A victory for Starbucks clarifies EU rules on sweetheart tax deals

MARGRETHE VESTAGER, the steely Dane who forged her global reputation by waging war on Silicon Valley tech firms and corporate tax dodgers, was offered a rare second term as the European Commission’s competition tsar earlier this month. However part of her legacy is now under intense scrutiny as tax-shy multinational companies try to contest her tough-minded tax-rulings.

The most well-known of these is her demand that Apple repay a huge €13bn ($14bn) sum to Ireland, which the EU’s General Court is still chewing over. But two other judgments offer a sense of whether the courts will back up her mission to revolutionise the taxation of multinational companies in Europe. The cases are complex, but the overall message from the judiciary to Ms Vestager is “proceed—but with caution, because the court is watching,” says Pablo Ibáñez Colomo at the London School of Economics.

The first case involves Starbucks, which Ms Vestager ordered in 2015 to cough-up some €30m ($33m) in unpaid taxes in the Netherlands. She had argued that the existing tax arrangements the coffee-seller had set up with the Dutch government’s approval involved transactions between the firm’s subsidiaries that did not take place at arm’s length using market prices.

The General Court upheld the principle that Ms Vestager was entitled to insist on arm’s...

via Business Feeds

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