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Starbucks wins appeal in EU court over €30 million European Commission tax fine

Ireland is also battling a similar fine levied against tech giant Apple over its Irish-based operations.

Image: Shutterstock/Sean Wandzilak

COFFEE SHOP CHAIN Starbucks has successfully appealed a fine from the European Commission which had demanded it pay €30 million in back taxes to the Netherlands.

The decision comes as Ireland challenges a €13 billion fine levied against Apple over the amount of corporation tax it has paid through its Irish operation. 

Meanwhile, the same court ordered that car manufacturer Fiat must pay roughly the same amount to Luxembourg, upholding a similar order from 2015. 

The court result is a mixed blessing for the EU’s anti-trust supremo Margrethe Vestager, one of the EU’s highest profile officials who made her name by slapping mega-fines on Google. 

In a statement she said the decisions “gave important guidance” and that the EU would continue its fight against “aggressive tax planning”.

“The judgements confirm that, while member states have exclusive competence in determining their laws concerning direct taxation, they must do so in respect of EU law, including state aid rules,” she said in a statement.

The cases can now be appealed at the EU’s highest court, the European Court of Justice, a process that could take years.

Starbucks in a statement said the ruling “makes clear” that it “did not receive any special tax treatment from the Netherlands”.

In her landmark ruling, Vestager had said Dutch authorities must recoup unpaid taxes from Starbucks because it illegally allowed an elaborate tax set-up that allowed the company to shift revenue abroad.

“This decision proves that the Dutch tax authorities treated Starbucks like any other company, and no better or different,” Dutch secretary of state for finance Menno Snel said in a statement.

The Starbucks and Fiat cases pale in comparison to the order in 2016 that Apple repay Ireland €13 billion.

That case drew global attention, and infuriated Apple CEO Tim cook who called it “total political crap”. 

EU member states such as Ireland, Luxembourg, Belgium and the Netherlands have attracted multinationals over many years due to the countries’ tax regimes. 

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 from Amazon and €120 million from French energy giant Engie.

The government on Tuesday said it took note of the Fiat decision and underlined its adherence to tax reform at the OECD.

A court in February handed the commission its first setback 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.

Tove Maria Ryding, tax expert at the European Network on Debt and Development, welcomed the state aid cases as they “exposed cracks in the broken tax system”.

However, “the only way to ensure that multinational corporations are taxed fairly and effectively is to throw the existing corporate tax rules in the bin and create a new and better system,” she said.

In the new commission, Vestager 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.

© AFP 2019  

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