The European Commission has ordered the Netherlands and Luxembourg to recover tens of millions of euros in back taxes from Starbucks and Fiat Chrysler, in a ruling that could set nerves on edge across the corporate world. David Pollard reports.
Landed with a hefty new tax bill for 20-30 million euros, it wasn't exactly a cappuccino moment for Starbucks. That's the amount the Netherlands has been ordered to recover in back taxes from the coffee shop chain. A similar amount by Luxembourg from Fiat Chrysler. Those countries giving those companies special tax arrangements or "rulings". According to European competition commissioner, Margrethe Vestager. (SOUNDBITE) (English) EUROPEAN COMPETITION COMMISSIONER, MARGRETHE VESTAGER, SAYING: "The tax rulings have artificially reduced the tax burden of both companies and this is illegal under EU state aid rules .... Last year, Fiat Finance and Trade paid not even 0.4 million in corporate tax. And Starbucks Manufacturing paid not even 0.6 million in tax." Fiat deny receiving any state aid. Starbucks says it will appeal. Luxembourg disagrees - while the Netherlands says it's "surprised" at the ruling. Amazon and Apple are among other companies in the Commission's crosshairs. Though Vestager said those cases are different - while also warning the Commission "would not stop here". Admiral Markets' Darren Sinden. SOUNDBITE (ENGLISH) DARREN SINDEN, MARKET RESEARCH & CLIENT RELATIONS MANAGER, ADMIRAL MARKETS, SAYING: "It won't play well to see unelected officials in Brussels telling elected officials in member states what they can and can't do in terms of trying to attract direct foreign investment and corporates into their countries. So I think it will be very messy, very unpopular at a political level. It may play well to certain sections of the media and the general public, but overall I think it will open up a much bigger can of worms." One tax advisor who spoke to Reuters agreed - the ruling, he said, would "rock the corporate world to its very core".