Dutch tax deal with Starbucks was legit, and not state-aid: European court

The tax agreements the Netherlands made with Starbucks are not equivalent to state aid, the European General Court ruled on Tuesday, annulling a previous ruling by the European Commission.

In 2015 the European Commission ruled that the Netherlands granted unauthorized state aid to Starbucks through tax agreements between 2008 and 2014. The European Commission ordered the Netherlands to collect more than 25 million euros in back taxes from the American coffee chain.

But on Tuesday the General Court, Europe's second highest court of law, declared that ruling invalid. The court ruled in favor of the Netherlands and Starbucks in an appeal they brought before the bench saying the European Commission's decision and its analysis of the business arrangement were unsound.

“The Commission was unable to demonstrate the existence of an advantage in favor of Starbucks,” a statement from the General Court said.

The European Commission has two months to appeal against this ruling. It is not clear how the Tuesday ruling could affect the EC's ongoing investigations into sweetheart tax deals, particularly in the Netherlands.

Margrethe Vestager, the European Commissioner for Competition since November 2014 has made the issue a key aspect of her portfolio. Under her watch, the European Commission began investigating Ikea's tax construction in the Netherlands three years after her appointment

The Swedish furniture and home products powerhouse allegedly evaded paying a billion euros in taxes by a complex arrangement where it moves cash and booked profits between corporate structures in the Netherlands, Liechtenstein and Luxembourg. 

"This involves a construction in which Ikea's trademark right is registered with a holding company in Delft", researcher Jasper van Teeffelen told BNR in December 2017. "All Ikeas in the world pay three percent of their turnover as a fee to that holding company. They use that to reduce profits because it is an extra cost, so they have to pay less corporation tax," he said.