Under EU rules it is illegal for countries to give financial help to some companies and not others in a way that distorts fair competition, writes Liza Lovdahl Gormsen.

State aid rules were originally designed to protect the internal EU market and avoid retaliation among member states.

The US Treasury, which last week began a vocal fight-back, believes the European Commission is bending these rules to breaking point to target the earnings of American companies.

Under international tax regulations these are predominantly taxed in the US where value is generated, although US rules allow taxes to be deferred until profits are repatriated.

With a decision in the investigation into Ireland’s tax arrangements with Apple expected this week, the stakes are high with possible retaliatory measures against European companies and concerns it will take its toll on investment in Europe.

The European Commission wants Europe to put its tax house in order and ensure companies pay their “fair share” of corporation tax. It’s a laudable ambition. Europe needs a level playing field that drives innovation and rewards excellence. Indeed, the Organisation for Economic Co-operation and Development (OECD) has made huge progress with its Base Erosion and Profit Shifting action plan by building global consensus.