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Starbucks’ Dutch tax deal potentially illegal – EU

A TAX DEAL struck between US coffee chain and the Netherlands could amount to illegal state aid, the EU has warned.

The arrangement, which saw the coffee chain pay tax on a lower income base and therefore see its bills significantly lowered.

The past two years have seen Starbucks attract extensive criticism for its tax practices, after it emerged it had paid almost no tax in the UK over the decade between 2002 and 2012.

Between its arrival on British high streets in 1998 and 2012, it handed just £8.6m over to HM Revenue & Customs. The café minimised its tax liabilities by recording substantial losses in its UK accounts year after year.

However, following the opprobrium of the Public Accounts Committee, senior MPs, the public and the tabloids, it made the first £5m instalment of a £20m corporation tax bill in June last year.

Additionally, it has since decided to move its European headquarters from the Netherlands to London, ending its potential state aid relationship with the country.

However, the European Commission may still take action over the deal.

It said: “The commission’s preliminary view is that the Advanced Pricing Arrangements in favour of Starbucks Manufacturing EMEA BV constitutes State aid. The Commission has doubts about the compatibility of such aid with the internal market.”

For its part, the Dutch government said it is “confident” no such finding will be reached.

A Starbucks spokesman said: “We agree with the Dutch Government that this investigation by the European Commission announced in June will find that there is no selective advantage and that we comply with all tax laws and OECD guidelines.”  

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