On 30 September, the Commission published further details about State aid investigations against Ireland and Luxembourg, a formal stage in a process which began on 11 June 2014.
The purpose of these investigations is to examine whether the Advanced Pricing Agreements (APA) granted by Ireland and Luxembourg constitute State aid, by unlawfully benefitting each of the individual companies involved.
In practice, the debate around APAs is very technical and relates mostly to transfer pricing matters. In Luxembourg’s case, the Commission’s specific concerns relate to whether the taxable basis of the company, as determined in the APA, complies with OECD transfer pricing principles. The discussions are mainly focused on the appropriateness of the parameters and data used in the transfer pricing report, which was prepared by KPMG Luxembourg.
Sébastien Labbé, Head of Tax, commented, "Preparing such a report involves making choices about the methodologies to be applied and parameters to be set. By using professional judgment and following OECD transfer pricing guidelines, we can be confident in the robustness of our reports."
"We join the Luxembourg government in their assertion that the APA granted in the case at hand should not constitute State aid."
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