The European Union is demanding that Starbucks and Fiat Chrysler pay tens of millions of euros in back taxes, saying the companies benefited from illegal tax deals in some nations in the region.
In a move that signals a crackdown on tax loopholes enjoyed by MNCs, the European Commission said Wednesday that tax deals granted to Starbucks in the Netherlands and Fiat in Luxembourg amounted to illegal state subsidies that must be repaid, the Wall Street Journal reported.
While the sums to be clawed back are modest—between 20 million and 30 million euros — for each firm, the decision nevertheless has far-reaching significance for multinationals taking advantage of tax breaks in Europe.
At a news conference on Wednesday, EU antitrust chief Margrethe Vestager was quoted as saying that the tax deals for Fiat and Starbucks “shifted profits from one company to another in the same group, with no valid economic justification.”
She said she may open more probes involving other firms if she suspects that EU rules are being violated.
Regulators are said to be working on investigations involving Apple Inc. in Ireland and Amazon.com in Luxembourg, as well as a Belgian case that involves AB InBev.
The EU’s move could have repercussions for investment and deals in Europe, as investors fret about higher future taxes and uncertain past liabilities, the Journal cited experts as saying.
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