Dutch government appeals in Starbucks state aid case

The Dutch government on Friday appealed the decision by the European Commission that Starbucks received state aid and that the Dutch cabinet should reclaim 20 to 30 million euros (21.19 to 31.79 million U.S. dollars) of unpaid taxes from Starbucks.

"The government is of the opinion that the Commission does not convincingly demonstrate that the tax authority deviated from the statutory provisions," the Dutch government stated in a press release. "It follows that there is no state aid involved."

"In order to get certainty and case law on the application of certainty in advance by way of rulings, the government appeals the Commission decision in the Starbucks case," the Dutch government added.

In October, the European Commission decided that Netherlands provided state aid to Starbucks by means of profitable tax rulings for the U.S.-based chain of coffee stores. However, according to the Dutch their tax deal is legal.

The Dutch tax authorities used an advance pricing agreement with Starbucks which included remuneration for the roasting of coffee beans, the so-called arm's length principle. The tax authorities collect taxes on profit which is made by Starbucks in the Netherlands by roasting coffee beans. Because the intellectual property rights of Starbucks are not located in the Netherlands, the royalties for the use of these are according to this rule not taxed in the Netherlands.

However, European Commissioner Margrethe Vestager, in charge of competition policy, stated in October that the tax deal, as well as a Luxembourg agreement with Fiat, was illegal under EU state aid rules.

"Tax rulings that artificially reduce a company's tax burden are not in line with EU state aid rules," Vestager said. "They are illegal. I hope this message will be heard by member state governments and companies alike. All companies, big or small, multinational or not, should pay their fair share of tax."

The Dutch government emphasized on Friday it is not against the fight against tax avoidance by multinationals. "The government supports this fight," the cabinet stated. "The Dutch practice is lawful and compliant with the international system of the European and Organization for Economic Co-operation and Development (OECD)."

According to the Dutch government, the European Commission's verdict in the Starbucks case deviates from the national law and the OECD's system.

The Dutch government appeal follows an appeal made by Starbucks. Enditem