Leaders and members of the Senate Finance Committee today wrote to Treasury Secretary Jack Lew concerning EU state aid investigations of U.S. multinational companies.
In recent years, the European Commission initiated formal investigations as to how various EU Member States treat certain multinational companies. In June 2014, the EC issued opening decisions with respect to Ireland, the Netherlands, and Luxembourg. In October 2014, the EC issued an opening decision with respect to Luxembourg, and then in December 2015, the EC announced its opening decision with respect to yet another Luxembourg case.
In October 2015, the EC announced final decisions in the Netherlands case and the Luxembourg case. In those decisions, the EC ordered these countries to recover amounts that the EC believed should have been collected in tax revenue from the companies, going back up to 10 years.
The Senate Finance Committee in December 2015 examined the potential impact these investigation could have on U.S. firms. Read TaxNewsFlash-Legislative Updates
Today's letter (available on the Finance Committee website) requests that Secretary Lew increase efforts to caution the European Commission to avoid imposing retroactive results that are inconsistent with international tax standards. The letter concludes:
Our concerns are driven not only by these initial cases, but also by the precedent they will set that could pave the way for the EU to tax the historical earnings of many more U.S. companies – in some cases, the earnings in question could have been generated up to a decade ago. We urge Treasury to intensify its efforts to caution the EU Commission not to reach retroactive results that are inconsistent with internationally accepted standards and that the United States views such results as a direct threat to its interests. We also ask that you consider, under section 891, whether U.S. corporations are being subjected to discriminatory taxation.
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.