Microsoft’s tax affairs look to be scrutinised next

Microsoft looks set to be the latest company to become embroiled in a European Commission inquiry into Luxembourg's tax treatment of multinational firms, according to sources familiar with the review.

The commission has quizzed Luxembourg about how it taxes Microsoft’s intellectual property, said one of the sources.

However, a commission spokesman said: “As we have said publicly many times before, the commission continues to gather information about certain tax practices in several member states, in order to assess the situation from the point of view of EU state aid rules.

“However we will not make any comment on whether specific companies may or may not be covered by this information-gathering exercise.

"It is in any event entirely premature to speculate on whether new investigations could target this or that specific company in the future. At the moment we have three ongoing investigations, which relate to tax rulings concerning Apple in Ireland, Starbucks in the Netherlands and Fiat Finance and Trade in Luxembourg, the spokesman said.

Competition regulators also asked questions about McDonald’s taxes in Luxembourg, the sources said.

The commission has requested documents in relation to Amazon. com's tax affairs, according to reports.

"We are in constant contact with the European Commission on all these tax issues and Luxembourg is pretty confident in the way it handles its taxation issues and so we're going to monitor the information with the commission and hand over the information that is requested," Pierre Gramegna, Luxembourg finance minister, said yesterday .

The scrutiny of Luxembourg is a potential embarrassment for Jean- Claude Juncker, who is set to become the next commission president. Mr Juncker, who led Luxembourg until last year, helped the country win a reputation as an attractive location for international companies.

“The commission continues to gather information about certain tax practices in several member states,” Antoine Colombani, spokesman for competition commissioner Joaquin Almunia, said.

“However we will not make any comment on whether specific companies may or may not be covered by this information-gathering exercise.”

Sabina Gockel, a spokeswoman for Microsoft in Brussels, declined to comment. Natasha Bertaud, a spokeswoman for Juncker at the commission, said the former Luxembourg premier also has no comment. – (Bloomberg)