Published: Mon, December 18, 2017
Business | By Max Garcia

European Union regulators open investigation into Ikea's Dutch tax deals

European Union regulators open investigation into Ikea's Dutch tax deals

"Member states can not let selected companies pay less tax by allowing them to artificially shift their profits elsewhere", European Competition Commissioner Margrethe Vestager said.

The European Commission will open an investigation into Ikea's corporate taxes. It is the duty of the European Commission to stop these unfair behaviours and make sure that companies pay their taxes where they make their profits.

European Union state aid regulators will investigate whether Swedish furniture retailer Ikea's [IKEA.UL] tax arrangement with the Netherlands helped cut its tax bill - the latest crackdown on unfair tax deals between multinationals and European Union countries.

The EC said on Monday: "The Commission considers at this stage that the treatment endorsed in the two tax rulings may have resulted in tax benefits in favour of Inter IKEA Systems, which are not available to other companies subject to the same national taxation rules in the Netherlands". Ms Vestager ruled in August a year ago that Ireland had granted the company illegal state aid in the form of generous tax benefits which allowed the California-based company to pay nearly no tax on a significant proportion of its global sales.

The furniture retailer is the latest high profile company to face such a probe.

Information is limited as Ikea is not a public company and, like most multinational groups, it is formed of a large number of subsidiary companies in numerous jurisdictions.

In August 2016, Vestager ordered Apple to pay a record amount of back taxes up to €13 billion to Ireland in a landmark decision that stoked transatlantic tensions.

Ikea Group, the retailer, paid € 825m in tax in its financial year to the end of August on pre-tax profits of € 3.31bn.

The 2006 ruling endorsed a tax arrangement that IKEA's core company used to shift "a significant part" of its revenues to a special tax scheme in Luxembourg that was exempt from corporation tax.

The EU is also conducting investigations into McDonald's, the fast-food chain; Engie, the French utility; and a United Kingdom tax scheme for foreign-controlled corporations.

Belgium has been told to recover a total of 700 million euros from 35 companies, among them Anheuser-Busch InBev (ABI.BR), BP (BP.L) and BASF (BASFn.DE) because of an illegal tax scheme. Engie, which is 33 per cent owned by the French state, said it was co-operating with the probe.

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