On 28 November 2024, the European Commission officially closed three investigations. Tax rulings by Luxembourg to Fiat and Amazon and by the Netherlands to Starbucks. The investigation was launched to verify whether the tax regime made state aid incompatible with European law.
Earlier Commission decisions, which identified selective tax benefits for these companies, were overturned by the EU courts. Margaret Vestager, Executive Vice President of Competition explained:
“The EU courts have confirmed in the recent Apple decision that the Commission had the right to challenge certain aggressive tax governance practices. In other rulings, they have upheld the tax in light of EU state aid rules. It also sets the standard for evaluating planning practices. Today, taking into account all the findings of the EU courts, we have concluded that Fiat, Amazon and Starbucks do not have a selective advantage over other companies. found
What are the tax rulings?
Tax rulings, when used transparently, ensure compliance of business practices with local tax regulations. However, they can be problematic if they provide specific tax benefits to certain companies, creating a distortion of competition in the single market.
The commission initially disputed this. Tax authorities of Luxembourg and the Netherlands gave selective benefits to Fiat, Amazon and Starbucks. According to preliminary analyses, these benefits would have artificially reduced the taxes owed by the incorporated companies. However, the decisions of the European Court of Justice have raised doubts about the methodology used by the Commission.
Cases analyzed: Fiat, Starbucks and Amazon
- Fiat (Luxembourg): The 2012 tax ruling will reduce the company’s taxes by 20-30 million euros. The Court of Justice overturned the Commission’s decision in 2022, highlighting the use of incorrect parameters.
- Starbucks (Netherlands): The 2008 tax ruling would have resulted in tax savings of 20-30 million euros. In 2019, the General Court overturned the Commission’s decision, holding that an electoral advantage had not been demonstrated.
- Amazon (Luxembourg): A 2003 decision, which was extended in 2011, could have reduced taxes by around 250 million euros. However, in 2023, the Court of Justice confirmed that there was insufficient evidence to prove selective benefits.
Implications for the European Single Market
An important step in the discussion is the closure of the investigation. Tax regulation within the European Union. As Margrethe Vestager highlighted, the Commission will continue to monitor tax practices to ensure a level playing field in the single market.
Recent phrases, including one related to Apple caseThe EU provides a clear picture of how to interpret tax rulings in the light of state aid rules. While Investigations into Fiat, Amazon and Starbucks ended without sanctionsthey emphasize the need for greater financial transparency and strict application of common rules.
The decision to close investigations into Fiat, Amazon and Starbucks represents an important clarification on EU state aid rules. Although the Commission has been unable to demonstrate infringements in these cases, it is committed to ensuring that tax regulations do not become an instrument of unfair competition, thereby safeguarding the fairness of the European Single Market. go
