Google Inc. and Facebook Inc. Quizzed by EU Lawmakers

Google Inc. and Facebook Inc. were among U.S. companies facing questions Monday from European Union lawmakers about their tax-reducing techniques, a month after regional antitrust regulators raised the stakes by ordering Starbucks Corp. and a Fiat Chrysler Automobiles NV unit to repay millions of euros in back taxes.

The queries about the “Dutch Sandwich” and the “Double Irish” — tax arrangements that allow companies to declare income in lower-tax areas — came as the European Commission weighs its next decisions on fiscal pacts Amazon.com Inc. arranged with Luxembourg and Apple Inc. with Ireland. Eleven companies, including Amazon, faced questioning from the parliament’s special tax committee in Brussels.

“We make use of tax incentives and tax structures that are well known, widely accessible and are employed by virtually all multinational companies,” Google’s Nicklas Lundblad, senior director, public policy and government relations, told the parliamentary committee.

Elected officials have scrutinized the tax strategies of Google, Apple, Amazon, Starbucks, Microsoft Corp. and others, which have used the “Double Irish” and “Dutch Sandwich” to move foreign profits through Ireland and the Netherlands to Bermuda to avoid U.S. income taxes.

Such structures have “no impact on the amount of tax we pay across various European Union countries,” Lundblad said. “The entire Bermuda structure doesn’t erase any tax liability, it defers only U.S. tax.”

Facebook, which has its European base in Ireland, also has operations in the Netherlands in the form of a commercial office, and a legal entity in Luxembourg, said Delphine Reyre, the company’s director of public policy, southern Europe.

“There is no ‘Dutch Sandwich’ in this,” she told the lawmakers. She said has “no preferential fiscal tax treatment”  in Luxembourg.

An earlier hearing by the committee was scuttled when nearly all the corporate invitees declined to attend.

“Unfortunately we were unable to accept previous invitations to appear in respect of tax rulings, due to the fact that we’re part of an ongoing state aid investigation,” said Monique Meche, vice president of global public policy at Amazon. “That investigation remains open, and that’s why our comments, we’re limiting them to tax policy.”

Fiat, which declined the lawmakers’ invitation, and Starbucks last month were told to repay tens of millions of euros in back taxes in the first decisions from EU antitrust regulators on fiscal deals that allowed companies to avoid taxes. After facing criticism by British lawmakers and activist groups, Starbucks last year announced it would move its European base to London from Amsterdam and increase the amount of tax it pays in the U.K.

Google and Amazon were also targeted in U.K. Parliament hearings in late 2012 to 2013 on corporate tax dodging and tactics used by information-technology companies and others. The U.S. Senate has also looked into Apple Inc.’s offshore tax policies. The companies all say they’ve complied with international tax laws.

The European Parliament’s probe, which is separate from the regulatory inquiry by the European Commission, started in February, after documents leaked by a group of investigative journalists showed that Luxembourg alone struck hundreds of secret fiscal deals known as tax rulings with companies from around the world, including PepsiCo Inc. and The Walt Disney Co.

Disney, Coca-Cola Co., and Anheuser-Busch InBev NV, HSBC Holdings Plc, Ikea Group and Philip Morris International Inc. also faced questions Monday, with Wal-Mart Stores Inc. declining to appear.