EU says Starbucks' 'very low' Dutch tax deal may be illegal

Fri Nov 14, 2014 6:45am EST
 
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By Foo Yun Chee and Tom Bergin

BRUSSELS/LONDON (Reuters) - A tax deal the Netherlands cut with Starbucks Corp SBUX.O may be illegal state aid, European Union regulators said on Friday, part of a crackdown on members attracting investment by helping companies to avoid tax.

Luxembourg, Ireland, Malta, Belgium, Cyprus and Gibraltar are also facing scrutiny over tax deals they have struck with multinational companies.

The inquiries have overshadowed the early days of the new European Commission led by Jean-Claude Juncker, prime minister and finance minister of Luxembourg for more than two decades, and intensified calls among lawmakers and EU countries for a more harmonised tax system in the 28-country bloc.

The European Commission said it suspects the Dutch tax ruling allows Starbucks, the world's biggest coffee chain, to lower its taxable profit, and thereby its tax bill, in a way that is at odds with accepted accounting rules.

"The Commission’s preliminary view is that the advanced pricing arrangements in favour of Starbucks Manufacturing EMEA BV constitutes state aid," the EU executive said.

Deputy Finance Minister Eric Wiebes said that the Starbucks deal "is fully in line with international transfer pricing standards, is consistent with the policy framework applied by the government in its efforts to create an attractive business climate".

Starbucks said it was confident EU regulators would conclude that it had not received a selective advantage.

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Branded packaging is seen in Starbucks' Vigo Street branch in Mayfair, central London January 11, 2013.  REUTERS/Stefan Wermuth