22 Oct 2015

Starbucks ordered to repay $50m in tax

10:08 am on 22 October 2015

American coffee-shop chain Starbucks and car maker Fiat-Chrysler have been ordered to repay up to $50 million each in taxes.

The European Commission said the complex international arrangements used by companies to reduce the amount of tax they pay are illegal under European law.

In a case involving Starbucks and Fiat-Chrysler, which has its headquarters in Britain, it ordered both firms to repay up to US$34 million.

The companies were accused of using complicated networks of artificial international transactions between different parts of their business in order to reduce tax bills.

The transactions were authorised by the Netherlands and Luxembourg governments, but that gave them an advantage other companies did not receive and was therefore considered illegal state aid, the commission said.

Starbucks said it would appeal against the ruling.

Both the United Kingdom and Australia were also clamping down on tax avoidance by multi-nationals.

Separately, the OECD was trying to prevent between US$100 billion and $240b in corporate profits slipping through the cracks between the tax laws of its member countries.