The Netherlands announced November 27 that it will appeal the EU Commission’s October 21 ruling that an advance pricing agreement (APA) granted by the Netherlands to a Starbucks subsidiary amounted to illegal State aid because it sanctioned the allocation of too little taxable profit to the Netherlands.
The Dutch Ministry of Finance (MOF) said in a statement that it would appeal the Commission’s decision to “get certainty and case law” on advance tax rulings. The Dutch practice is lawful and compliant with OECD rules, the MOF asserted.
The EU Commission ruled that the 2008 APA granted to Starbucks Manufacturing EMEA BV by the Netherlands wrongly sanctioned excessive payments by the Netherlands subsidiary to related Starbucks companies for royalties for coffee roasting know-how and for green coffee beans.
The APA thus allowed most of the profits of the Dutch subsidiary to be shifted abroad, where the profits are also not taxed, the Commission said. Concluding that the artificial reduction of tax was illegal State aid, the Commission ordered the Dutch goverment to recover the unpaid taxes from Starbucks.
According to the MOF though, no State aid is involved. “The Commission does not convincingly demonstrate that the tax authority deviated from the statutory provisions,” the MOF said.
“European Commission’s verdict in the Starbucks case deviates from national law and the OECD’s system. In the end this will cause a lot of uncertainty about how to enforce regulations,” the MOF said.
The MOF added that the Netherlands supports international efforts to fight tax avoidance and “wants to make international agreements in order to counter tax avoidance by increasing transparency and aligning different national systems in a better way.”
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