EU STARTS PROBE INTO IKEA’S TAX DEALS
EC scrutinising Swedish giant’s alleged use of Netherlands subsidiary to slash levy bill on revenue from megastores globally
THE European Union (EU) yesterday opened an in-depth investigation into Swedish furniture giant Ikea’s tax deals in the Netherlands, in the latest salvo by Brussels against the tax affairs of multinationals.
With the probe, the European Commission is taking a close look at the ways Ikea allegedly used a Dutch subsidiary to slash its tax bill on revenue from megastores around the world.
The case is the most ambitious one yet by Brussels against a multinational from Europe, and follows similar cases against United States heavyweights Apple, Amazon and McDonald’s.
“All firms, big or small, multinational or not, should pay a fair share of tax,” said the EU’s anti-trust commissioner Margrethe Vestager.
“Member states cannot let selected companies pay less tax by allowing them to artificially shift their profits elsewhere,” she said.
The commission put no figure on its allegations against Ikea, but a report by the Green party in European Parliament last year said Ikea avoided €1 billion (RM4.90 billion) in EU taxes between 2009 to 2014.
The Ikea group has a complex corporate structure and is run by various foundations that have allowed it to stay clear of Sweden’s high taxes.
The commission’s probe concerns two tax deals brokered between the Netherlands and Inter Ikea, a Dutch-based unit of the retail giant that receives franchise fees from Ikea shops worldwide.
In the first tax ruling, between 2006 and 2011, Inter Ikea was allowed by the Netherlands to pay a hefty licence fee to another Ikea unit in Luxembourg, thereby shifting revenue to a jurisdiction where it remained untaxed.
In 2011, after Brussels forced a law change in Luxembourg, Inter Ikea arranged a second ruling with the Netherlands, this time involving a complex loan arrangement with an Ikea unit in Liechtenstein, and again the Swedish company successfully shifted taxable revenue to a low tax jurisdiction.