Starbucks 'bitter sweet tax deal' stirs European Commission

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Starbucks 'bitter sweet tax deal' stirs European Commission

Starbucks 'bitter sweet tax deal' stirs European Commission
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A tax deal between the world’s biggest coffee chain, Starbucks, and the Netherlands may be illegal, EU competition regulators are saying.

The European Commission suspects a Dutch ruling which allows Starbucks to lower its taxable profit, and so cut its tax bill, breaks accounting rules.

Under the deal the company is allowed to do things like exclude the cost of the coffee beans it uses, which remain the property of another Starbucks subsidiary.

Five months into its investigation the Commission said its preliminary view is that arrangement “constitutes state aid”.

The Netherlands Deputy Finance Minister Eric Wiebes said that the Starbucks deal “is fully in line with international transfer pricing standards and is consistent with the policy framework applied by the government in its efforts to create an attractive business climate”.

Starbucks said it was confident EU regulators would conclude that it had not received a selective advantage.

If the EU investigation finds Starbucks did receive an unfair advantage, the company could be forced to repay unpaid tax but the amounts are unlikely to be large.

The tax saving achieved by the deal was under 20 million euros, according to calculations by the Reuters news agency.

Regulators are also looking at Amazon, Apple and Fiat in probes on whether countries attract investment by helping multinational firms to avoid tax.

As well as the Netherlands, Luxembourg, Ireland, Malta, Belgium, Cyprus and Gibraltar are facing scrutiny over tax deals they have struck with companies.

with Reuters