October 21, 2015 – The European Union ordered Starbucks and Fiat to each repay up to €30 million in back taxes in a landmark tax avoidance case that began in the wake of the LuxLeaks scandal.
Brussels said tax deals that the Netherlands offered US coffee giant Starbucks and that Luxembourg gave Italian automaker Fiat were illegal, as it unleashed its first major blow in a campaign against sweetheart tax arrangements.
The Netherlands and Luxembourg both said they disagreed with the European Commission ruling that they would have to reclaim the tax from the two companies.
Decisions on Apple and Amazon are also looming after the EU launched a series of probes last year following the LuxLeaks affair, which revealed that top global companies had negotiated lower tax rates, in some cases just one percent, in secret pacts with Luxembourg.
“Tax rulings that artificially reduce a company’s tax burden are not in line with EU state aid rules, they are illegal. All companies, big or small, multinational or not, should pay their fair share of tax,” EU Competition Commissioner Margrethe Vestager said.
The LuxLeaks revelations were a huge embarrassment to Jean-Claude Juncker, who took over as European Commission President last November after serving nearly 19 years as Luxembourg prime minister during the period when the tax deals were made.