Nike investigated by EU over Dutch tax affairs

Global sports giant Nike is being investigated by the European Commission over its tax arrangements in the Netherlands.

According to the commission, its in-depth investigation will examine whether tax rulings granted to Nike by the Netherlands gave the company an unfair advantage over competitors, in breach of the EU’s state aid rules.

The probe relates to two of the US company’s subsidiaries based in the Netherlands – Nike European Operations Netherlands BV and Converse Netherlands BV.

The commission claims both units obtained licences to use intellectual property rights relating to Nike and Converse across the region in return for a tax-deductible royalty payment from two other Nike subsidiaries that were not taxable in the Netherlands.

“The Nike group’s corporate structure itself is outside the remit of EU state aid rules,” the EC said in a statement.

Margrethe Vestager, commissioner in charge of competition policy, 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.

“The commission will investigate carefully the tax treatment of Nike in the Netherlands, to assess whether it is in line with EU state aid rules.

“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.”

Sky News contacted Nike’s European headquarters but the company had not responded by the time of writing.

The commission has an ongoing investigation into Ikea’s tax model used in the Netherlands to see if it breached EU state aid rules.

The competition watchdog is concerned that in 2006 and 2011, the world’s largest furniture retailer received tax rulings that allowed it to declare lower pre-tax profits in the country – and therefore pay less tax.

It argued the rulings may have given the company an unfair advantage over competitors and breached state aid rules in the process.

In August 2016, the commission concluded that US tech giant Apple received illegal tax benefits from Ireland, because it allowed Apple to pay substantially less tax than other businesses.

The ruling eventually led to the recovery of €14.3bn in tax, but only after the country was hauled in front of the European Court of Justice in 2017.

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