Starbucks and FIAT again under Commission’s microscope: is Europe ready to kick multinationals out of the house?

Starbucks_Logo__Some multinationals (MNEs) such as FIAT and Starbucks have been overdoing it in the EU for quite some time now. The case of tax investigation of the aforementioned companies on whether they have paid the correct amount of corporate income tax or not is ongoing for over a year now.

The Commissioner responsible for Competition, Mrs Margrethe Vestager, is expected to decide today on the tax avoidance case of FIAT’s financial arm and Starbucks, based in Luxembourg and in the Netherlands respectively. The decision would be of great importance, if finally taken, for the future of big enterprises in the EU.

In the case it will be decided that these firms have been doing business under favorable tax rates, then they will have to pay back the amount of money that was avoided. In addition to that, an extensive legal and tax investigation that might follow in the member states where such favorable treatments exist will urge some of the biggest tech companies such as Apple and Amazon to reevaluate their positions in the EU and possibly flee to Turkey.

However, these cases has been under investigation for a long time now and no definite decision has been made so far. Will Mrs Vestager be able to tackle this long-lasting issue in one day and at what cost for the EU?  It is certainly a too crucial decision and many aspects have to be taken under consideration such as the EU-US negotiations for the free trade agreement TTIP which are still facing plenty of setbacks on their own.

FIAT and Starbucks devour the SMEs

The moment that EU governments were tightening their budgets due to the financial crisis, the tax rates of big multinationals such as Starbucks and FIAT were reducing. More specifically, the rate of Starbucks was reduced from 25% to 2.5% and the one of FIAT from 29% to 1%. Those numbers do seem overwhelming, thus allowing the competition with smaller corporations to be extremely “unfair” and setting barriers for the viability of the local firms.

It is the European Commission’s duty after all to decide whether this is against the EU rules and if so start imposing fines at will. According to the Financial Times, FIAT would owe less than €30 million, while Starbucks would have to pay back no more than €200 million. Nonetheless, the two corporations will pay way below the maximum fines that could be imposed, as this is the usual practice.

Apple and Amazon should be “trembling”

It seems though that the EC is ready to go a step further and probe also similar pending investigations of the US tech giants Amazon and Apple in Luxembourg and Ireland. The main problem is whether the EU-US free trade pact “factor” will be enough to slow down the European determination on imposing fines and changing the already beneficial (for the MNEs) fiscal environment. The EU and particularly the Commission have shown that they greatly value this agreement and are determined to proceed smoothly, which of course contradicts with their will to put a halt to the MNEs’ “tax party”.

Apart from the fact that the EU laws have to be implemented, the EC needs to think of alternative “benefits” to provide to the MNEs in order to maintain their subsidiaries in the EU and not drive them away to more favourable tax environments outside Europe. Consequently, it is not an easy call taking into consideration also the advantages that a big corporation is giving to the EU economy (e.g. employment, growth) as a whole but also to the EU member states where its subsidiaries are located.

Seeking for a fairer business environment

In fact, the local companies are the ones to be suffering most from this unfair tax market. The competition with the big multinationals has always been uneven due to unfavourable objective factors such as the size, human expertise, capital depth, etc. However, in the cases where the local firms need also to compete against favorable tax rates, it makes the “game” to be made just for one; the MNEs.

Therefore, the Commission together with the member states will need to decide on such matters based on the good of the whole economy and not just the survival of the fittest. It is the right time now to see proof that Juncker’s Commission is ready to put an end to this.

The European Sting will be monitoring the matter closely.

Follow Chris on Twitter @CAnyfantis

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

How women are transforming the Arab world’s start-up scene

More than half of the global population is now online

The 28 EU leaders care more about fiscal orthodoxy than effectively fighting youth unemployment

Why do medical students need to emigrate to become doctors in 2017?

EU Trust Fund for Africa: Can it be beneficial for Italy and tackle the migration crisis in the Mediterranean?

Refugee crisis update: EU lacks solidarity as migration figures drop

Coronavirus – here’s the public health advice on how to protect yourself

Iran-US attack in Iraq: Guterres pledges ‘active engagement’ in further de-escalation efforts

Germany to re-invent its security position in Europe and a chaotic world

Countries must invest at least 1% more of GDP on primary healthcare to eliminate glaring coverage gaps

The Parliament defies a politically biased Banking Union

Juncker Plan reaches almost €410 billion in triggered investment across the EU

These dogs can smell tree disease – and could help save the world’s orange groves

A Sting Exclusive, the European Commissioner for Energy Günther Oettinger writes for the Sting on “EU Industry: a major energizer”

New book honours UN women who made HERstory

New report says better metrics could have prompted stronger response to the crisis

‘Vaccines are safe’ and save lives, UNICEF declares, launching new #VaccinesWork campaign

6 innovative technologies about to transform our infrastructure

GDPR and the World Cup have these 4 things in common

Austerity lovers to put a break on Renzi’s growth vision for Europe? the Sting reports live from World Economic Forum 2015 in Davos

6 surprising side effects of this year’s global heatwave

How do we build a #sustainableworld?

UN chief condemns terror attack in Kismayo, Somalia

Killings and violence targeting ethnic group in DR Congo ‘may amount to crimes against humanity’

Road injuries leading cause of death for the young, despite safety gains: UN report

What’s needed to ensure maternal health for women in vulnerable populations

COVID-19 underlines the importance of fintech in emerging markets

GSMA Mobile 360 – Latin America at Mexico City: Intelligently Connecting to a Better Future, in association with The European Sting

The hidden downsides of autonomous vehicles – and how to avoid them

E-Governance: A powerful tool to combat, mitigate and sustainably manage disaster risks

Australian solar could power Singapore within a decade

Ukraine’s Poroshenko implicates NATO in his duel with Putin

These 4 trends are shaping the future of your job

EU leading in global agri-food trade

UN, African Union make significant joint commitment to global health

Countries must up their game to reduce low birth weights, warns UN-backed report

EU Commission – US hasten talks to avoid NGO reactions on free trade agreement

Oslo leads the way in ‘Breathe Life’ campaign for cleaner cities in climate change era

Rohingya emergency one year on: UN says thousands of lives saved, but challenges remain

Pedro Sánchez: We must protect Europe, so Europe can protect its citizens

This is how countries compare on gun deaths

The US starts an intense currency war to protect its global standing

Threat from petty criminals who turn to terrorism, a growing concern, Security Council hears

Statistics show the ugly face of youth training schemes

What’s going on in Chernobyl today?

A new generation of women leaders is making waves in the Arab world

“Austerity was not the alternative!”, President Hannes Swoboda of the European Socialists and Democrats on another Sting Exclusive

Global initiative launched to keep top sports events safe from terrorism

Could this electric ferry’s success herald an era of greener shipping?

Coronavirus update: COVID-19 likely to cost economy $1 trillion during 2020, says UN trade agency

From the boardroom to the consulting room: pharma’s role in curing gender bias

State aid: Commission approves €30 billion French subordinated loan scheme to support companies affected by the coronavirus outbreak

Poor Greeks, Irish and Spaniards still pay for the faults of German and French banks

Taxation: Commission refers Germany to the Court for its failure to apply EU rules on VAT for farmers

Where are the charities in the great Artificial Intelligence debate?

‘A trusted voice’ for social justice: Guterres celebrates 100 years of the International Labour Organization

The global economy isn’t working for women. Here’s what world leaders must do

Why business can no longer turn a blind eye to poor vision

The role of employers in the post #MeToo era

Here’s how to achieve growth in the Middle East and North Africa

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s