Expatica news

Starbucks, Fiat brace for EU court decision on taxes

An EU court on Tuesday will decide if orders by Brussels that Starbucks and Fiat Chrysler pay back taxes are legal, in an early signal on how the same judges will decide a similar case with Apple.

The cases from 2015 were the first out of the gate in the crackdown by the EU’s anti-trust supremo Margarethe Vestager against member states that had sealed sweetheart tax deals with multinationals.

If successful, the appeal at the EU’s lower General Court against her state aid ruling could stymie Brussels’ ambition to lodge more such cases against multinationals.

In her landmark rulings, Vestager said Dutch authorities must recoup 30 million euros ($33 million) from Starbucks and Luxembourg a similar amount from Fiat Chrysler.

These demands were dwarfed by the blockbuster order in 2016 that Apple repay Ireland 13 billion euros, a case that is also making its way through EU courts.

That case drew global attention, helping Vestager become the EU’s highest-profile official.

In the new commission, she has been promoted to executive vice president and will effectively become Europe’s tech regulation czar, while still holding on to her powerful anti-trust portfolio.

– Public outrage –

EU member states such as Belgium, Ireland, Luxembourg and the Netherlands have attracted multinationals over many years by offering extremely favourable tax deals to generate jobs and investment.

In all the cases, authorities are accused of clinching agreements with multinationals that allowed firms to shift EU revenue abroad, which slashed their international tax bills significantly.

Political outrage against such practices has grown after the financial crisis, driving public resentment that the rich paid relatively little tax while the general public faced austerity.

The issue hit close to home in 2014 with the LuxLeaks scandal which revealed that European Commission President Jean-Claude Juncker’s native Luxembourg gave companies favourable tax deals while he was prime minister.

Luxembourg has also been ordered by Brussels to recoup 250 million euros from Amazon and 120 million euros from French energy giant Engie.

The same court handed the commission a first setback in 2019, when it threw out a tax deal decision against Belgium, but mainly on procedural grounds. The commission last week refiled the case.

The commission is also investigating tax deals with Ikea and Nike in the Netherlands. Brussels dropped a keenly-watched case against McDonald’s.