Commenting on the news that the European Commission has ruled that tax deals granted to Starbucks in the Netherlands and Fiat in Luxembourg amounted to illegal state aid, George Bull, senior tax partner at Baker Tilly said:
‘A number of multinationals have been criticised recently over their tax affairs, but the important point about this ruling is that it’s directed at the countries which provided sweetheart tax deals to certain companies.
‘This is an example of harmful tax competition where two EU countries have been accused by the EU of having provided unfair state aid. Today’s EU ruling is a warning shot across the bows of tax authorities generally, not simply those in the Netherlands and Luxembourg.
‘In an era of greater tax transparency, national tax authorities must understand that they can’t just boost their tax takes by luring multi-national corporations to their shores with selective offers of favourable treatment.
‘Countries want multinationals to play by the rules and pay a fair amount of tax – something that the recently announced OECD BEPS project is trying to achieve. However, national governments also need to play fair with each other.’