EU regulators to probe Ikea’s tax arrangement with the Netherlands

BRUSSELS: EU state aid regulators will investigate whether Swedish furniture retailer Ikea’s tax arrangement with the Netherlands helped cut its tax bill – the latest crackdown on unfair tax deals between multinationals and EU countries.

The European Commission said yesterday it was looking into two tax rulings issued to Inter Ikea, which operates Ikea’s franchise business and collects a fee of 3% of turnover from all Ikea shops via subsidiary Inter Ikea Systems in the Netherlands.

“All companies, big or small, multinational or not, should pay their fair share of tax. Member states cannot let selected companies pay less tax by allowing them to artificially shift their profits elsewhere,” European Competition Commissioner Margrethe Vestager said.

The Commission said the first tax ruling, which covered 2006 to 2011, resulted in a significant part of Inter Ikea Systems’ fran- chise profits shifting to a Luxembourg unit where it was not taxed.

A 2011 ruling, brought in after the Commission declared the first deal illegal, allowed a substantial part of the company’s franchise profits after 2011 to be transferred to its Liechtenstein parent.

Inter Ikea said it and Inter Ikea Systems were committed to paying tax in line with the laws of the countries in which they operate and it believed that the way it had been taxed was in accordance with EU rules.

Fast food chain McDonald’s and French energy company Engie are also in the EU crosshairs over their Luxembourg tax deals.

The Commission has to date ordered Apple to pay a record amount of back taxes up to �

13bil (US$15.3bil) to Ireland, Starbucks up to �

30mil to the Netherlands and Amazon �

250mil to Luxembourg.

Belgium has been told to recover a total of �

700mil from 35 firms. — Reuters