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Starbucks wins, Fiat loses fights against EU tax orders

Starbucks wins, Fiat loses fights against EU tax orders
FILE PHOTO: A Starbucks sign is show on one of the companies stores in Los Angeles, California, U.S. October 19,2018. REUTERS/Mike Blake -
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Mike Blake(Reuters)
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By Foo Yun Chee

LUXEMBOURG (Reuters) – Starbucks <SBUX.O> won an appeal on Tuesday against an EU demand to pay up to 30 million euros (29.7 million pounds) in back taxes to the Netherlands, while Fiat Chrysler Automobiles <FCHA.MI> lost its appeal to pay back a similar amount of levies to Luxembourg.

“The (European) Commission was unable to demonstrate the existence of an advantage in favour of Starbucks,” the General Court, Europe’s second-highest court, said.

In a separate ruling, the General Court upheld an EU Commission decision that forces Fiat to pay taxes in Luxembourg, from which the carmaker was illegally exempted by the Luxembourg authorities.

The European Commission in its 2015 decisions said Starbucks and Fiat Chrysler set prices for goods and services sold between subsidiaries, known as transfer prices, that were below market rates and which artificially lowered their taxes.

The companies, as well as the Netherlands and Luxembourg, subsequently challenged the rulings. The losing side can appeal to the Court of Justice of the European Union on points of law.

Both cases are part of European Competition Commissioner Margrethe Vestager’s crackdown on unlawful tax breaks offered by EU countries to multinationals that has also extended to Apple’s <AAPL.O> Irish deal and Amazon’s <AMZN.O> Luxembourg deal, among others.

Luxembourg, the Netherlands and Ireland are among countries whose economies have benefited from attracting multinationals.

The European Commission is currently investigating Ikea AB <IKEA.UL> and Nike Inc’s <NKE.N> Dutch deals and Huhtamaki Oyi’s <HUH1V.HE> Luxembourg tax ruling.

Critics said the EU executive appears to be harmonising taxation regimes across the 28-country bloc by using its state aid rules to assess tax strategies used by many companies. The Commission has denied the accusations while the countries involved have amended their tax rules in recent years.

(Reporting by Foo Yun Chee; editing by Francesco Guarascio and Susan Fenton)

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