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EU court ruling on Starbucks, Fiat million euro tax orders on Sept. 24

Stock Markets Sep 20, 2019 19:41
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By Foo Yun Chee

BRUSSELS (Reuters) - Europe's second-highest court will rule on Sept. 24 whether Starbucks Corp (O:SBUX) has to pay up to 30 million euros ($33 million) in Dutch back taxes and Fiat Chrysler Automobiles NV (MI:FCHA) a similar amount to Luxembourg.

Both cases are part of European Competition Commissioner Margrethe Vestager's crackdown on unlawful tax breaks offered by EU countries to multinationals that have drawn criticism for using the bloc's state aid rules to assess tax strategies commonly used by many companies.

The judgments from the Luxembourg-based General Court could determine the scope of Vestager's drive in the coming years and whether she will open more cases. Many of the countries have already tweaked their tax systems since then.

Vestager suffered a setback in February when the same court dismissed her decision against a Belgian tax scheme for BP (LON:BP), BASF and more than 30 other multinationals. Vestager did not give up and opened separate investigations of the companies this week.

The European Commission is investigating Ikea AB and Nike Inc's (N:NKE) Dutch deals and Huhtamaki Oyi's (HE:HUH1V) Luxembourg tax ruling.

Luxembourg, the Netherlands and Ireland are among countries where much of their economies have been built on attracting multinationals. Ireland is fighting against an order to claw back a record 13 billion euros in back taxes from Apple (NASDAQ:AAPL).

Vestager in her 2015 decisions said U.S. coffee chain Starbucks had benefited from an illegal tax deal with the Dutch and the Italian-U.S. carmaker Fiat Chrysler with Luxembourg.

She said Fiat's Luxembourg unit paid "not even" 0.4 million euros in corporate tax in 2014 and Starbucks' Dutch subsidiary less than 0.6 million euros.

The Commission said the companies set prices for goods and services sold between subsidiaries, known as transfer prices, that were below market rates and which artificially lowered their taxes.

Starbucks criticised errors in the European Commission's assessment while Fiat denied receiving state aid. Companies can appeal to the Court of Justice of the European Union on points of law.

The cases are T-755/15 Luxembourg v Commission & T-759/15 Fiat Chrysler Finance Europe v Commission.

EU court ruling on Starbucks, Fiat million euro tax orders on Sept. 24

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