Commission opens investigation into Ikea's tax arrangements in the Netherlands

The European Commission's Vestager is set to launch a state aid probe against Ikea

The European Commission on Monday opened an in-depth investigation into the corporate tax structure in the Netherlands of Inter IKEA, one of the two divisions of the Swedish furniture giant.

In a statement released on Monday, the EC said, "The Commission considers at this stage that the treatment endorsed in the two tax rulings may have resulted in tax benefits in favor of Inter IKEA Systems, which are not available to other companies subject to the same national taxation rules in the Netherlands", Business Insider noted. European Commissioner on competition Margrethe Vestager is expected to officially announce the investigation on Tuesday, British newspaper the Financial Times reports.

"Member states can not let selected companies pay less tax by allowing them to artificially shift their profits elsewhere".

The opening of an in-depth investigation gives the Netherlands and other interested parties the opportunity to comment, and does not prejudge the outcome.

The Commission said the first tax ruling, which covered 2006 to 2011, resulted in a significant part of Inter Ikea Systems' franchise profits shifting to a Luxembourg unit where it was not taxed.

The inquiry into the company - founded in Sweden and now headquartered in Delft, the Netherlands - is the latest in a series of cases that have targeted aggressive tax avoidance by multinationals and is the third to shine the spotlight on The Hague's tax regime.

In accordance with Vestager's blockbuster 2015 decision against Apple, Ireland said earlier this month it will begin collecting the 13 billion euros in back taxes owed by the US-based iPhone-maker.

A senior European Union official from the Netherlands said the government there would look into the case.

The holding company of IKEA Group, INGKA Holding B.V., as well as a majority of the group functions and management, are based in the Netherlands. That ruling endorsed a model that allowed Inter Ikea to send a significant portion of its franchise profit, via interest paid under an intercompany loan, to a Liechtenstein company.

They'll also review a 2011 tax ruling on the reorganization of the company's tax affairs, looking at whether the price Inter Ikea Systems agreed on to buy intellectual property rights and the interest paid on an inter-company loan reflect economic reality. No illegal aid needed to be recovered from I.I. Holding because the scheme was granted under a Luxembourg law from 1929, predating the EC Treaty.

Inter IKEA group operates the franchise business of IKEA, using the "IKEA franchise concept", so Inter IKEA does not own the IKEA shops.

The Commission said it will assess whether the remuneration sanctioned under the second tax ruling reflects economic reality.

She's already ordered Apple, Starbucks and to repay tax while a probe of McDonald's is continuing.

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