Starbucks had allegedly paid too little tax in the Netherlands. According to the findings of the authority in 2015, Starbucks is said to have shifted profits within the group to save taxes. Fiat, on the other hand, was obliged to pay.
The EU Commission has wrongly demanded back tax payments from the US coffee house chain, an EU court ruled. Fiat, on the other hand, was obliged to pay.
The court of the European Union (EuG) has overturned a million-dollar EU tax claim against Starbucks for illegal tax advantages. The EU Commission failed to prove the existence of discriminatory treatment for Starbucks, the European court said. With today’s ruling, the Commission’s decision will be overturned.
According to the EU Commission, the coffee chain had allegedly paid too little tax in the Netherlands. According to the findings of the authority in 2015, Starbucks is said to have shifted profits within the group to save taxes. The procedure was tantamount to state aid from the Netherlands for the US company and was to be classified as illegal, the Commission announced at the time. The Netherlands would have to demand up to 30 million euros.
The Luxembourg ruling, which can be challenged before the European Court of Justice, is a severe setback to EU Competition Commissioner Margrethe Vestager. She is taking effective public action against questionable tax relief offered by EU countries to multinational companies. The most significant case is a €13 billion tax assessment to Apple in Ireland. The decision is also currently being reviewed in court. In Luxembourg, the Netherlands and Ireland, a disproportionately large number of international corporations have their European headquarters. The Commission is examining Ikea’s and Nike’s finances.
Fiat action dismissed
In a similar case against Fiat Chrysler, the European court rejected the company’s claim. The Netherlands and Luxembourg had also taken legal action against Fiat Chrysler. The EU court has confirmed the tax arrears imposed by the EU Commission on the Fiat Group in Luxembourg. The complaints of both the company and Luxembourg were rejected.
In 2015, the EU Commission found that the Fiat Group had received illegal tax benefits in Luxembourg. Luxembourg was to reclaim the amount from the company. It was about 20 to 30 million euros. The ruling can be challenged within two months at the higher European Court of Justice (ECJ).
In recent years, the EU Commission has repeatedly advocated more uniform and transparent tax regulations in Europe. However, a proposal by the Brussels authority for an EU digital tax failed due to resistance from individual states, including Ireland. As a component of the Organisation for Economic Cooperation Cooperation and Development (OECD) and the G20, the leading industrial nations are working on a reform of the global tax system. An agreement is to be reached in 2020.