Vestager to investigate IKEA’s taxes

Margrethe Vestager, the EU’s competition boss, is poised to open a formal probe into the tax affairs of Ikea, the world’s largest furniture retailer, according to people familiar with the investigation.

The inquiry into the company — founded in Sweden and now headquartered in the Netherlands — could come early this week and would be the latest in a series of cases that have targeted aggressive tax avoidance by multinationals, as well as the second to shine the spotlight on The Hague’s tax regime.

The Ikea inquiry is expected to focus on rulings issued to the company by the Netherlands that allegedly allowed the company to cycle profits through the EU.

“The Commission has informed the Netherlands that it contemplates opening an in-depth investigation into possible state aid involving Inter Ikea Group,” said a senior Dutch EU official. “The Netherlands fully supports the Commission’s work.”

The official said that the Netherlands agreed individual companies should not receive preferential treatment and would cooperate with the inquiry.

Commission investigators have been looking at royalties paid by a Dutch entity to a Luxembourg subsidiary holding intellectual property during the period between 2006 and 2010. They have also been examining the acquisition of that intellectual property by a Dutch Ikea entity, financed by an internal group loan from Liechtenstein, according to a person with knowledge of the inquiry.

In February 2016, Green MEPs published a report that found Ikea companies had avoided €1 billion in taxes across Europe over the prior six years. Ikea did so, the report claimed, through an aggressive franchising structure, the payment of business charges to Liechtenstein and a sweetheart tax ruling in the Netherlands.

The MEPs forwarded the report to Vestager.

The European Commission and Ikea declined to comment.

Ikea, which turned over some €35 billion in 2016, would be a prominent European scalp for Vestager, who has been dogged by accusations she is “disproportionately” targeting U.S. companies.

In August 2016, she ordered Ireland to recoup more than €13 billion in back taxes from Apple, while in October she told Luxembourg to collect around €250 million against Amazon.

Her defenders point out that she is probing France’s Engie and has targeted Fiat, now Fiat Chrysler Automobiles, as well as many European multinationals located in Belgium.

Correction: This story has been updated to reflect the correct number of tax ruling cases targeting the Netherlands: Two.

Original Article

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