Ikea’s Dutch tax deal target of EU ‘teeth’

BRUSSELS • Ikea is the latest company ensnared in the European Union’s sprawling tax probes as regulators look at whether the retailer’s revenue deals in the Netherlands allowed it to avoid hundreds of millions of euros of taxes.

The tax breaks may have given Inter Ikea Group, which operated the Swedish furniture maker’s franchise business, an unfair advantage over rivals, the European Commission said in an emailed statement Monday. It will probe a 2006 deal on how Ikea calculates a licence fee paid by a Dutch unit to a Luxembourg branch where it was exempted from tax. The EU will also look at a 2011 ruling on how the Dutch company paid tax on payments to a Liechtenstein unit.

A probe into Ikea, one of Europe’s best-known brands, may ease criticism EU Competition Commissioner Margrethe Vestager has received for focusing on how U.S. companies reduce taxes. She’s already ordered Apple Inc., Starbucks Corp. and Amazon.com Inc. to repay The EU has opened an investigation into the complex tax deals Ikea is using in the Netherlands. tax while a probe of McDonald’s Corp. is continuing. She’s also suing Ireland for delays in reclaiming about 13 billions euros (US$15.3 billion) from Apple during the appeal process.

Ikea may have avoided at least 1 billion euros (US$1.2 billion) in tax from income from stores from 2009 to 2014, according to a report by Greens/EFA lawmakers submitted to the EU last year. Vestager said in an interview last year that the EU was vetting those claims.

“Europe shows its teeth,” said Sven Giegold, a German Green member of the European Parliament. “Ikea has been using a series of tax loopholes for years to avoid paying taxes. It is the duty of the European Commission to stop these unfair behaviours and make sure that companies pay their taxes where they make their profits.”

Inter Ikea Group said that “the way we have been taxed by national authorities, has in our view been in accordance with EU rules” and “it is good if the investigation can bring clarity and confirm that.”