Following in-depth investigations, which were launched in June 2014, the Commission has concluded that Luxembourg has granted selective tax advantages to Fiat’s financing company and the Netherlands to Starbucks’ coffee roasting company. The resolution to pay the owed tax amount and end this special treatment is created to eliminate Starbuck’s and Fiat’s unfair competitive advantage.
Advertisement
The European Commission has ruled that the sweetheart tax deal between Starbucks and the Dutch tax authorities amounts to illegal State aid.
Highlighting the significance of the rulings, EU Competition Commissioner Margrethe Vestager said: “Tax rulings that artificially reduce a company’s tax burden are not in line with European Union state aid rules”.
Starbucks Manufacturing pays a very substantial royalty to Alki (a UK-based company in the Starbucks group) for coffee-roasting know-how. “The Irish government moved in the right direction last week, but missed the opportunity to show real leadership by ensuring citizens are aware of exactly what companies earn where, what they owe where, and what they actually pay in tax”, said Mr Clarken.
The same goes for Fiat Chrysler, whose finance division avoided up to 30 million euros ($34 million) in taxes through a deal with Luxembourg in 2012.
The Dutch Finance Ministry said it was “surprised” by the commission’s decision and would analyze it carefully before deciding further steps.
Inquiries into tax deals involving Amazon and Apple are very different from those into illegal tax deals struck by Fiat and Starbucks and a decision will be taken in due course, the EU’s competition chief said.
“Starbucks shares the concerns expressed by the Netherlands government that there are significant errors in the decision”, the company said in a statement.
He says the investigating committee has only now got access to important taxation documents shedding more light on the various tax avoidance schemes in a number of member states. The Commission’s assessment showed that in the case of Fiat Finance and Trade, if the estimations of capital and remuneration applied had corresponded to market conditions, the taxable profits declared in Luxembourg would have been 20 times higher. “Luxembourg already notes that the European Commission has used unprecedented criteria in establishing the alleged State aid”, the ministry said in a statement. “It is in fact a challenge to established revenue authorities working within long standing law and internationally agreed guidelines”, he said.
Advertisement
Still, the scrutiny of complex tax structures may help level the playing field for startups and smaller firms that can not afford to engage in such arrangements, Mr. Curthoys said.
