EU accuses Netherlands on Starbucks tax deal

14th November 2014, Comments 0 comments

European Union regulators on Friday publicly accused the Netherlands with awarding coffee-shop giant Starbucks unfair tax breaks, laying out their case at a time when such practices have fueled an uproar.

The EU's allegation that a sweetheart tax arrangement with Starbucks amounts to an illegal subsidy by the Netherlands joins similar arguments against Ireland with Apple and Luxembourg with Amazon and Fiat.

The case, sent to the Dutch government in June but made public Friday, comes a week after the shock revelation that Luxembourg allowed hundreds of top companies -- including Pepsi, IKEA and Deutsche Bank -- to enjoy such sweetheart deals.

That revelation put huge pressure on incoming commission head Jean-Claude Juncker who led Luxembourg as prime minister for 19 years when the deals were made and now presides over probes delving into them.

With attitudes sharpening over the tax affairs of multinationals, Juncker has faced sharp criticism over the deals, known as "tax rulings", including some calls for him to step down.

But Juncker has vowed to fight tax evasion as head of the EU's executive and promised to stay out of the handling of the probes against Amazon and Fiat, leaving all responsibility to Margrethe Vestager, the EU's competition chief.

The 40-page letter from EU regulators to the Dutch tax authorities formally sets out the reasons for opening an investigation into the Netherlands arrangements with Starbucks.

In it, the EU alleges that Starbucks, with stores worldwide, secured an arrangement that allowed the coffee bar chain to shift revenue from other countries to a lower-taxed subsidiary in the Netherlands.

"In light of the foregoing considerations, the Commission's preliminary view" is that the deal "constitutes state aid" according to the EU treaty rules, the letter said.

Commissioner Vestager, who took office along with Juncker on November 1, has said she would like the politically sensitive probes to reach their conclusion by spring of next year.

If found at fault, the companies would be asked to repay the state aid to the governments, though these decisions are often caught up for years in European courts.

The issue of tax evasion is at the heart of a G20 summit in Brisbane, Australia where Juncker will be in attendance.

© 2014 AFP

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