Daily Management Review

European Commission suspects IKEA in tax evasion


12/19/2017


The European Commission announced the beginning of a tax audit of the IKEA subsidiary in the Netherlands for possible tax evasion.



Calvin Teo
Calvin Teo
The reason for the investigation, as noted, was a suspicion of potentially infringing legislation in the judgments of the Dutch tax authorities against Inter IKEA Systems.

The EC stated that decisions of the Dutch tax authorities, taken in 2006 and 2011, could provide the IKEA subsidiary in the Netherlands with an unfair advantage over competitors in the form of a lower tax burden.

In 2006, the Netherlands allowed Inter IKEA to spend part of the proceeds through the I.I. Holding branch in Luxembourg, whose activities were not taxed. This division owned intellectual rights for the IKEA brand and received payment for using them from Inter IKEA.

The EC recognized the "Luxembourg scheme" as illegal and ordered the company to abandon its use by the end of 2010. In 2011, Inter IKEA purchased intellectual property from I.I. Holdings at the expense of a loan from the IKEA office in Liechtenstein. The cash that was paid to repay the loan was deducted from the taxable profits of Inter IKEA Systems in the Netherlands.

The press release of the European Commission also contains a report (PDF), which was published by representatives of the European Parliament's Green-European Free Alliance in 2016. The report describes the structure of IKEA, as well as the potential schemes by which the corporation evades taxes.

According to the report, in 2014 IKEA evaded taxes for tens of millions of euros in various EU countries. In general, according to the report, in the period 2009-2014, IKEA has not paid taxes in the EU for more than € 1 billion.

source: reuters.com






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