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Sept. 24, 2019, 4:57 p.m. EDT

EU court rules in favor of Starbucks in tax break battle

The court says Starbucks did not get illegal state support as claimed by EU regulators

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By Associated Press


BRUSSELS (AP) — A European Union court ruled Tuesday that a tax deal between the Dutch government and Starbucks /zigman2/quotes/207508890/composite SBUX -0.10%   did not amount to illegal state support, as claimed by regulators, delivering a blow to the bloc’s efforts to crack down on sweetheart tax breaks for multinationals.

The General Court said the European Commission “was unable to demonstrate the existence of an advantage in favor of Starbucks” when handing down its tax ruling in 2015. The Dutch authorities, which fought the commission in court along with Starbucks, have already claimed back 25.7 million euros ($28 million) from the coffee giant to respect the ruling.

EU Competition Commissioner Margrethe Vestager, who the Trump administration accuses of targeting U.S. companies like Google /zigman2/quotes/205453964/composite GOOG +0.14%   or Amazon /zigman2/quotes/210331248/composite AMZN +2.15%   with antitrust action and big fines, vowed to push on with the commission’s tax crackdown.

“The commission will continue to look at aggressive tax planning measures under EU State aid rules,” Vestager said in a written statement.

“All companies, big and small, should pay their fair share of tax. If member states give certain multinational companies tax advantages not available to their rivals, this harms fair competition in the EU. It deprives the public purse and EU taxpayers of much needed funds to fight climate change, to build infrastructure, to invest in innovation,” she said.

Apple launched last week its fight against a commission order to pay 13 billion euros ($14.3 billion) in back taxes linked to a deal it made with the Irish government. Dublin is also challenging the ruling.

Starbucks and Dutch State Secretary for Finances Menno Snel welcomed Tuesday’s court decision.

“This judgment means that the tax service did not treat Starbucks better or differently from other companies,” Snel said in a written statement.

The coffee company said the decision “makes clear Starbucks did not receive any special tax treatment from the Netherlands. Starbucks pays all of its taxes wherever they are due.”

In a similar case Tuesday, the General Court decided that automaker Fiat will have to pay up to 30 million euros ($33 million) in back taxes to Luxembourg.

It ruled that Vestager’s services had acted correctly in 2015 when they ordered Fiat Chrysler Finance Europe to return the tax break, saying that the commission was “fully entitled to conclude that the tax ruling at issue conferred an advantage” to the group.

Following the two verdicts, Vestager said that “each case has its specificities and involves complex legal questions. We will study the judgments carefully before deciding on possible next steps.”

EU lawmaker Sven Giegold — the Greens group financial affairs spokesman — said they highlight the need to reinforce EU-wide tax avoidance rules.

“We should not have to rely on lengthy Commission investigations and Court decisions to achieve tax justice,” Giegold said in a statement. “EU Member States should not be able to aid and abet the tax avoidance of large companies.”

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