Pride Partners International

Global association of transfer pricing and valuation consulting firms with presence in the most entrepreneurial cities around the globe.

Read more

EU party says Ikea avoids at least US$1.1b taxes

Back to news
Feb 16, 2016 by Mike Newman

The EU accuses the furniture giant of funneling money through Lichtenstein and the Netherlands between 2009 and 2014.

“The European Commission has taken note of this report and will study it in detail”, said AFP Vanessa Mock, spokesman for the Commission, in charge of financial services and taxation. “The royalties go in and out of the Netherlands untaxed and end up in Liechtenstein, or at least partly”, it added.

Questioned by AFP about the report MEPs, Ikea said “pay taxes in accordance with national and global legislation”, in an email.

A report from the Green Party in the European Government has accused furniture giant IKEA of large-scale tax evasion through a complex series of subsidiaries in different European countries, according to CNN Money.

Profit shifting, which involves establishing a company’s headquarters in low-tax countries, has become a common strategy for huge corporations to create maximum profits with very little tax.

According to the newspaper, the crux of Ikea’s tax construction is in the division of the group. It, however, said that it had paid corporate taxes to the tune of €822m at an effective rate of 19%.

“The contested decision breaches the principle of legal certainty since the commission’s novel formulation of the arm’s length principle introduces complete uncertainty and confusion as to when an advance pricing agreement, and indeed any transfer pricing analysis, might breach European Union state aid rules”, Fiat said in a summary of its claims, which was published Monday along with those of Luxembourg and the Netherlands. “We have a strong commitment to manage our operations in a responsible way and to contribute to the societies where we operate”.

The issue of multinational tax avoidance has come under renewed scrutiny in recent weeks particularly in Britain following Google’s payment of a £130 million settlement with the British tax authorities.