Economy

Ikea targeted by European Union in tax evasion probe

Ikea targeted by European Union in tax evasion probe

The European Commission said on Monday (18 December) that it was looking into two tax rulings issued to Inter Ikea, which operates Ikea's franchise business and collects a franchise fee of 3% of turnover from all Ikea shops via its subsidiary Inter Ikea Systems in the Netherlands. She's already ordered Starbucks and Amazon.com to repay tax while a probe of McDonald's is continuing.

"Member states can not let selected companies pay less tax by allowing them to artificially shift their profits elsewhere", said Margrethe Vestager, European commissioner for competition.

The commission put no figure on its latest allegations against Ikea, but a report by the Green party in European Parliament previous year said Ikea avoided one billion euros ($1.2 billion) in EU taxes between 2009 to 2014. "IKEA's tax practices are a theft to society".

The European Commission said it would centre on concerns that two Dutch tax rulings may have allowed part of the group to pay less tax since 2006 - giving the company an unfair advantage over competitors and breaching state aid rules in the process.

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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. EU Competition Commissioner Margrethe Vestager said the EU was vetting those claims. "Europe works", MEP Sven Giegold told AFP.

The inquiry into the company - founded in Sweden and now headquartered in the Netherlands - could come early this week and would be the latest in a series of cases that have targeted aggressive tax avoidance by multinationals, as well as the third to shine the spotlight on the Hague's tax regime.

In similar cases, the European Union has also gone after member states to claw back taxes from the likes of Apple, Amazon and Starbucks.


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