Lawmakers in the EU have struggled to prevent multinational companies using aggressive tax planning to move profits around Europe saving billions in corporation tax in individual member states. Individual countries are also coming in for operating "sweetheart deals" that give special tax breaks to companies, creating an unequal EU tax playing field.
However, lawmakers on the European Parliament’s Tax Rulings Committee (TAXE) have struggled to take evidence from multinational and in July 2015 said it may introduce sanctions against some companies for failing to take part in their investigation into agreements between some member states and the companies for beneficial tax status.
Amazon, Barclays, Coca Cola, Facebook, Fiat Chrysler, Google, HSBC, IKEA, McDonald’s, Philip Morris, Walmart and Walt Disney all declined an invitation to meet with lawmakers last year. However, lawmakers are Tuesday set to grill representatives of Apple, Google, IKEA and McDonald's, after the companies relented. Fiat Chrysler and Starbucks declined to attend. The TAXE committee has no powers to demand the appearance of the companies.
The lawmakers are also set to question officials from Andorra, Liechtenstein, Monaco and the Channel Islands – all of which operate special tax arrangements – but the Cayman Islands (a British Overseas Territory) and the Isle of Man (a self-governing possession of the British Crown) both declined to send representatives.
The investigation was triggered by the LuxLeaks scandal, where it was revealed that that there were more than 500 private tax arrangements between the Luxembourg tax administration and more than 300 multinational corporations between 2002 and 2010, showing the extent of the use of deals featuring complex financial structures designed to obtain drastic tax reductions.
Many of the corporations are alleged to have made arrangements to channel profits from transactions in EU member states through Luxembourg and other countries, including Ireland, which offered lower levels of taxation than the country where the transaction took place.
In January 2016, the Commission ordered Belgium to recover an estimated US$777,8 million (€700 million) in unpaid taxes from 35 multinationals. The companies have benefited from a tax ruling scheme dubbed "only in Belgium" which the Commission considers to be a form of illegal state aid.
In October 2015 the Commission released two decisions stating that Luxembourg and the Netherlands have granted selective tax advantages to Fiat Finance and Trade and Starbucks, respectively. The Commission considers these illegal under EU state aid rules.
The investigation into Ireland's tax treatment of Apple is ongoing. Last December the Commission opened an investigation into Luxembourg's tax deal with McDonald's.
Although Apple, Google, IKEA and McDonald's have agreed to appear before lawmakers Tuesday, along with officials from Andorra, Liechtenstein, Monaco and the Channel Islands, the lack of appearance by Fiat Chrysler, Starbucks, the Cayman Islands and the Isle of Man is further evidence their task of bringing about a common agreement on corporation tax is an uphill battle.