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 Antitrust commissioner Margrethe Vestager said all firms must pay a
"fair share" and ordered the Netherlands to recover 20-30 million
euros ($23-34 million) in back taxes from the U.S. coffee shop
chain. Luxembourg must recover a similar amount from Italian-U.S.
carmaker Fiat Chrysler Automobiles, she said.
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.
Fiat denied receiving any aid from the Luxembourg state.
Vestager, a Dane who has denied accusations of anti-American bias in
launching other tax probes into Apple and Amazon and competition
inquiries into Google, took care to avoid intruding on EU
governments' jealously guarded rights to set their own tax rates.
The issue, she stressed, was firms being treated differently within
the same national system.
"The decisions send a clear message," she told reporters in
Brussels. "National tax authorities cannot give any company, however
large or powerful, an unfair competitive advantage compared to
others. For most companies, especially the small and medium-sized, I
hope this is a reassuring message."
The Commission said Starbucks benefited from a tax ruling -- an
assurance of future tax levels -- from Dutch authorities in 2008 and
Fiat from a ruling in Luxembourg in 2012. It concluded that the
taxable profits for Fiat's Luxembourg unit could have been 20 times
higher under normal market conditions.
The precise amount of tax to be recovered must now be determined by
Luxembourg and the Netherlands on the basis of the Commission's
methodology.
Marc Sanders of tax advisers Taxand said the ruling would "rock the
corporate world to its very core".
"Whilst multinationals were lured to EU states with offers of low
tax rates as an incentive, little did they know that, despite having
agreement at the highest national level, this would come back and
bite a decade later," he said.
"WE DO NOT STOP HERE"
Warning that "we do not stop here", Vestager described the cases of
Apple in Ireland and Amazon in Luxembourg, where the Commission also
suspects the companies of benefiting from illegal state subsidies
via the tax system, as "very different". She declined to say when
she would rule on them.
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Inquiries are also continuing into the Belgian government's
treatment of dozens of unidentified companies.
"More cases may come if we have indications that EU state aid rules
are not being complied with," she warned, while noting that there
was a broader EU and global attempt, coordinated by the rich
nations' club the OECD, to crack down on tax avoidance using
artificial cash flows through ultra-low tax regimes.
"We cannot achieve fair tax competition in Europe with enforcement
of EU state aid rules alone. We cannot do it alone," Vestager said.
"The fight against tax evasion and tax avoidance can only be won
with a combination with enforcement of state aid rules and
legislative responses."
Special deals that slash multinationals' tax bills to little more
than zero in some cases have come under closer scrutiny as
governments struggle with declining revenues.
Vestager said that Fiat's Luxembourg unit paid "not even" 0.4
million euros in corporate tax last year and Starbucks' Dutch
subsidiary less than 0.6 million euros.
Starbucks said it paid an average global effective tax rate of about
33 percent.
"Starbucks shares the concerns expressed by the Netherlands
government that there are significant errors in the decision, and we
plan to appeal since we followed the Dutch and OECD rules available
to anyone," a spokesman said.
Commission President Jean-Claude Juncker has rejected calls for him
to resign because the Luxembourg tax system was developed during
nearly the quarter-century he served as his country's finance
minister and prime minister.
Since taking up the EU post a year ago, he has said the Commission
will work to level the international playing field in corporate
taxation.
(Additional reporting by Robert-Jan Bartunek and Alastair Macdonald;
Editing by Catherine Evans)
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