European Commission Closes Fiat, Amazon and Starbucks State Aid Investigations

On 28 November 2024, the European Commission announced that it had closed three in-depth State aid investigations into transfer pricing tax rulings granted by Luxembourg to Fiat and Amazon, and by the Netherlands to Starbucks.

The rulings were investigated by the Commission, in particular with regard to their compatibility with State aid rules. In 2015 and 2017, the Commission found that all these rulings granted selective advantages, notably by reducing the companies' tax liability.

The Commission's decisions were, however, annulled by EU Courts.

The Commission adopted three final decisions confirming that Luxembourg and the Netherlands did not give Fiat, Amazon and Starbucks selective tax advantages contrary to EU State aid rules.

Brendan Murphy, Tax Partner at Baker Tilly concludes that these findings are in contrast to the findings of the ECJ in the Apple case concluded in September of this year. In this case the ECJ agreed with the European Commission that Ireland had provided state aid to Apple on the basis that an advantage had been provided in a selective manner to Apple. The existence of a tax ruling from the authorities which allowed the Apple structure of Irish branches within a non-resident company shift profits back to "head office" was seen to go against the real substance of where Apples presence existed. It is interesting to note that other corporates who used the more traditional double Irish structure that existed at this time have not been challenged hence it appears it was the ruling on the head office/branch structure which demonstrated state aid.

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