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

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Featured Stings

Brexit: when the hubris of one man can set the UK, the EU and the entire world on fire

Happens now in Brussels: Green Week sets the EU and global climate policy agenda

Why Eurozone can afford spending for growth

Irish Presidency: Not a euro more for EU budgets

Bundesbank’s President Weidmann criticises France and the EU. Credibility at risk?

COP21 Breaking News_07 December: “The world is expecting more from you than half-measures”, UN Secretary General Bank Ki-moon cries out from Paris

Brussels wins game and match in Ukraine no matter the electoral results

Tackling youth unemployment through the eyes of a European entrepreneur

Eurozone plans return to growth

Can the next financial crisis be avoided?

Cédric in India

Draghi keeps the euro cheap, helps debt refinancing, recapitalization of banks and growth

EU: 13 major banks may pay fines 10% of worldwide turnover

Scotland and First Minister Salmond enter the most challenging battlefield for independence: Europe

Sanctions on Russia to be the biggest unity test at this European Council

EU to gain the most from the agreement with Iran

The EU Commission is lying to the “Right2Water” campaign

Campaign kicks off with High-level Event on #FairInternships

Cloud computing under scrutiny in the EU?

Ukraine: turning challenges into opportunities


Look Mom, even the House of Lords says the #righttobeforgotten is not right

A very good morning in European markets

Eurozone closer to a deflation – stagnation trap

A Sting Exclusive: EU Commissioner Mimica looks at how the private sector can better deliver for international development

Recession: the best argument for growth

Me and China

JADE visits Lithuanian Junior Initiatives

Migration crisis update: lack of solidarity not only among EU leaders but also EU officials

France pushes UK to stay and Germany to pay

Germany to help China in trade disputes with Brussels

The creative technology and its advancements

The Eurogroup offered a cold reception to IMF’s director for Europe

Apparently the EU Digital Single Market passes necessarily from China’s Digital Silk Road

Do you dare to go to China?

Tsipras doesn’t seem to have learned his “almost Grexit” lesson and Greece faces again financial and political dead end

EU to spend €135.5 billion in 2014 or 6.5% less than this year

Will the end of QE come along with ECB’s inflation target?

“Who do I call if I want to call Europe?” Finally a name and a number to answer Henry Kissinger’s question

Berlin repels proposal for cheaper euro

EU citizens disenchanted with Economic and Monetary Union over rising poverty and high unemployment

Dutch voters reject EU-Ukraine partnership and open a new pandora’s box for the EU

On Youth Education: “Just a normal day in the life of a medical student”

Fighting for minds of youth in Latvia

European banking stress tests 2014: A more adverse approach for a shorter banking sector

Intel @ MWC14: Our Love Story with Mobile – Transforming Wireless Networks

WEF Davos 2016 LIVE: “There is a communication issue (about China) which markets don’t like” Christine Lagarde, Managing Director of IMF stresses from Davos

Back to the basics for the EU: Investment equals Growth

Global Citizen-Volunteer Internships

The completion of the European Banking Union attracts billions of new capital for Eurozone banks

Regional policies slowed down by EU bureaucracy

Warmongers ready to chew what is left of social protection spending

Commission threatens Chinese firms with trade penalties

Is there a drug for every disease?

EU agrees on Ukraine – Georgia visa-free travel amid veto risks and populist fears

Eurozone: Even good statistics mean deeper recession

Facebook and Google to treat Europe as the 51st State of the USA

JADE Spring Meeting 2015: a step forward for Youth Entrepreneurship

Draghi left alone with no hope of boosting EU growth as Merkel just focuses on next elections

Turkey to let EU alone struggle with the migrant crisis while enhancing its economic ties with Russia instead?

Hollande protects the euro from the attacks of extremists

More Stings?

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 )

Twitter picture

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

Facebook photo

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

Google+ photo

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

Connecting to %s