As we reported in an earlier article, on November 27, 2015 the Dutch Ministry of Finance announced that it was going to file an appeal against the decision of the European Commission that the Advance Pricing Agreement (APA) concluded with Starbucks Manufacturing EMEA BV (Starbucks). The announcement that The Netherlands is going to file an appeal against the European Commission’s decision in the Starbucks case was made in a very extensive letter that the State Secretary for Finance sent to the Dutch Parliament on November 27, 2015. The letter does not only discuss the  Starbucks case, but also contains more general remarks regarding the combat against tax avoidance while maintaining a good business climate, progress made in combating tax evasion.

 

With respect to the Starbucks case the letters states a.o. the following:

 

On October 21, 2015 the European Commission ruled that by concluding an APA with Starbucks, the Dutch tax authorities gave Starbucks a selective advantage/illegal State Aid. Especially because of the fact that the Dutch tax authorities use internationally accepted methods and the decision of the Commission in this case raises many questions, the Dutch cabinet feels it’s compelled to appeal.

 

According to the letter the decision of the Commission in the Starbucks Case focuses on the APA as concluded between the Dutch tax authorities and Starbucks. While doing so, the Dutch tax authorities used the international OECD-framework via the so-called Transactional Net Margin Method (TNNM). The aim of this method is to treat parts of international operating companies the same for tax purposes as independently operating national entities are treated; profits are taxed equally for everybody there where value is being created. In its decision the Commission comes with its own interpretation and application of the OECD Transfer Pricing Guidelines, which then lead to the result that according to the Commission the so-called Comparable Uncontrolled Price (CUP) method should have been applied. The Dutch Government is of the opinion that in the case of Starbucks the CUP-method couldn’t have been applied since no suitable data is available. Furthermore in its decision the Commission uses a new, own criteria for the calculation of profits that does not reflect the Dutch national legislation, nor does it reflect the regulations of the OECD-framework. In its decision on the Starbucks Case the Commission states that the arm’s length principle as used by Starbucks is not the arm’s length principle as meant in Article 9 of the OECD Model Treaty. By doing so the Commission causes indistinctness and uncertainty:

·        at the level of the Dutch tax authorities with respect to which regulations should be applied and in which manner;

·        at the level of companies with respect to the correct application of the rules agreed upon in rulings.

 

In order to get more clearness and case law with respect to the aforementioned, the cabinet will file an appeal.

 

In his letter the State Secretary also states that in order to inform the Dutch Parliament together with the letter from which we were citing above, he sends the Parliament a summary of the decision of the European Commission. The State Secretary states that he decided to publicly disclose the summary because this case is a very principle and extraordinary with respect to which already a lot came into the open. Furthermore the decision of the Commission will be published as soon as the Commission has removed the confidential data from the decision. The Secretary furthermore emphasizes that the summary reflects the views of the Commission and not those of The Netherlands.

 

With respect to the decision on the Starbucks case the letter concludes by stating that in order to get clearness and case law on the application of certainty in advance by way of rulings, the Dutch Government will appeal against the European Commission’s decision in the Starbucks case. The Government seems to be of the opinion that the Commission did not convincingly demonstrate that the Dutch tax authorities deviated from the legal regulations and did not convincingly demonstrate that State Aid was involved.

 

Click here to be forwarded to the UNOFFICIAL ENGLISH TRANSLATION we made of the summary of the European Commission decision in the Starbucks Case that was published by the Dutch Ministry of Finance on November 27, 2015.

 

 

Copyright – internationaltaxplaza.info

 

 

Are you looking for a new tax colleague? Then place your job ad on International Tax Plaza!

 

and

 

Stay informed: Subscribe to International Tax Plaza’s Newsletter! It’s completely FREE OF CHARGE!

 

Submit to FacebookSubmit to TwitterSubmit to LinkedIn
INTERESTING ARTICLES