“[T]he European Commission’s verdict in the Starbucks case deviates from national law and the OECD’s system.” That was the reaction on Friday from Netherlands Ministry of Finance in response to the European Commission’s October ruling that “selective tax advantages” granted to Fiat in Luxembourg and to Starbucks in the Netherlands were improper. The Commission has ordered the companies to repay tens of millions of euros in back taxes.
This week, Netherlands Finance Minister Jeroen Dijsselbloem officially responded, saying that the Netherlands would appeal the finding that the country provided state aid to Starbucks. The Dutch practice, as it stands, is, according to a statement “lawful and compliant with the international system of the OECD.”
OECD stands for the Organization for Economic Cooperation and Development, an independent organization which focuses on “policies that will improve the economic and social well-being of people around the world,” including fiscal transparency and arm’s length transfer pricing.
(For more on transfer pricing arrangements, click here.)
The ruling, claims Dijsselbloem’s agency, “deviates from national law and the OECD’s system” and will “cause a lot of uncertainty about how to enforce regulations.” Luxembourg’s government has taken a similar position.
Both countries deny offering illegal deals to Starbucks or Fiat while the Commission found that such deals did exist. The Commission ruled that special arrangements allowed those companies to artificially lower their tax bills, saving millions in taxes. As a result, the Commission has ordered the companies to repay tens of millions of euros in back taxes.
The Dutch government, however, says that the ruling was based on new rules.
In October, Starbucks reacted to the ruling, with a company spokesperson saying, “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.”
The Commission is also investigating Ireland’s tax arrangement with Apple. EU Competition Commissioner Margrethe Vestager was expected to announce her findings by the end of the year but due to additional requests for information, that ruling is not likely to be issued before Christmas.