EU: Starbucks got tax break, must pay

SEATTLE — The European Union said Wednesday that the Netherlands gave Starbucks an illegal break on its tax bill, and it ordered the Dutch government to collect between $23 million and $34 million from the coffee company.

The decision is part of a wider crackdown by the EU on “comfort letters,” which are tax rulings issued by countries such as the Netherlands, Luxembourg and Ireland to companies like Starbucks and Amazon.

The EU said the specific tax deals with Starbucks and Italian car company Fiat, against which it also ruled Wednesday, allowed the companies to use “artificial and complex” methods to calculate taxable profits that “do not reflect economic reality.”

Starbucks said the EU’s assertion about the uniqueness of the Dutch royalty payments “is false.”

According to the EU investigation, the Starbucks roasting operation also paid “an inflated price” for coffee beans bought from another Starbucks subsidiary in Switzerland. The EU argued that by allowing Starbucks to calculate its profits that way, the Netherlands is giving the company — which until last year had its European headquarters in Amsterdam — an unfair state subsidy.

The Dutch government said it was “somewhat surprised” by the decision, since it believes international standards were applied.