May 14, 2021

Brussels investigates whether the Netherlands gave favorable tax treatment to Nike | Economy

Brussels investigates whether the Netherlands gave favorable tax treatment to Nike | Economy



Brussels once again puts the focus on tax advantages granted by EU countries to multinationals. The European Commission announced on Thursday the opening of an investigation to determine if the agreements between the Netherlands and the sportswear multinational Nike allowed it to pay less taxes than its competitors and thus enjoy "undue advantages" that could be considered illegal state aid. .

The inquiries are focused on two companies of the group: Nike European Operations Netherlands and Converse Netherlands, through which the company channels sales in Europe, the Middle East and Africa. Brussels suspects that both benefited from advantageous conditions between 2006 and 2015 when obtaining licenses to use the intellectual property rights of Nike and Converse in exchange for the payment of a tax-deductible fee. "The Commission will carefully examine the tax treatment of Nike in the Netherlands to determine whether it complies with the European Union's state aid rules," European Competition Commissioner Margrethe Vestager said in a statement.

European governments are free to sign agreements with large companies – the so-called tax ruling-, which allow multinationals to make transfers between subsidiaries of the same group under advantageous conditions. To this end, transfer prices are established between these subsidiaries under market conditions. But the Commission has found that some governments misuse these systems or allow certain companies practices that other companies do not benefit from, thus altering free competition.

Brussels has resolved seven such investigations in the last three years. In all cases except one, the alleged tax benefits of McDonald's in Luxembourg, companies were forced to return unpaid amounts illegally. Apple, Amazon, Starbucks or Fiat have been forced in the past to return multimillionaire sums to countries where they reduced their tax bill. The company founded by Steve Jobs ended last year the reimbursement of 13,100 million euros in aid received, as well as an additional 1,200 million euros in interest, the highest amount paid so far. The last solution arrived only a month ago, when the Commission concluded that Gibraltar gave selective subsidies to multinationals through bonuses of its Corporation tax and He imposed the obligation to recover 100 million euros.

In the case of Nike, the investigation must first determine whether there was a privileged fiscal scheme, and if so, calculate the amount that must return to the Dutch coffers. In its statement, the Commission welcomes the changes undertaken by the Netherlands in recent years to eliminate these tax advantages, but notes that two of the five tax agreements between Nike and Amsterdam are still in force. "Member States should not allow companies to implement complex schemes that allow them to unduly reduce their taxable profit," lamented Vestager.

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