EU opened an in-depth investigation into Ikea’s Dutch tax deals

Vastavam web: The EU today opened an in-depth investigation into Swedish furniture giant Ikea’s tax deals in the Netherlands, in the latest salvo by Brussels against the tax affairs of multinationals.With the probe, the European Commission is taking a close look at the ways Ikea allegedly used a Dutch subsidiary to slash its tax bill on revenue from megastores around the world.They all come amid a wave of revelations such as the “Paradise Papers” and “LuxLeaks” that have turned the spotlight on how multinationals and the world’s super rich use legal means to avoid paying tax.

“All companies, big or small, multinational or not, should pay their fair share of tax,” the EU’s anti-trust commissioner Margrethe Vestager said in a statement.Privately held since its creation in 1943, the Ikea group has a complex corporate structure and is run by various foundations that has allowed it to stay clear of Sweden’s high taxes.The commission’s probe concerns two tax agreements brokered between the Netherlands and Inter Ikea, a Dutch-based unit of the retail giant that receives franchise fees from Ikea shops worldwide.

In the first tax ruling, between 2006 and 2011, Inter Ikea was allowed by the Netherlands to pay a hefty license fee to another Ikea unit in Luxembourg, thereby shifting revenue to a jurisdiction where it remained untaxed.”The Netherlands fully supports the Commission’s work,” said a senior Dutch EU official, adding that the government would have to look at the details of the case.The move against Ikea came at the urging of the Greens party in European Parliament which mounted a major campaign to put the spotlight on Ikea.

“This is a huge success for the Greens as it comes from our initial complaint. Europe works,” MEP Sven Giegold told.”It is good if the investigation can bring clarity and confirm that,” the company added.Many of the Brussels probes came in the wake of the “LuxLeaks” scandal which revealed details of tax breaks given by the wealthy duchy to dozens of major US firms.In a similar Dutch case, the EU decided against coffee- shop chain Starbucks in the Netherlands and ordered the latte and espresso-maker to pay roughly 30 million euros in back taxes.