Sept. 28, 2014 8:54 a.m. ET
BRUSSELS—European Union regulators will explain as soon as Monday why they believe that tax deals granted to Apple Inc. AAPL +2.94% Apple Inc. U.S.: Nasdaq $100.75 +2.88 +2.94% Sept. 26, 2014 4:00 pm Volume (Delayed 15m) : 61.65M AFTER HOURS $100.70 -0.05 -0.05% Sept. 26, 2014 7:59 pm Volume (Delayed 15m) : 723,903 P/E Ratio 16.17 Market Cap $586.03 Billion Dividend Yield 1.87% Rev. per Employee $2,214,380 09/28/14 Microsoft to Open Fifth Avenue... 09/28/14 EU to Publish Details of Probe... 09/28/14 SoftBank's Masayoshi Son Wants... More quote details and news » and Fiat F.MI +0.44% Fiat S.p.A. Italy: Milan €8.05 +0.04 +0.44% Sept. 26, 2014 5:37 pm Volume (Delayed 15m) : 19.86M P/E Ratio 14.24 Market Cap €10.02 Billion Dividend Yield N/A Rev. per Employee €399,788 09/28/14 EU to Publish Details of Probe... 09/26/14 New Ford Recall Adds to Record... 09/18/14 Highlights From Helsinki Desig... More quote details and news » SpA violated EU law, people familiar with the matter said, marking the next formal step in the bloc's drive against alleged tax avoidance by multinationals.
The European Commission, the EU's central antitrust authority, opened formal investigations in June into whether tax deals granted to Apple in Ireland, Fiat's finance arm in Luxembourg and Starbucks Corp. SBUX +1.42% Starbucks Corp. U.S.: Nasdaq $75.17 +1.05 +1.42% Sept. 26, 2014 4:00 pm Volume (Delayed 15m) : 3.78M AFTER HOURS $75.34 +0.17 +0.23% Sept. 26, 2014 7:26 pm Volume (Delayed 15m) : 52,005 P/E Ratio 230.72 Market Cap $55.68 Billion Dividend Yield 1.38% Rev. per Employee $88,236 09/28/14 EU to Publish Details of Probe... 09/25/14 Apple Pay or Other Tap-to-Pay ... 09/24/14 As Doctors Lose Clout, Drug Fi... More quote details and news » in the Netherlands amounted to illegal state support for the companies.
The commission will publish its so-called opening decision in the Apple case as soon as Monday, explaining why it believes that two tax deals agreed between the U.S. company and the Irish government—in 1991 and 2007—amounted to illegal state aid, a person familiar with the matter said.
Apple will have 30 days to respond to the EU's decision, the person said.
The commission also will publish its opening decision on tax deals struck by Fiat in Luxembourg, another person familiar with the matter said. Fiat declined to comment. The status of the decision on Starbucks, which didn't respond to requests for comment, was unclear.
A spokesman for the Irish government said it is "confident that there is no breach of state-aid rules" in the Apple case. Ireland "has already submitted a formal response to the commission earlier this month, addressing in detail the concerns and some misunderstandings," he said.
He also said the opening decision will be published on Monday.
The decision to examine the tax deals through the lens of the region's state-aid rules, a first for the European Union, means the commission could eventually demand that the companies return any unpaid taxes, tax experts said. It wasn't clear how large these sums would be.
The publication will shed light on the EU's investigation into alleged illegal sweeteners offered to multinationals in several EU countries, which is understood to have been under way for more than a year.
EU competition chief Joaquín Almunia has said the investigation could span much wider. It has already covered Ireland, Luxembourg, the Netherlands, Belgium and the British territory of Gibraltar.
At issue are the comfort letters, known as tax rulings, sent by governments to multinationals to give clarity on how a specific tax will be calculated. These would be illegal if they gave selective advantages to some companies.
This week's expected moves are a formal step aimed at giving interested third parties—such as Apple and Fiat, which aren't themselves under investigation—a chance to comment, said Martina Maier, an antitrust lawyer with McDermott Will & Emery in Brussels.
The published documents are unlikely to contain confidential information such as the sums of money involved, Ms. Maier said. But they will shed light on the reasoning behind the commission's decision to open the investigations, she said.
While the companies themselves aren't under investigation, their input is being sought because they would be required to return any unpaid taxes.
The investigation will focus on "transfer-pricing arrangements," under which companies can redistribute profit within a group by charging for goods or services sold by one subsidiary to another, typically located in different countries.
Experts say companies can use transfer pricing to minimize their tax bills.
While not illegal, such arrangements could violate EU rules if tax authorities allowed specific companies to charge prices internally that didn't reflect market conditions.
In the three cases under investigation, the commission is concerned that national tax authorities allowed the companies concerned to underestimate their taxable profits, thereby granting them an unfair advantage over competitors, Mr. Almunia said in June.
Mr. Almunia is to leave his post at the end of October and will be succeeded by former Danish Economy Minister Margrethe Vestager.
The commission will base its decision in Apple's case on guidelines on transfer pricing established in 2010 by the Organization for Economic Cooperation and Development, a club of rich countries, a person familiar with the matter said.
The move came after earlier efforts by the EU to crack down on tax avoidance and tax evasion made painfully slow progress and yielded little. Despite much hand-wringing by some politicians over Ireland's low corporate tax rate, tax policy remains largely in the hands of national governments, which can veto EU decisions.
Write to Tom Fairless at tom.fairless@wsj.com
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