Brussels rules Starbucks, Fiat tax deals unlawful

Brussels, Oct 21 (IANS) Ruling as illegal the sweetheart tax deals reached by Starbucks and Fiat with European nations, the European Commission on Wednesday ordered each to pay tax dues up to 30 millions euros ($34 million).

The decision came after 15-month-long in-depth investigations into grant of “selective tax advantages” by local authorities to Starbucks’ coffee roasting company in the Netherlands and Fiat’s financing subsidiary in Luxembourg, Xinhua news agency quoted the commission as saying in a statement.

Dutch and Luxembourg tax policies have for years helped both multinationals reduce their respective tax burden by a total of between 20 and 30 million euros, said the commission.

The two countries now were ordered to recover the unpaid tax from Starbucks and Fiat.

“Tax rulings as such are perfectly legal. They are comfort letters issued by tax authorities to give a company clarity on how its corporate tax will be calculated or on the use of special tax provisions,” said the statement.

“However, the two tax rulings under investigation endorsed artificial and complex methods to establish taxable profits for the companies,” it said. “They do not reflect economic reality.”

Margrethe Vestager, the EC antitrust commissioner, said the findings sent out a clear signal that “all companies, big or small, multinational or not, should pay their fair share of tax”.

“Tax rulings that artificially reduce a company’s tax burden are not in line with EU state aid rules. They are illegal,” she said.

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