The European Commission has today taken a landmark legal decision on aggressive tax avoidance by ordering Luxembourg and the Netherlands to collect between €20-30 million in unpaid taxes from Fiat and Starbucks. This decision shows that European countries have been giving "sweetheart deals" to certain companies to allow them to reduce their tax bill - and sends a strong message from the EU that they will not get away with it.
Today's announcement comes at the end of a two-year long investigation into Fiat and Starbucks. Two other investigations - into Amazon and Apple - are still ongoing and have the potential to result in much larger repayments.
Anneliese Dodds MEP, Labour's European spokesperson on tax, said: "Today's landmark decision sends a powerful message to European countries and companies alike: you should be paying your fair share of tax. It is not right that large multinationals like Starbucks have been able to reduce their tax rate to almost 1%, while small family-run coffee shops in the UK are dutifully paying the full 20%.
"I am delighted to hear that the EU has taken this seriously, and ruled that this kind of behaviour is unacceptable. Their attention should now turn to concluding the other cases that are already open into Apple and Amazon, and opening new cases into companies like McDonalds, who are also accused of having reduced their tax bill."
Anneliese continued: "Every time a company like Starbucks or Fiat manage to reduce their tax bill in this way, it impacts on ordinary people. Hospitals and schools go unbuilt. Other taxes have to rise to make up for it. Smaller businesses go bust because they can't compete. Today's ruling shows the power of acting at a European level on these matters. The European Commission can, and should, act in this way to stamp out tax dodging once and for all."