State Aid case SA.51284 | Tax treatment of Nike in the Netherlands

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Author (Corporate)
Publication Date 2019
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Summary:

State aid investigation conducted by the European Commission on whether tax rulings granted by the Netherlands to Nike may have given the company an unfair advantage over its competitors, in breach of EU State aid rules.

Further information:

The European Commission announced the opening of an investigation on 10 January 2019.

The Commission's formal investigation concerns the tax treatment in the Netherlands of two Nike group companies based in the Netherlands, Nike European Operations Netherlands BV and Converse Netherlands BV. These two operating companies develop, market and record the sales of Nike and Converse products in the EMEA region. From 2006 to 2015, the Dutch tax authorities issued five tax rulings, two of which still in force at the time of this investigation, endorsing a method to calculate the royalty to be paid by Nike European Operations Netherlands and Converse Netherlands for the use of the intellectual property.

As a result of the rulings, Nike European Operations Netherlands BV and Converse Netherlands BV have only been taxed in the Netherlands on a limited operating margin based on sales. The Commission showed concerns that the royalty payments endorsed by the rulings may not reflect economic reality.

Related Link(s)
News
The Guardian, 10.01.19: EU investigates Nike's tax status in the Netherlands https://www.theguardian.com/business/2019/jan/10/eu-investigates-nikes-tax-status-in-the-netherlands
Reuters, 10.01.19: Nike's Dutch tax status investigated by EU regulators https://www.reuters.com/article/idUSKCN1P415L
EurActiv, 10.01.19: Commission investigates if Netherlands benefited Nike with tax bill https://www.euractiv.com/section/competition/news/commission-investigates-if-netherlands-benefited-nike-with-tax-bill/

Official
European Commission: Press Release, 10.01.19: Commission opens in-depth investigation into tax treatment of Nike in the Netherlands http://europa.eu/rapid/press-release_IP-19-322_en.htm

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