Tags: ikea | tax | netherlands | investigate

Ikea Tax Arrangement With Netherlands Investigated

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By    |   Monday, 18 December 2017 12:54 PM

Ikea’s tax arrangements with the Netherlands is under investigation as the European Commission broadens its crackdown on unfair tax deals and corporate tax avoidance, The Financial Times reported.

Ikea is the Swedish home furnishings giant popular in the United States and Europe.

Under scrutiny are two Dutch tax rulings that may have given Inter Ikea, one of the Swedish corporate giant’s divisions, unfair tax advantages that "have significantly reduced" the firm's taxable profits, BBC reported.

In a statement released on Monday, the EC said, "The Commission considers at this stage that the treatment endorsed in the two tax rulings may have resulted in tax benefits in favor of Inter IKEA Systems, which are not available to other companies subject to the same national taxation rules in the Netherlands,” Business Insider noted.

The first tax agreement extends back to a 2006 Dutch tax ruling that allowed Inter Ikea to pay a large chunk of its revenue as a licensing fee to another Ikea unit in Luxembourg, ultimately leading to the company receiving untaxed royalties.

According to Business Insider, EC declared the tax ruling illegal in 2011 and Ikea restructured as a new tax agreement was brought in.

However, the EC believes the 2011 ruling enabled the company to shift a substantial amount of its franchise profits into a low tax jurisdiction via a loan deal with its Liechtenstein parent, CNBC noted.

“All companies, big or small, multinational or not, should pay their fair share of tax,” said Margrethe Vestager, EU competition commissioner, according to The Financial Times.

“Member states cannot let selected companies pay less tax by allowing them to artificially shift their profits elsewhere. We will now carefully investigate the Netherlands’ tax treatment of Inter Ikea.”

A spokesman for Inter Ikea Group argued that the way it had been taxed "has in our view been in accordance with EU rules,” BBC noted.

"It is good if the investigation can bring clarity and confirm that," he added.

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Ikea’s tax arrangements with the Netherlands is under investigation as the European Commission broadens its crackdown on unfair tax deals and corporate tax avoidance.
ikea, tax, netherlands, investigate
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2017-54-18
Monday, 18 December 2017 12:54 PM
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