Court rulings on Starbucks and Fiat expose need for better EU tax rules

The General Court of the European Union today confirmed a decision by the European Commission which qualified a tax deal between Luxembourg to Fiat as illegal; at the same time, the court overturned a similar decision on a sweetheart deal between Starbucks and the Netherlands.

Reacting to the news, Oxfam’s EU tax policy advisor, Chiara Putaturo, said:

“These rulings  are a wake-up call for the EU. Case-by-case investigations are not the solution to large-scale tax dodging. Governments in the EU and beyond must stop the destructive race to the bottom on taxation, and reform the global architecture to create a fairer and more equitable system.

“European states should support the current efforts to address international tax rules and introduce an effective minimum tax rate. They should also end the deadlock in EU negotiations on rules that require companies to disclose how much money they make, and how much tax they pay, in each country they operate in.”

“When big businesses dodge tax, governments in Europe and beyond lose money that could be invested in education or healthcare. These public services are crucial to reduce inequality, particularly for the women and girls who bear most of the burden.”

Notes to editors: 
  • Oxfam tax experts are available in Brussels for interviews and background.
  • According to UNCTAD, corporate tax dodging costs developing countries $100 billion a year.
  • In October 2015, the European Commission had decided that Fiat and Starbucks received illegal state aid as they had been granted significant tax reductions through so-called tax rulings issued by Luxembourg and the Netherlands respectively. Both the companies and the governments in question appealed to the European Court of Justice.
  • Further court judgements are expected on tax deals by Luxembourg with Amazon and Ireland with Apple. The Commission is also carrying out in-depth investigations concerning tax rulings issued by the Netherlands in favour of Nike and Inter Ikea.
  • Since 1 July 2019, The Netherlands applies new requirements for tax rulings. The tax authority will no longer approve rulings for structures mainly intended to avoid tax abroad or for transactions with zero-tax jurisdictions. Past rulings nevertheless remain valid.
  • New legislation proposed by the European Commission and approved by the European Parliament would introduce so-called public country-by-country reporting for big companies. It would require big multinational businesses to make public how much profits they make and how much taxes they pay in each country they operate in. The file is currently blocked by member states, including Germany. However, the German finance minister has recently indicated the government might change its position.
  • More than 130 governments are currently negotiating new global tax rules. This process is led by the OECD under the mandate of the G20 to ensure fair taxation of big corporations. This should include the introduction of a global minimum effective tax rate, which should be set at an ambitious level and applied at a country-by-country basis without exception. Such a minimum tax rate would put a stop to the damaging tax competition between countries and remove the incentive for profit shifting – effectively putting tax havens out of business. For more details, read Oxfam’s background briefing “Tax Revolution?”.
Contact information: 

Florian Oel | Brussels | florian.oel@oxfam.org | office +32 2 234 11 15 | mobile +32 473 56 22 60

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