EU Economy
European Commission expected to say Starbucks got special tax deal from Netherlands - Update
By Finfacts Team
Nov 14, 2014 - 6:51 AM

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Update: The Guardian reports that Brussels has accused the Dutch government of cooking up an illegal deal with Starbucks that allowed the coffee chain to pay a very low rate of tax.

The European Commission is expected to confirm today that Starbucks got a special tax deal from the Netherlands, in the latest front in Europe against corporate tax avoidance.

The Financial Times says that initial conclusions from the first stage of Brussels’ state aid probe, will be published on Friday, and will detail concerns over the Dutch illegally favouring Starbucks by understating its taxable income.

The investigation of Starbucks by the Commission's competition authority relates to possible breaches of state aid and coincides with probes of Apple's sweetheart deal with Ireland and similar alleged secret deals secured by Amazon and Fiat Finance from Luxembourg.

The FT says that the Netherlands case turns on the methodology used to calculate Starbucks’ taxable profit. The tax ruling allegedly underestimated the business risk carried by Starbucks’ coffee roasting facility and, as a result, attributed too little profit to the Netherlands.

The European Union should complete its four tax investigations before it can “decide what to do next,” Margrethe Vestager, EU competition commissioner, said Wednesday.

“Maybe in the beginning of the second quarter of next year we will have results on at least some of those open cases,” Vestager told reporters after a hearing at the European Parliament in Brussels.

Once the investigations are finished the EU will “know much, much more about what actually goes on,” Vestager told MEPs.

Last week,  it was revealed that Luxembourg facilitated more than 340 companies to transfer profits to the Grand Duchy to avail of ridiculously low tax rates.

While the Commission will “of course” take the leaked documents into consideration, “it is very important to approach this in a way that will actually achieve results,” Vestager said in reference to the reports by the International Consortium of Investigative Journalists based on a trove oaf almost 28,000 leaked documents from the office of PricewaterhouseCoopers in Luxembourg.

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