Illegal advantageous tax treatments for Fiat and Starbucks: Commission fines are right but too low

21 Oct 2015

Following in-depth investigations, which were launched in June 2014, the European Commission has decided today that selective tax advantages (tax rulings) for Fiat in Luxembourg and Starbucks in the Netherlands are illegal under EU state aid rules. As an EU-level trade union confederation representing national-level tax administration trade unions of several European countries, CESI welcomes the Commission's sanctioning of dubious tax practices.

Illegal advantageous tax treatments for Fiat and Starbucks: Commission fines are right but too low

More specifically, the Commission has ordered Luxembourg and the Netherlands to recover unpaid taxes in order to remove the unfair competitive advantage Fiat and Starbucks have enjoyed and to restore equal treatment with other companies in the market. The (in CESI’s view unfortunately rather modest) amount to be recovered is between €20 million and €30 million for each company. The Commission’s decision also means that the Fiat and Starbucks can no longer continue to benefit from the advantageous tax treatment granted by their tax rulings with Luxembourg and the Netherlands respectively.

The Commission announced that it will continue to pursue its inquiry into tax ruling practices in all EU Member States. CESI is in full support of the Commission’s actions, believing however that more substantial fines are necessary to achieve a significant deterrent effect against tax evasion and tax fraud by multinationals.