Tax deals: Brussels investigates Ikea
The EU Commission is investigating Ikea for suspected tax avoidance. Two deals between the furniture chain and the Dutch state may have given the company inadmissible tax advantages. The case was brought to Brussels' attention by a report presented by the Greens in the European Parliament. Is Europe making progress in the fight against tax avoidance scams?
A ruthless discount battle
For the Süddeutsche Zeitung the Ikea case highlights once again what is wrong with European tax policy:
“The state is not a furniture store: it is not its job to sell sofas and armchairs but to fulfil official tasks. And it can't do that when price battles are pushing down business taxes to virtually zero percent. ... As commendable as EU Commissioner Margrethe Vestager's tougher controls are: nowadays turbo discounts for global companies are so widespread that the phenomenon is far too big for a few Brussels competition watchdogs to tackle. The answer to the overarching question of what conditions should prevail for international companies that do business in the EU has to be political in nature. The EU government need to finally agree on standardised tax rates.”
At last things are moving
Slowly but surely progress is being made in the fight against tax avoidance, the business paper Les Echos comments:
“In 2016 the EU Commission passed a directive on the fight against tax avoidance meant to prevent profits from being unduly repatriated. What's more this year it set its sights on the 'hybrid instruments' - in which the Netherlands specialises - which enable multinationals to avoid taxation. The Hague has committed itself to making the necessary adjustments by 2020, when these new regulations go into effect. But it's clear that such advances are taking place bit by bit, and only because the states thus pillorised are forced to go along with them. If they don't, they run the risk of sooner or later having new regulations imposed on them by a qualified majority.”
Action that can be taken now
National and EU authorities must do all they can to debunk bogus companies set up to facilitate tax avoidance, the Financial Times demands:
“How many people does that company on a dot in the Atlantic or in the middle of Europe employ? What non-financial assets does it hold? Where were its patents filed? If the ownership structure does not correspond to economic reality, block or tax the cross-border payments. Tougher enforcement is less elegant than deep reform, of course, but it requires less international diplomacy. What it does require, and what the commission may just be displaying, is determination.”