Skip to footer

Are Dutch tax laws giving Starbucks an unfair advantage?

The European Commission is investigating four 'sweetheart deals,' including what may constitute illegal state aid to Starbucks from the Dutch government, which allows the coffee company to make payments on a lower corporate tax base.

|
Eric Thayer/Reuters/File
A Starbucks store is seen in New York in January 2014. The coffee chain's two Dutch units are facing investigation under European Union antitrust regulations.
  • By Foo Yun Chee Reuters

| Brussels

A deal between Starbucks Corp's and Dutch authorities may be illegal state aid as it allows the world's biggest coffee chain to make payments on a lower corporate income tax base, European Union antitrust regulators said on Friday.

The comments by the European Commission came five months after it opened an in-depth investigation into the case involving the company's Starbucks Manufacturing EMEA BV.

The probe is one of four into so-called sweetheart deals which the Commission said may give the companies an unfair advantage. The other three firms are online retailer Amazon, Italian carmaker Fiat and iPhone maker Apple.

"The Commission's preliminary view is that the advanced pricing arrangements in favor of Starbucks Manufacturing EMEA BV constitutes state aid... The Commission has doubts about the compatibility of such aid with the internal market," the European Union executive said.

The arrangements refer to the pricing for transactions between company subsidiaries, the main focus of all four investigations.

The coffee chain's two Dutch units, Starbucks Coffee BV and Starbucks Manufacturing BV, paid 715,876 euros in taxes in 2011 and between 600,000 to 1 million euros (1.25 million US dollar) in 2012, the Commission said.

It said Dutch authorities justified their tax ruling for the company on the grounds that for tax-planning purposes Starbucks Manufacturing was not considered a fully-fledged or contract manufacturer.

In addition to the Netherlands, Luxembourg, Ireland, Malta, Belgium, Cyprus and Gibraltar are also in the regulatory sight over tax deals which substantially lower some firms' tax bills.

Regulators said this favorable treatment could breach EU state aid rules.

The probes have overshadowed the start of the new 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 harmonized tax system in the 28-country bloc.

Corporate tax avoidance has risen to the top of the international political agenda following reports of how big international companies use convoluted structures to cut their tax bills.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.
editor@csmonitor.com
Subscribe
Mark Sappenfield
Editor

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

Subscribe to insightful journalism

QR Code to Are Dutch tax laws giving Starbucks an unfair advantage?
Read this article in
https://www.csmonitor.com/Business/Latest-News-Wires/2014/1115/Are-Dutch-tax-laws-giving-Starbucks-an-unfair-advantage
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe