22 October 2015

Commission orders Fiat and Starbucks to repay tax saved in sweetheart deals

The European Commission on Wednesday announced the first of its findings in the much publicised investigation into tax sweetheart deals.

The Commission has found that the comfort letters granted by Luxembourg and the Netherlands to Fiat and Starbucks respectively, amounted to "illegal tax advantages" and thus fell foul of the State Aid rules.

The Commission has ordered that both countries must recover between €20 million and €30 million from each country. The decision, which follows revelations about the limited amount of tax paid by some of the world’s most recognisable companies, sends a clear message that companies must pay their fair share of tax.

The Commission found that in both cases the local tax authorities had applied incorrect methodology when endorsing the transfer prices charged between group companies, which allow companies to shift profits between group companies and potentially to more favourable tax jurisdictions.

All the parties have wasted no time in affirming their disagreement with the decision and Starbucks has already publically pledged to appeal the decision.

These decisions are likely to be merely the opening salvo of a protracted battle between the Commission and some of the world's largest organisations. The Commission’s parallel investigations include Apple's tax affairs in Ireland and Amazon's tax affairs in Luxembourg.

A Guide to Doing Business in China

We explore the key issues being considered by clients looking to unlock investment opportunities in the People’s Republic of China.

Doing Business in China
Share on LinkedIn Share on Facebook Share on Twitter
    You might also be interested in

    El equipo de Derecho Fiscal de KWM destaca las principales medidas contenidas en el Proyecto de Ley de Presupuestos Generales del Estado para 2021

    03 November 2020

    Urgent tax and procedural measures to respond to the economic impact of COVID-19 immediately

    18 March 2020

    We discusses recent developments and emerging trends in competition litigation involving the Competition Appeal Tribunal.

    28 November 2016

    The European Commission’s proposed Geo-Blocking Regulation fails to address some of the key e-commerce concerns the Commission had previously identified.

    21 June 2016

    You may also be interested in...

    This site uses cookies to enhance your experience and to help us improve the site. Please see our Privacy Policy for further information. If you continue without changing your settings, we will assume that you are happy to receive these cookies. You can change your cookie settings at any time.

    For more information on which cookies we use then please refer to our Cookie Policy.