STARBUCKS and Fiat were ordered yesterday to forfeit up to £22 million after tax breaks that they had been granted were ruled illegal.
A European Commission inquiry found that a deal between the coffee chain and the Dutch government and another between the carmaker and the government of Luxembourg effectively amounted to illegal state subsidies that must be repaid.
The Netherlands and Luxembourg will now have to recover the unpaid taxes from Fiat and Starbucks, under an EU ruling branded a “game-changer” in the fight against tax avoidance.
Similar tax practices in all of the 28 EU member states, including Britain, is now being investigated by the commission.
ActionAid estimates that developing countries lose at least £89 billion a year to special tax breaks.