The General Court of the European Union on Tuesday struck down an order from the European Commission for Starbucks to pay €30m in back taxes to the Netherlands.
The Netherlands entered into an advance pricing agreement (APA) with Starbucks in 2008, but the Commission later found in 2015 that the APA “constituted aid incompatible with the internal market and ordered recovery of that aid.” Both the Netherlands and Starbucks dispute this finding of a selective advantage.
The Commission alleges that the wrong transactional net margin method (TNMM) was used in calculating the agreement with Starbucks. Under the comparable uncontrolled price (CUP) method, the Commission states that the price analysis would have come out differently and that the use of TNMM conferred an advantage on Starbucks.
The court found that the Commission did not sufficiently demonstrate the error in using TNMM and its economic advantage on Starbucks as defined by Article 107 TFEU.
In response to the judgment, Commissioner Margrethe Vestager stated, “All companies, big and small, should pay their fair share of tax. If Member States give certain multinational companies tax advantages not available to their rivals, this harms fair competition in the EU. It deprives the public purse and EU taxpayers of much needed funds to fight climate change, to build infrastructure, to invest in innovation.”