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

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

EU shapes its ambitious strategy on India

We need natural solutions to fight ocean and climate risk

‘Nothing left to go back for’: UN News hears extraordinary stories of loss, and survival as Mozambique rebuilds from deadly cyclones

MEPs list conditions for new EU-Azerbaijan deal

38th ACP-EU Assembly: dialogue on cooperation challenges in Kigali

Have Europe’s Ukrainian wounds begun to heal?

Paris, Washington, IMF against Berlin and ECB on money and interest

This entrepreneur built an island resort out of plastic waste

This company grows crops inside, stacked on top of one another

Monday’s Daily Brief: US-DPRK relationship reset, ‘Horrific’ Kabul bombing, Anti-conscription plan in Syria, Climate change heat stress, Security Council in Iraq

More women than ever before are running for political office in the US

Brexit: UK to suffer from EU’s uncompromising stance

A new bioeconomy strategy for a sustainable Europe

Europe enters uncharted waters with Kiev-Moscow standoff

JADE Testimonial #2: Jacques @ Process mapping

This start-up is 3D-printing an entire neighbourhood in Mexico

European Commission increases support for the EU’s beekeeping sector

Here are 6 big ideas to help the environment

The world is getting angrier, according to a new poll

Civilians ‘continue to pay highest price’ in Ukraine conflict, with peace prospects losing ‘momentum’

Time to make a fundamental choice about the future of healthcare

Ambassador Zhang Ming: “Work Together for a Better Globalization”

Lessons from the Global Entrepreneurship Index

Wednesday’s Daily Brief: updates from the Near East and Libya, Ebola in DR Congo, World War remembrance

Safer roads: EU lawmakers agree on life-saving technologies for new vehicles

Saudi Arabia must halt air strikes in Yemen, says UN panel

Draghi strives to control the unruly exploitation of financial markets by banking leviathans

Main results of European Council of 18/10/2018

Last-chance Commission: Why Juncker promised investments of €300 billion?

Ahead of street protests, UN rights chief urges Guatemalan Government to respect democratic freedoms

The Franco-German axis considers that all EU needs now is more armaments

5 ways Coca-Cola is cleaning up its plastic footprint in Africa

At UN forum, Asia-Pacific countries highlight importance of transport for sustainable development

Children are so hungry in one British town they are eating from bins

GSMA Mobile 360 Series – Latin America, in association with The European Sting

These 8 countries have perfect scores for women’s rights at work

China repels EU allegations of export subsidies

Advocate General ‘outlaws’ Data Retention Directive

Millions of Bangladeshi children at risk from climate crisis, warns UNICEF

Wolfgang Schäuble: “Without European unification, there would be no German unity”

The ECB accuses the politicians of inaction, continues injecting billions to banks

This young activist explains how to change the world in 3 steps

Refugees now make up 1% of the world’s population

Social, cultural diversity ‘an enormous richness, not a threat’ Guterres declares calling on investment for a harmonious future

Why economic growth depends on closing the interview gap

Top UN rights official urges transparent probe into Khashoggi disappearance

Sudan: New political transition, bolstered by peacebuilding, could bring long-term stability to Darfur, Security Council told

Sweden gives all employees time off to be entrepreneurs

How can consumers be effectively protected from insurance sellers?

Be a part of the World Forum on Future Trends in Defence and Security

IMF cuts global growth outlook, but predicts pick up later in 2019

Education critical to ensure future of forests, and reverse their destruction

Germany objects to EU Commission’s plan for a Eurozone bank deposits insurance scheme but Berlin could go along

EU Commission announces Safe Harbour 2.0 and a wider Data protection reform

Business is a crucial partner in solving the mental health challenge

Human trafficking cases hit a 13-year record high, new UN report shows

230 Junior Entrepreneurs and over 70 guests attended the International Congress on “Entrepreneurial Skills for Youth”

Primary Healthcare should be strongly connected with initial education

3 lessons from India in creating equal access to vaccines

MEPs adopt plan to keep 2020 EU funding for UK in no-deal Brexit scenario

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 )

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