Two Global Companies Just Moved for Tax Reasons
Even as Apple faced a grilling from lawmakers over its tax avoidance schemes, two more companies revealed they would move jurisdictions to lighten their tax burden.
U.S. drugs maker Actavis announced on Monday that it is to acquire rival Warner Chilcott in a transaction valued at approximately $8.5 billion. In the same press release it said the combined company would be incorporated in Ireland, where Warner Chilcott is currently domiciled.
Actavis said the deal would add 30 percent to earnings per share in 2014, according to a report by Reuters, in part because it would pay lower taxes in the country.
Ireland, with its 12.5 percent corporate tax rate, has attracted attention in recent days with accusations that Apple used its international operations unit in Ireland to reduce its tax liability. Apple hit back saying Tuesday that it doesn't use "tax gimmicks" and the company is set to pay more than $7 billion in U.S. taxes in the fiscal year.
(Read More: Tax Evasion Dangerous for Europe: Schulz)
"We pay all the taxes we owe — every single dollar," Apple CEO Tim Cook said in testimony in front of the Senate Permanent Subcommittee.
The investigation by the subcommittee revealed on Monday that Apple had paid just a 2 percent tax rate on $74 billion of income from overseas.
Meanwhile, Italy-based truck and tractor maker Fiat Industrial announced it would move to the U.K., a move that would save the company millions of pounds in taxes.
In a recent filing to the Securities and Exchange Commission, the company announced it was merging with farm equipment group CNH Global. The combined company tentatively called FI CBM Holdings, would use the U.K. as its "principal place of business."
(Read More: Ireland's Tax Policy Is No Secret)
The current corporate tax rate in the U.K. is 23 percent, but it's set to drop to 20 percent in 2015, whereas Italy's corporate tax rate currently stands at 31.4 percent.
"Companies always threaten to move for tax reasons and then they do move if they get the proper deal," Bluford Putnam, a chief economist at the CME Group told CNBC Wednesday.
"[There's] just so many rules that have to be complied with in Europe and there are plenty of rules in the U.K. but they're clearer and it's easier."
(Read More: Tim Cook: We Pay 'Every Single Dollar' in Taxes Owed)
The issue of tax avoidance is set to be high on the agenda in at a summit of EU leaders in Brussels on Wednesday. Talk is expected to center on the how to improve the efficiency of tax collection and the best way to tackle tax evasion.
It's not just Apple that has been in the firing line, with Amazon, Starbucks and Google all expected to be discussed in Brussels.
Fiat Industrial declined to comment when contacted by CNBC. Attempts to contact Acativis proved unsuccessful at the time of publishing.
—By CNBC.com's Matt Clinch; Follow him on Twitter