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LUXEMBOURG – A European Union (EU) court rejected an appeal by United States sports equipment maker Nike against the European Commission’s decision to open a probe into favourable tax deals in the Netherlands yesterday.
The decision by the EU’s lower general court comes after the commission in 2019 said it will formally look into whether Nike and lifestyle brand shoe maker Converse are getting a beneficial tax deal from the Dutch.
“The commission has neither failed in its obligation to state reasons, nor committed manifest errors of assessment,” said the Luxembourg-based court, in its decision to start the investigation.
The Netherlands is frequently on EU’s anti-trust radar because of alleged sweetheart tax deals with multinationals.
Nike’s two Dutch-based subsidiaries are suspected of exploiting a tax loophole, which allow them to lower corporate taxes.
Nike is said to have obtained licences to use intellectual property rights in exchange for royalties paid to its two Dutch subsidiaries in the Netherlands, which are exempt from being taxed.
The practice was first highlighted in the so-called “Paradise Papers”, an investigation into global tax evasion by the International Consortium of Investigative Journalists that involved 96 media outlets from 67 countries.
In 2019, European anti-trust supremo Margarethe Vestager said the number of royalties favoured by Dutch tax rulings “did not reflect economic reality”. – AFP, July 15, 2021
