By Julie Martin, MNE Tax
The European Commission announced April 30 that it has widened the scope of its in-depth investigation into the Netherlands’ tax treatment of an IKEA subsidiary, Inter IKEA’s tax. The Commission will determine if the Netherlands’ annual tax assessments of the Dutch subsidiary tax liability granted the subsidiary State aid.
Since December 18, 2017, the Commission has been investigating tax rulings issued by the Netherlands to IKEA subsidiary, Inter IKEA Systems. According to the Commission, the tax rulings, issued in 2006 and 2011, may have allowed the Dutch subsidiary to reduce taxable profits in the Netherlands, giving it an unfair competitive advantage in breach of EU State aid rules.
The 2011 Dutch tax ruling endorsed the price paid by Inter IKEA Systems for the acquisition of intellectual property from a related Luxembourg company and the deductable interest to be paid under an intercompany loan used by the Dutch subsidiary to finance the purchase.
The Commission in 2017 said it was concerned that the transfer price of the IKEA intellectual property rights sanctioned in this ruling may be too high, allowing Inter IKEA Systems to pay less tax.
The Commission in its latest announcement said that after it launched the 2017 investigation, Inter IKEA Systems began to amortize the IKEA IP rights and the Dutch tax authorities confirmed the deduction of such amortization in their annual assessments of Inter IKEA Systems’ tax returns.
The Commission said it has therefore now extended the scope of its investigation to cover the Netherlands annual tax assessments to determine if the amortization deductions of the IKEA IP rights provided an advantage to Inter IKEA Systems in breach of EU State aid rules.
The Commission’s decision will be released publically once confidentiality issues have been resolved.
Julie Martin
Julie Martin is the founder of MNE Tax. She edits the publication and regularly contributes articles on new developments in cross-border business taxation.
Julie has worked as a tax journalist and editor for more than 13 years. Prior to that, she worked as an in-house tax attorney in New York. She also holds an LLM in taxation from New York University School of Law.
Julie can be reached at [email protected].
Latest posts by Julie Martin (see all)
- UN committee considers updates to model tax treaty, developing nation tax guidance - April 21, 2021
- UN Committee of Experts approves new digital tax article for model treaty - April 20, 2021
- Leaked copy of US proposal for Pillar One and Two multinational group tax reforms available - April 12, 2021
- US offers new “Pillar One” compromise plan for taxing large multinationals - April 8, 2021
- UN tax committee releases updated model treaty language on automated digital services - April 7, 2021
Be the first to comment