect market conditions.

In the three cases under investigation, the commission is seeking to determine whether the national tax authorities allowed the companies involved to underestimate their taxable profits, thus granting them an unfair advantage over competitors.

Source: Fairless, Tom, "EU to Publish Details of Probes of Tax Deals Benefiting Apple, Fiat," The Wall Street Journal, September 28th, 2014

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