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Starbucks and Fiat to pay back £22m tax break cash

By Business Reporter

Published 22/10/2015

The EU ruling will pave the way for Starbucks to repay up to 30 million euro (£22 million) in unpaid taxes
The EU ruling will pave the way for Starbucks to repay up to 30 million euro (£22 million) in unpaid taxes

Starbucks and Fiat have been ordered to repay up to €30m (£22m) in illegal tax breaks after an EU ruling branded a "game changer" in the fight against tax avoidance.

An inquiry by the European Commission found that deals struck between the coffee chain in the Netherlands and the car maker in Luxembourg effectively amounted to illegal state subsidies that must be repaid.

The Netherlands and Luxembourg will now have to recover the unpaid taxes from Fiat and Starbucks, amounting to between €20m (£15m) and €30m (£22m) for each firm, following the EU ruling. The landmark judgment is seen as a major step forward in the battle against tax avoidance deals which are used by global multinationals.

EU antitrust Commissioner Margrethe Vestager said: "Tax rulings that artificially reduce a company's tax burden are not in line with EU state aid rules. They are illegal."

She added: "All companies, big or small, multinational or not, should pay their fair share of tax."

The year-long investigation found that "most of the profits of Starbucks' coffee roasting company are shifted abroad, where they are also not taxed, and Fiat's financing company only paid taxes on underestimated profits".

The Commission is now investigating similar tax practices in all of the 28 nations, including the UK.

Catherine Bearder MEP and chair of the Liberal Democrat EU referendum campaign, commented: "This is a game-changer in the fight against corporate tax avoidance.

"By working together across Europe, we can clamp down on tax-dodging and get a fairer deal for British taxpayers and businesses."

Belfast Telegraph

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