Brussels rules Starbucks, Fiat sweetheart tax deals unlawful

The sweetheart tax deals reached by Starbucks and Fiat with European nations were ruled illegal, the European Commission announced on Wednesday, ordering each to repay taxes up to 30 millions euros (34 million U.S. dollars) back.

The decision came after 15-month in-depth investigations. The commission said in a statement that Starbucks' coffee roasting company in the Netherlands and Fiat's financing subsidiary in Luxembourg were granted "selective tax advantages" by local authorities.

Dutch and Luxembourg tax policies have for years helped both multinationals reduce tax 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 antitrust commissioner, said that 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. Endit