BRUSSELS--European Union regulators explained on Friday why they
think a tax deal struck by Starbucks Corp. in the Netherlands may
amount to illegal state aid, marking the next phase of an
investigation that could lead to huge back tax payments.
In a letter to the Dutch government, the European Commission,
the EU's central antitrust authority, said it had reached the
preliminary view that an advanced tax deal in favor of the U.S.
coffee chain's Dutch manufacturing arm, Starbucks Manufacturing
EMEA BV, constitutes state aid.
"The commission is of the opinion that [the tax deal] tolerates
questionable adjustments which allow Starbucks Manufacturing BV to
lower the resulting corporate income tax basis in the Netherlands,"
the commission wrote.
The probe comes amid heightened scrutiny of tax avoidance by
multinationals, as governments seek to bolster crisis-hit national
coffers and assuage citizens' anger over tax increases. The EU is
also investigating tax deals struck by Apple Inc. in Ireland and
Amazon.com Inc. and Fiat SpA in Luxembourg.
Earlier this month, a trove of tax documents published by the
Washington-based International Consortium of Investigative
Journalists shed fresh light on how hundreds of the world's biggest
companies, from PepsiCo Inc. to FedEx Corp., have funneled profit
through subsidiaries in Luxembourg, avoiding billions in taxes in
other jurisdictions.
Write to Tom Fairless at tom.fairless@wsj.com
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