July 29, 2021

EU expands research on Dutch tax aid to IKEA

The European Commission has expanded this Thursday the investigation it has open on the tax treatment of IKEA in the Netherlands, which was initially opened in December 2017, as reported on Thursday.

The ongoing Brussels investigation concerns two tax rulings in favor of Inter Ikea’s Dutch subsidiary, Inter IKEA Systems, issued by the Netherlands in 2006 and in 2011.

In relation to the 2011 tax ruling, the 2017 Commission investigation provisionally concluded that the transfer price of IKEA’s intellectual property (IP) rights may be too high, allowing Inter IKEA Systems to pay less tax and give them an unfair advantage over other companies, in violation of EU state aid rules.

Following the opening of the in-depth investigation, some of the facts and assumptions of the 2011 tax decision have changed: In particular, Inter IKEA Systems has started to amortize IKEA’s intellectual property rights.

The Dutch tax authorities confirmed the deduction for such depreciation in their annual tax assessments of Inter IKEA Systems tax returns.

In Thursday’s decision, the Commission expands the scope of its investigation to annual tax assessments to examine whether the deduction from the amortization of IKEA’s intellectual property rights provided an advantage to Inter IKEA Systems, in violation of the rules of the EU on state aid.

A study by the Tax Justice Network reveals that EU member states are dropping some 9.2 billion euros in corporate tax a year for the benefit of the Netherlands, the country that is most opposed to a joint and ambitious response from the EU to the coronavirus crisis.

Tax losses were highest in the four EU countries with the highest COVID-19 cases, explains Tax Justice: France, with more than 150,000 cases, stopped collecting more than € 2.4 billion in corporate taxes to the Netherlands. ; Italy, with more than 178,000 cases, lost more than 1,350 million; Germany, with more than 145,000 cases, also lost more than 1,300 million; and Spain, with 195,000 cases, lost almost 1,000 million in the Dutch tax shelter.

The European Commission already claimed in October 2015 that the multinationals Fiat and Starbucks had to return between 20 and 30 million euros for tax benefits received in Luxembourg and the Netherlands, respectively, when concluding after an investigation that constituted illegal public aid.

“The ‘tax rulings’ (artificially anticipated tax decisions) that artificially reduce the tax burden on companies are not in line with EU state aid rules. It is illegal,” said the Commissioner for Competition at the time, Margrethe Vestager, after announcing the Brussels decision. “This message will be heard by the governments of the member states and companies. All companies, large or small, multinational or not, must pay their fair share of taxes,” he added.

In September 2019, the EU court of law resolved Starbucks and Fiat Chrysler’s appeals against Vestager’s decisions, regarding allegedly unfair tax deals. And he gave the reason to Brussels in the case of Fiat, but he took it away in that of Starbucks.


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