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European Commission to investigate Apple's Ireland tax haven - report

Apple's headquarters in Cork, Ireland, via Flickr user Sigalakos.

The competition authority of the European Union is reportedly set to launch a formal investigation on Wednesday into Apple's corporate presence in Ireland, a strategy that it and other companies use to avoid paying taxes.

Additional details on the allegedly impending investigation from the European Commission were not shared by the initial source, Ireland's RTE, according to Reuters. A formal announcement of the investigation is expected to follow.

It's already been established through other investigations that Apple has not broken any laws in utilizing Ireland as a tax haven, so it's unclear exactly what the commission may be seeking in targeting Apple. A U.S. Senate investigation found that Apple paid just 2 percent tax on $74 billion in income made outside America, by moving billions of dollars in profits to affiliate corporations such as Apple Operations International in Ireland, where the effective tax rate is less than 2 percent.

Apple, for its part, has contended that it pays all of the taxes it owes and has broken no laws. Tax laws also force Apple to hold the vast majority of its cash overseas, otherwise it would pay high repatriation rates on bringing that money back to the U.S.

And Apple is not the only company that has set up operations in Ireland for its favorable tax laws. Other major U.S. corporations with a presence there include Google, Microsoft, Facebook, and Amazon.

Facing scrutiny from other countries around the world, legislators in Ireland have expressed interest in closing loopholes that companies use to avoid high taxes. Many companies utilize a strategy famously dubbed the "Double Irish with a Dutch Sandwich," in which funds are routed through the Netherlands to further avoid international taxes.