Tax and Tip

European Commission Opens Investigation of Starbucks’s Tax Arrangements

Photo: Ulrich Baumgarten

The European Commission has announced a three-part, “in-depth” probe into Starbucks’s tax practices in the Netherlands in an effort to determine if the coffee chain and others have received substantial tax reductions as a result of nationally assigned “tax rulings.” Other companies being looked at are Apple, in Ireland; and Fiat Finance and Trade, in Luxembourg. The Commission says it’s been crunching the numbers from the three countries, and while Netherlands tax authorities “proceed with a thorough assessment” of information provided by Starbucks, it need[s] to look at other aspects that may be favorable to the company.

A Reuters investigation conducted in 2012 revealed that Starbucks had paid taxes of £8.6 million in a 14-year period in which it reported £3 billion in sales. The chain responded to the report by pointing out it was following the law. “We have paid and will continue to pay our fair share of taxes in full compliance with all UK tax laws, as we always have,” it told BBC News.

The European Commission’s newly-announced investigation seeks to determine if the three companies comply with the European Union’s rules of state aid. “[A]t this stage the Commission has concerns that the tax ruling for Starbucks Manufacturing EMEA BV is providing that company with a selective advantage, because there are doubts whether it is in line with a market-based assessment of transfer pricing,” it writes.

State aid: Commission investigates transfer pricing arrangements on corporate taxation of Apple (Ireland) Starbucks (Netherlands) and Fiat Finance and Trade (Luxembourg) [ via The Verge]

European Commission Opens Investigation of Starbucks’s Tax Arrangements