The EC has published the non-confidential version of its decision sent to the Netherlands tax authorities in June to open a formal state aid investigation into corporate tax rulings involving Starbucks. The EC had already published its decisions sent to Ireland and Luxembourg to open investigations into tax rulings given in favour of Apple and Fiat respectively, and has opened an ‘in-depth investigation’ over what it considers to be an ‘unorthodox’ tax deal by Luxembourg with online retailer Amazon.
In a statement, the EC said: ‘[We note] the Netherlands seem to generally proceed with a thorough assessment based on comprehensive information required from the taxpayer. The Commission therefore does not expect to encounter systematic irregularities in tax rulings. However, at 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.’
Heather Self (Pinsent Masons) described the response from the Netherlands as ‘very robust’. She noted that the response pointed out that ‘a proper transfer pricing study had been done, the advance pricing agreement was in accordance with OECD principles and the resulting price was arm's length’.
‘The Commission isputting forward a very detailed and technical challenge to a company which has done a full transfer pricing study,’ Self said. ‘If upheld, this approach will make it difficult for any company to be confident that its ruling is safe from attack.’
In a client briefing on the issue, EY explained that the publication of the letters is the next procedural step in the state aid investigation process. 'At this stage, the Commission has not finally decided that there is state aid, only that it is of the preliminary view that the measures may constitute state aid and that it formally continues to examine these cases. It is expected that a final decision … will take a considerable period of time. Once the letter and accompanying summary has been published in the Official Journal of the European Union, interested parties will have one month to submit their comments directly to the European Commission.’
Meanwhile, MEPs questioned Commission president Jean-Claude Juncker in an extraordinary debate that was prompted by the recent revelation of tax deals granted to multinational companies in Luxembourg at a time when Juncker was Luxembourg’s prime minister. In response, Juncker said: ‘There probably was a certain amount of tax avoidance in Luxembourg ... because there is insufficient tax harmonisation in Europe’. He assured the Parliament that taxation commissioner Pierre Moscovici is now taking forward the Commission’s battle against tax fraud and evasion.
The EC has published the non-confidential version of its decision sent to the Netherlands tax authorities in June to open a formal state aid investigation into corporate tax rulings involving Starbucks. The EC had already published its decisions sent to Ireland and Luxembourg to open investigations into tax rulings given in favour of Apple and Fiat respectively, and has opened an ‘in-depth investigation’ over what it considers to be an ‘unorthodox’ tax deal by Luxembourg with online retailer Amazon.
In a statement, the EC said: ‘[We note] the Netherlands seem to generally proceed with a thorough assessment based on comprehensive information required from the taxpayer. The Commission therefore does not expect to encounter systematic irregularities in tax rulings. However, at 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.’
Heather Self (Pinsent Masons) described the response from the Netherlands as ‘very robust’. She noted that the response pointed out that ‘a proper transfer pricing study had been done, the advance pricing agreement was in accordance with OECD principles and the resulting price was arm's length’.
‘The Commission isputting forward a very detailed and technical challenge to a company which has done a full transfer pricing study,’ Self said. ‘If upheld, this approach will make it difficult for any company to be confident that its ruling is safe from attack.’
In a client briefing on the issue, EY explained that the publication of the letters is the next procedural step in the state aid investigation process. 'At this stage, the Commission has not finally decided that there is state aid, only that it is of the preliminary view that the measures may constitute state aid and that it formally continues to examine these cases. It is expected that a final decision … will take a considerable period of time. Once the letter and accompanying summary has been published in the Official Journal of the European Union, interested parties will have one month to submit their comments directly to the European Commission.’
Meanwhile, MEPs questioned Commission president Jean-Claude Juncker in an extraordinary debate that was prompted by the recent revelation of tax deals granted to multinational companies in Luxembourg at a time when Juncker was Luxembourg’s prime minister. In response, Juncker said: ‘There probably was a certain amount of tax avoidance in Luxembourg ... because there is insufficient tax harmonisation in Europe’. He assured the Parliament that taxation commissioner Pierre Moscovici is now taking forward the Commission’s battle against tax fraud and evasion.
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