Friday , 19 July 2024

Amazon, McDonald’s Face EU Tax Audit Similar to Apple’s YORK) — From Cupertino to Copenhagen, the top business story across the world Tuesday is the European Commission slapping Apple with a massive $14.5 billion tax bill.

The ruling is the result of a three year investigation by the commission, which is the executive branch of the European Union, that concluded Ireland gave Apple unfair tax advantages. The commission claims this gave the tech giant an effective tax rate as low as 0.005 percent at some points. Both the Irish Finance Minister and Apple have denounced the ruling and say they will seek appeals.

While Apple is the subject of Tuesday’s ruling, the European Commission (EC) is currently looking into the tax dealings of two other prominent U.S. companies: McDonald’s and Amazon.

Both cases involve the tiny country of Luxembourg, nestled between Belgium, France and Germany, in the heart of Europe.

Open Investigation: Amazon

In October 2014, the EC opened an investigation into Amazon’s tax arrangements with Luxembourg, saying in a press release from the time, that a tax ruling in favor of Amazon from 2003 might be in violation of the trade bloc’s rules.

“It applies to Amazon’s subsidiary Amazon EU Sàrl, which is based in Luxembourg and records most of Amazon’s European profits,” the commission said. “Based on a methodology set by the tax ruling, Amazon EU Sàrl pays a tax deductible royalty to a limited liability partnership established in Luxembourg but which is not subject to corporate taxation in Luxembourg.”

“As a result, most European profits of Amazon are recorded in Luxembourg but are not taxed in Luxembourg,” the commission added in the statement.

Amazon declined to comment further to ABC News, citing the ongoing investigation, but referred to a statement in which the company said: “Amazon has received no special tax treatment from Luxembourg, we are subject to the same tax laws as other companies operating here.”

Open Investigation: McDonald’s

McDonald’s has also drawn a concerned eye from the EC over its activities in Luxembourg.

In December, the commission said that it was opening an investigation into McDonald’s, alleging that “McDonald’s Europe Franchising has virtually not paid any corporate tax in Luxembourg nor in the U.S. on its profits since 2009,” which were made from “royalties paid by franchisees operating restaurants in Europe and Russia for the right to use the McDonald’s brand and associated services.”

The commission said that two tax rulings from Luxembourg allowed the company to operate without paying taxes in Luxembourg or the U.S. on its European profits.

Those profits were more than €250 million ($278 million dollars at today’s rate) in 2013, the commission said.

The company was paying tax in Switzerland, according to the statement released by the EC.

McDonald’s did not return ABC News’ request for comment.

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