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Starbucks & Fiat Chrysler tax announcement: Just shadowboxing, not preventing more tax avoidance

Following the Commission's state aid investigations against Luxemburg and the Netherlands concerning tax deals with Starbucks and Fiat Finance and Trade, Europe’s Competition Commissioner, Margrethe Vestager, announced this morning that 20 to 30 million euros in unpaid taxes will be recovered from each of these companies and that they will “no longer continue to benefit from the advantageous tax treatment granted by these tax rulings”.

Fabio De Masi, Member of the European Parliament in the United European Left / Nordic Green Left (GUE/NGL) comments: “The rulings against Starbucks and Fiat are like medieval sales of indulgences. The EU Commission still refuses to take serious measures against the tax dumping of international corporations”.

De Masi, who is the GUE/NGL shadow rapporteur in the Special Committee for Tax Rulings and Other Measures Similar in Nature or Effect (TAXE) continues: “The completion of the state aid investigation is no reason to celebrate. We know now that EU law was violated – in Luxemburg during the leadership of the current President of the Commission, Jean-Claude Juncker, and in the Netherlands under President of the Eurogroup, Jeroen Dijsselbloem.

“However, the restrictive EU competition law is a blunt sword in the fight against tax dumping. It provides for recovery of unpaid taxes, but does not impose any penalties. Moreover, the payments don't even go to the countries that had their tax base decimated because of tax avoidance, but ironically to states like Luxemburg, which orchestrate the tax theft.

“European competition law requires that no company suffers from tax disadvantages on a national level. Therefore, as long as there are no special guarantees for particular corporations, low taxes for corporations at the expense of the majority of taxpayers are consistent with EU law. As a result, the Commission's investigations – which consume significant resources – lead to negligible financial losses for multinational corporations, and will not jeopardise the profitable business practice of tax dumping.”

“Both corporations say that they have acted in accordance with the relevant tax laws and guidelines of the OECD. This is the true tragedy. The existing rules are totally insufficient and the European Commission does not strive for far-reaching measures regarding the fight against tax dumping, for example, by taxing corporate gains according to the principle of economic substance. Only then would letterbox companies with near-zero employment like the Starbucks holding have no future.”

De Masi concludes: “In addition to real transparency in tax havens – through comprehensive country-by-country reporting, public tax rulings and transparent ownership structures – there is an urgent need for taxation according to economic substance. Whistleblowers like Antoine Deltour must also be well protected, and licences must be withdrawn from banks and auditors who systematically facilitate tax avoidance and tax evasion.”

GUE/NGL Press Contact:
Nikki Sullings  +32 22 83 27 60 / +32 483 03 55 75
European United Left / Nordic Green Left
European Parliamentary Group
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