The European Commission ruled on Wednesday that Starbucks Corp and Fiat Chrysler Automobiles NV benefited from illegal tax deals with the Dutch and Luxembourg authorities, dealing a heavy blow to profit-shielding arrangements used by many multinationals.
European Commissioner for Competition Margrethe Vestager said all firms must pay a “fair share” and ordered the Netherlands to recover 20 million to 30 million euros (US$23 million to US$34 million) in back taxes from the US coffee shop chain. Luxembourg must recover a similar amount from Italian-US automaker Fiat.
Starbucks immediately said it would appeal, echoing the Dutch government in accusing the EU executive of significant “errors” in its assessment. Luxembourg, where much of the economy has been built on attracting multinational firms, said it disagreed and reserved its right to appeal.
Fiat denied receiving any aid from Luxembourg.
Vestager, a Dane who has denied accusations of anti-US bias in launching other tax probes into Apple Inc and Amazon.com Inc, as well as competition inquiries into Google Inc, took care to avoid intruding on EU governments’ jealously guarded rights to set their own tax rates. The issue, she said, was firms being treated differently within the same national system.
“The decisions send a clear message,” Vestager told reporters in Brussels. “National tax authorities cannot give any company, however large or powerful, an unfair competitive advantage compared with others. For most companies, especially the small and medium-sized, I hope this is a reassuring message.”
The European Commission said Starbucks benefited from a tax ruling — an assurance of future tax levels — from the Dutch authorities in 2008 and Fiat from a ruling in Luxembourg in 2012. It concluded that the taxable profits for Fiat’s Luxembourg unit could have been 20 times higher under normal market conditions.
The precise sum to be paid must now be set by Luxembourg and the Netherlands on the basis of the European Commission’s methodology.
Marc Sanders of tax advisers Taxand said the ruling would rock the corporate world to its very core, throwing tax planning into disarray.
“Whilst multinationals were lured to EU states with offers of low tax rates as an incentive, little did they know that, despite having agreement at the highest national level, this would come back and bite a decade later,” Sanders said.
Warning that “we do not stop here,” Vestager described the cases of Apple in Ireland and Amazon in Luxembourg, where the European Commission also suspects the companies of benefiting from illegal state subsidies via the tax system, as “very different.”
She declined to say when she would rule on them.
“More cases may come if we have indications that EU state aid rules are not being complied with,” Vestager said, while noting that there was a broader EU and global attempt, coordinated by the rich nations of the Organisation for Economic Co-operation and Development, to crack down on tax avoidance using artificial cash flows through ultra-low tax regimes.
Apple did not respond to a request for comment on Wednesday’s ruling and the commissioner’s statement. Amazon declined to comment.
The European Commission’s decision could force “real soul searching” by US multinational companies considering investments in Europe, said Robert Willens, an independent corporate tax consultant in New York.
The tax strategies the European Commission is now calling illegal state aid are used by many companies, he said.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”