EU Commission to launch tax investigation over IKEA

An investigation by Brussels is to be launched today into Ikea’s Dutch tax arrangements. The Financial Times is reporting that Margrethe Vestager, the EU’s competition commissioner, will today announce an official probe into Ikea’s tax arrangements in the Netherlands, which according to a report published by the Green Party in the European Parliament, allegedly have helped Ikea avoid nearly €1bn in EU taxes between 2009 to 2014.

The report said that Ikea, which specialises in flat-pack furniture, established two corporate groups within “a web of companies” in the Netherlands, Liechtenstein, and Luxembourg, through which Ikea moved profits and funds, that enabled it to benefit from special tax schemes.

An unnamed senior Dutch EU official was also cited in the Wall Street Journal as saying the Netherlands had recently been informed of the possible state-aid inquiry. Ikea and the commission declined to comment.

Ikea has 242 stores in Europe and is owned by the Dutch-based Stichting Ingka Foundation. Ikea's parent company Ingka Holding B.V. is also located in the Netherlands.

Ikea Group's yearly summary report says its corporate income tax amounted to €800 million globally, which it also says is an equivalent effective corporate tax rate of 24.9 percent. Its total revenue for 2017 was €34.1 billion.

The commission's inquiries into aggressive tax avoidance schemes has in the past targeted big US corporate giants like Apple, Starbucks, and Amazon.

Earlier this month, Ireland began to claw back some €13 billion due in back taxes from Apple following a commission investigation into a illegal state aid.

The EU is also conducting investigations into McDonald’s, the fast-food chain; Engie, the French utility; and a UK tax scheme for foreign-controlled corporations. McDonald’s has denied wrongdoing. Engie, which is 33 per cent owned by the French state, said it was co-operating with the probe.

The investigations are part of a wider European effort to stop tax avoidance. In addition to the state-aid investigations, the bloc changed its rules to require more transparent reporting from companies, closed some tax loopholes, published a tax haven blacklist and proposed EU-wide comprehensive tax reform. Some member states have also proposed a special tax on digital companies until the comprehensive reform is in place.