THE European Commission sparked a surreal row with the Netherlands today when it said that coffee giant Starbucks’s Dutch tax arrangements amounted to state aid for an industry.
Commission investigators found that Starbucks funnelled its European profits to the Netherlands but, despite having its European headquarters there in 2011 and 2012, it paid just €715,876 (£570,000) in tax there for 2011 and between €600,000 (£480,000) and €1 million (£800,000) for 2012.
The firm had agreed a formula with Dutch authorities that allowed it to claim that certain costs — such as the purchase of coffee beans — were held by subsidiaries, lowering its tax base.
But in a letter to former Dutch foreign minister Frans Timmermans, who in a bizarre twist is now the commission’s own vice-president, the commission claimed that this amounted to illicit state subsidy.
Dutch Finance Minister Eric Wiebes defended the tax deal as part of a government strategy to create “an attractive investment climate.”
Starbucks has a month to respond to the investigation’s findings.
But even if the arrangements are deemed illegal, it can only be made to pay what it is deemed to have owed in the first place, probably less than €20m (£16m) — peanuts for a firm that boasted of profits approaching $15 billion (£9.5bn) in 2013.
Critics said the apparent EU clampdown was mere “window-dressing.”
New commission president Jean-Claude Juncker’s first weeks in the role have been overshadowed by an explosion of anger over rampant tax avoidance in Luxembourg during the 18 years he was prime minister of the dodgy duchy.
His home state is now under investigation for structures allegedly used by car manufacturer Fiat and online retailer Amazon to avoid tax.
“Juncker wants to look like he’s doing something, but on his watch Luxembourg has been embezzling money from the third world for decades,” said No2EU spokesman Brian Denny.
“The fact that even this investigation is based on preventing governments from protecting industries in the name of competition reinforces the message that member states are powerless to challenge corporate Europe.”