The European Commission ruled on Wednesday that Starbucks and Fiat benefited from illegal tax deals with the Dutch and Luxembourg authorities, dealing a heavy blow to profit-shielding arrangements used by many multinationals.
Antitrust commissioner Margrethe Vestager said all firms must pay a “fair share” and ordered the Netherlands to recover 20-30 million euros in back taxes from the U.S. coffee shop chain. Luxembourg must recover a similar amount from Italian-U.S. carmaker Fiat Chrysler Automobiles.
The sums will barely dent revenues. The bigger impact lies ahead for global corporations whose strategies to avoid tax are under attack on various fronts from cash-strapped governments. One leading consultant said this first of several EU cases to be concluded would “rock the corporate world to its very core”.
Starbucks immediately said it would appeal, echoing the Dutch government in accusing the European Union executive of significant “errors” in its assessment. Luxembourg, where much of the economy has been built on attracting multinational firms, said it disagreed and reserved its right to appeal.
Full content: The Wall Street Journal
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