Breaking News
0

Nike's Dutch tax status investigated by EU regulators

Stock MarketsJan 10, 2019 08:21AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: FILE PHOTO: Nike (NKE)'s logo is seen in Los Angeles

By Philip Blenkinsop

BRUSSELS (Reuters) - The European Commission has opened an investigation into the tax treatment of Nike Inc (N:NKE) in the Netherlands, saying this may have given the U.S. sportswear maker an illegal advantage.

The Nike case, announced on Thursday, follows other probes by the EU executive since 2013 into tax schemes in Belgium, Gibraltar, Luxembourg, Ireland and the Netherlands it says allow companies to establish structures to reduce their taxes unfairly.

The countries have been ordered to recover the tax from beneficiaries of such schemes, which have included Amazon (O:AMZN), Apple (O:AAPL), Starbucks (NASDAQ:SBUX) and Fiat (MI:FCHA).

The Commission said in a statement that Dutch authorities had issued five tax rulings from 2006 to 2015, two of which are still in force, endorsing a method to calculate the royalty payments to two Nike entities based in the Netherlands.

The EU executive, which oversees competition policy in the 28-member European Union, said that, at this stage, it was concerned that the royalty payments endorsed by the rulings "may not reflect economic reality".

"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," EU Competition Commissioner Margrethe Vestager said in a statement.

Nike said it was subject to and ensured that it complied with all the same tax laws as other companies operating in the Netherlands.

"We believe the European Commission’s investigation is without merit," a Nike spokesperson said.

The Dutch finance ministry said it would cooperate with the Commission's investigation and said that it agreed tax rulings should provide certainty and not preferential treatment.

The Commission has pushed governments to tighten taxation rules in response to revelations in the so-called LuxLeaks and the Panama and Paradise Papers, but some countries have resisted EU-wide changes.

Vestager did say she welcomed actions taken by the Netherlands to reform its corporate taxation rules and to help to ensure that companies operate on a level playing field.

The Commission said its new investigation concerned the tax treatment of two Nike companies based in the Netherlands - Nike European Operations Netherlands BV and Converse Netherlands BV - which market and record sales in Europe, the Middle East and Africa.

They received licenses to use intellectual property rights of Nike and Converse products in the region in return for tax-deductible royalty payments to two other Nike entities also based in the Netherlands, but not taxable there.

The Commission said the royalty payments appeared higher than what independent companies would have agreed between themselves. As a result the Netherlands may have allowed the Nike companies to pay a lower amount of tax. If this was confirmed, it would amount to illegal state aid.

The Commission will allow the Netherlands and interested parties to submit comments.

The Commission is also conducting an in-depth investigation into Dutch tax rulings in favor of IKEA and an investigation into a tax scheme for multinationals in Britain.

Nike's Dutch tax status investigated by EU regulators
 

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email