Starbucks and Fiat Chrysler's European operations have been a focal point of a 15-month-long investigation by the European Union. The investigation focused on Starbucks' naming the Netherlands as its home base, while Fiat has gained tax benefits by using an internal financing subsidiary in Luxembourg.
Report Details
According to The Guardian, Margrethe Vestager, the Competition Commission, concluded that both Starbucks and Fiat are illegally benefiting from state aid.
The report alleged that Starbucks artificially inflated the internal price at which its Dutch roaster purchased its coffee beans from another Starbucks company based in Switzerland. The company took advantage of favorable tax treatments that are available in the Netherlands.
Starbucks could receive a tax bill of around 30 million euros, according to sources cited by The Financial Times. A decision against Fiat's similar "sweetheart tax deal" is expected to be more costly.
Pay Attention, Investors
Investors should be made aware that while Starbucks and Fiat were the subject of an initial investigation, the committee is preparing to investigation similar tax avoidance allegations involving Apple Inc. AAPL's offices in Ireland and Amazon.com, Inc. AMZN's tax affairs in Luxembourg.
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