Nike loses in court over EU tax crackdown
Nike Inc. failed to topple a European Union decision to probe its tax affairs amid a crackdown on allegedly unfair fiscal deals for big companies.
The European Commission complied with procedural rules when it decided to scrutinize the sportswear giant, the EU’s General Court in Luxembourg ruled on Wednesday, dismissing Nike’s appeal.
Margrethe Vestager, the EU’s competition commissioner, has used the bloc’s tough state-aid rules to attack special treatment doled out by member states to multinationals, including Apple Inc., Amazon.com Inc. and Starbucks Corp. She’s since suffered a couple of big setbacks. Both Amazon and Apple won their appeals to topple tax-payback demands, including a record €13 billion ($15 billion) order for the iPhone maker.
Wednesday’s court decision follows the commission’s 2019 opening of a probe into whether so-called tax rulings by the Netherlands may have given Nike an unfair advantage over its competitors. The company challenged the move, saying it was premature and based on insufficient evidence.
Wednesday’s ruling means that the investigation will continue to run its course.
“Nike is subject to and rigorously ensures that it complies with all the same tax laws as other companies operating in the Netherlands,” the company said in a statement. “We believe the European Commission’s investigation is without merit.”
In the meantime, the Group of 20 nations have agreed on the outlines of a global corporate-tax pact, with U.S. Treasury Secretary Janet Yellen warning against “taxes that are discriminatory against U.S. firms.” The EU on Monday postponed plans for a controversial digital levy that was likely to hit Silicon Valley giants’ business in Europe.
The EU’s Nike probe focuses on Dutch tax treatment of Nike European Operations Netherlands BV and Converse BV. The EU said it may have unfairly reduced the tax bill for the Nike group.
The investigation weighs five Dutch tax rulings issued from 2006 to 2015 that calculated the royalty paid by the Nike units to use intellectual property for Nike and Converse products sold in Europe, the Middle East and Africa.
The case is: T-648/19, Nike European Operations Netherlands and Converse Netherlands v. Commission.
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