That's because European Union regulators are closing up tax loopholes that U.S. companies have been enjoying for years. The first two to feel the heat are Starbucks (SBUX) and Fiat Chrysler Automobiles (FCAU) . Each will have to pay as much as $30 million in back taxes, and will face significantly higher taxes going forward.
They're not alone.
In addition to hurting its tax-haven status, Europe's crackdown may galvanize support for President Obama's efforts to address corporate offshoring of profits to avoid tax liability in the U.S.
"The actions taken by both the EU Commission and the OECD signal clearly that European countries are going to make substantive moves to clamp down on corporations shifting their profits into tax havens," said Bob McIntyre, the director of Citizens for Tax Justice, a nonprofit analysis group. "The EU's actions certainly show that the problem of offshore tax havens is one that can be dealt with. It remains to be seen whether Congress will follow the EU's blueprint for action."
Tax avoidance through the use of aggressively complicated accounting and overseas tax havens has been a steadily growing issue in the U.S. since 2008, when the Congressional Research Service found that American multinational companies collectively reported 43% of their foreign earnings in five small tax-haven countries -- Bermuda, Ireland, Luxembourg, the Netherlands and Switzerland.
Last year, the IRS released data showing that American multinationals collectively reported that 54% of their foreign "earnings" supposedly were earned in 12 well-known tax havens. An April 2015 study by the research firm Audit Analytics found that the Russell 1000 list of U.S. companies collectively reported having nearly $2.3 trillion offshore, a figure which has more than doubled since 2008.
According to CTJ, which has analyzed publicly available data from corporate public filings and published a report on their findings, "Nearly three-quarters of Fortune 500 companies operate at least one subsidiary in known tax havens," said McIntyre. "This is having a real effect on tax collection in the United States because companies now hold over $2.1 trillion offshore on which they owe an estimated $620 billion in federal taxes."