Two of the biggest names in the global market, the Starbucks coffee chain and the Fiat Chrysler car manufacturer, have been told that their current EU state tax aid deals are “illegal” and the pair must pay back between €20 and €30 million each.
Starbucks, one of the biggest coffee shops in the world, currently has a deal in the Netherlands while Fiat have their own links with Luxembourg, but European competition commissioner Margrethe Vestager came out and said that “the rulings that reduce a company’s tax burden are not in line with EU state rules.”
— European Commission (@EU_Commission) October 21, 2015
She went on to say that “All companies, big or small, multinational or not, should pay their fair share of tax.”
While certain tax rulings by national governments are legal, which is why the firms chose to deal with them in the first place, the companies opted to move certain profits to other accounts to avoid the higher taxes with the belief that Fiat’s tax bill could have been “20 times higher” had it not moved its funds to Luxembourg, allowing them to pay what the commission called “underestimated profits”.
The Dutch government have denied any wrongdoing in the matter, saying that they were “surprised” by the decision to charge Starbucks and that they believed that what was going on was completely legal.
Both companies have already stated that they will be appealing against the decision to charge them the huge tax bills, and several other multinational companies including Amazon and Apple, who have taken part in similar overseas dealings in the past year, are still being investigated and may be waiting to see how the appeal pans out before making their move.
The European Commission have made a move to crack down on any companies and governments working on what are commonly known as “sweetheart deals” to ensure that everyone pays their fair share of tax.
Do you have an opinion on the current methods used by some of the biggest companies in the world to reduce the amount of tax being paid? We’d love you to share your views with us.