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Nike's Dutch tax status faces major investigation by EU Commission

By Sheetal Sukhija, Massachusetts State News
12 Jan 2019, 02:02 GMT+10

BRUSSELS, Belgium - The European Commission, which oversees competition policy in the 28-member European Union, has announced an investigation into the tax treatment of Nike Inc in the Netherlands.

The EU executive announced that it was planning to conduct an in-depth investigation into the tax treatment of the U.S. sportswear maker in the Netherlands, which it believes would have given the company an illegal advantage.

Commenting on the probe in a statement, the European Commission said that Dutch authorities had issued five tax rulings from 2006 to 2015, two of which are still in force.

The rulings endorse a method to calculate the royalty to two Nike entities based in the Netherlands.

The EU Commission added that at this stage it was concerned that the royalty payments endorsed by the rulings "may not reflect economic reality."

In a statement announcing the probe, EU Competition Commissioner Margrethe Vestager said, "Member states should not allow companies to set up complex structures that unduly reduce their taxable profits and give them an unfair advantage over competitors."

Further, the Commission is reportedly planning to investigate the tax treatment of Nike in the Netherlands, to assess whether it is in line with EU State aid rules.

Vestager added in the statement, "At the same time, I welcome the actions taken by the Netherlands to reform their corporate taxation rules and to help ensure that companies will operate on a level playing field in the EU."

Currently, the Commission is already conducting an in-depth investigation into Dutch tax rulings in favor of IKEA.

It is also leading a probe into a tax scheme for multinationals in Britain.

Previously, the EU executive has launched probes into tax schemes in Belgium, Gibraltar, Luxembourg, Ireland and the Netherlands - which it has alleged allows companies to set up structures to reduce their taxes unfairly.

Amazon, Apple, Starbucks and Fiat have all been beneficiaries of similar tax schemes.

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