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Blow for Vestager: tax deal The Netherlands with Starbucks not illegal!

The tax arrangements that the Dutch Tax Authorities have made with the American coffee chain Starbucks are not in conflict with European rules

By: N. Peter Kramer - Posted: Wednesday, September 25, 2019

"The Commission has not succeeded in proving that there was an advantage in favor of Starbucks," is the verdict of the judges in Luxembourg.
"The Commission has not succeeded in proving that there was an advantage in favor of Starbucks," is the verdict of the judges in Luxembourg.

by N.Peter Kramer

The tax arrangements that the Dutch Tax Authorities have made with the American coffee chain Starbucks are not in conflict with European rules. The European Court of First Instance blew the whistle on the European Commission on its decision, that the Netherlands had to reclaim 25.7 million euros from Starbucks for alleged state aid.

In 2015, the European Commission ruled that between 2008 and 2014 the Netherlands had granted unlawful state aid through tax agreements. Due to a construction with intellectual property rights abroad, the fees for roasting coffee beans in the Netherlands were not taxed. According to EU Competition Commissioner Margrethe Vestager, this shift with profits resulted in an artificial and illegal reduction of the tax. The Dutch government and Starbucks challenged this decision because it had not been conclusively demonstrated that the tax authorities had violated rules and that there was no question of unlawful state aid.

The General Court of the European Union now agrees with that and annul the decision of the European Commission. "The Commission has not succeeded in proving that there was an advantage in favor of Starbucks," is the verdict of the judges in Luxembourg. According to the Court of First Instance, the Commission made errors in the assessment of the tax arrangements.

Meanwhile, The Netherlands has recovered 25.7 million euros from Starbucks. That amount can be refunded if the European Commission does not appeal. The Commission has two month to do this.

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