The EU Competition Commission could issue the first of its rulings as early as today on the tax arrangements between a number of prominent multinationals and member states. The first is expected to relate to carmaker Fiat's dealings with the Netherlands and those between coffee giant Starbucks and Luxembourg. A ruling on Ireland's tax dealings with Apple is expected too. The investigations have been ongoing for 15 months.
Brian Keegan, Director of Taxation with Chartered Accountants Ireland, explained that the probe was not into the companies themselves, but into the member states and how they operate their tax structures in relation to those companies. "We've known that arrangements between a number of companies and the Dutch and Luxembourg revenue authorities are under scrutiny. We're expecting to get an indication as to whether the techniques they used were in accordance with treaties and were they giving selective advantage to the companies. If they were, EU state aid rules kick in and they are obliged to recover the tax benefit from the companies concerned," he explained.
Mr Keegan said about 300 state aid investigations are conducted by the Commission every year. Only in about a dozen cases is direct action taken where they ask the authorities to cease the practice or recover the aid. "If recovery is decided, then it's up to the authorities to recover that tax. That creates problems, because if you take tax in one jurisdiction, that means there will be a higher tax liability somewhere else. The US authorities have said whatever the Commission does, they hope it will be prospective not retrospective," he explained.
He said the absence of an announcement around Apple would be indicative of a delay and suggests something is going wrong in the process. "Given that the three investigations were all announced at same time, we would expect an announcement from Apple around now. This is not an investigation into concealment, it's simply to establish whether state aid rules were complied with. It would be surprising if the Apple announcement is not made," he concluded.
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MORNING BRIEFS - Toyota is to recall 6.5 million cars worldwide to fix a potential defect with a window switch. 1.2 million units are to be recalled in Europe. Toyota said millions of cars sold between 2005 and 2010 have a module on the window switch that was lubricated inconsistently and could overheat and melt. Toyota says it is not aware of any crashes caused by the fault but that one person in the US did receive a burn.
*** NAMA has written up the value of its assets for the first time since it was set up in 2009. In its half yearly report, the National Asset Management Agency reported its first impairment release amounting to €25m. An impairment release is the opposite of an impairment charge, where a business sets money aside for expected bad loans. NAMA is now now strengthening the balance sheet by writing up the value of the assets that it holds. The agency recorded a profit of €473m in the first half of the year. Yesterday, NAMA and US real estate firm Kennedy Wilson secured permission for a 5 acre development in the so-called Strategic Development Zone in Dublin's Docklands.
*** Increases in property prices and rental returns in the commercial property market are one of the reasons for the NAMA impairment release. JLL's latest property index points to a continued strong performance with overall returns of 7.7% in the quarter. It was the 16th consecutive quarter of growth. Capital values increased by just over 6% in the quarter with rental values up 2.7%. Overall rental values are now almost 17% higher than at the same point last year.
*** Internet giant Yahoo reported third quarter earnings which disappointed investors. Revenue for the three month period came in at $1 billion, down from $1.9 billion a year earlier. It forecasts final-quarter profits below expectations.
CEO Marissa Mayer announced a search partnership with Google, but also said Yahoo's spin-off of its Alibaba stock would be delayed.
*** Car maker Ferrari goes public from today. The sports car manufacturer will start selling a 10% stake on the New York Stock Exchange later using the ticker RACE. Shares are priced at $52 a piece. This is at the top end of the range of $48-52 Per share and it gives the company a market capitalisation of around $9.8 billion. Sources say that demand for shares is well over-subscribed.
