Nike's Dutch tax status investigated by EU Commission

BRUSSELS (Reuters) – The European Commission has opened an in-depth investigation into the tax treatment of Nike Inc (NKE.N) in the Netherlands, saying this may have given the U.S. sportswear maker an illegal advantage.

The Nike investigation, announced on Thursday, follows other probes by the EU executive into tax schemes in Belgium, Gibraltar, Luxembourg, Ireland and the Netherlands it says allow companies to set up structures to reduce their taxes unfairly.

Beneficiaries of such schemes have included Amazon (AMZN.O), Apple (AAPL.O), Starbucks SBOX.O and Fiat (FCHA.MI).

The Commission said in a statement that Dutch authorities had issued five tax rulings from 2006 to 2015, two of which are still in force, endorsing a method to calculate the royalty to two Nike entities based in the Netherlands.

The EU executive, which oversees competition policy in the 28-member European Union, said that at this stage it was concerned that the royalty payments endorsed by the rulings “may not reflect economic reality”.

“Member states should not allow companies to set up complex structures that unduly reduce their taxable profits and give them an unfair advantage over competitors,” EU Competition Commissioner Margrethe Vestager said in a statement.

The Commission would investigate the tax treatment of Nike in the Netherlands, to assess whether it is in line with EU State aid rules.

“At the same time, I welcome the actions taken by the Netherlands to reform their corporate taxation rules and to help ensure that companies will operate on a level playing field in the EU,” Vestager said.

The Commission is also conducting an in-depth investigation into Dutch tax rulings in favor of IKEA and an investigation into a tax scheme for multinationals in Britain.

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