The American Chamber of Commerce in the Netherlands, AmCham, is concerned about the decision of the European Commission on state aid in the Starbucks case. The Commission’s verdict is ambiguous and can have significant adverse consequences for the Dutch business climate, says Arjan van der Linde, Chairman of AmCham Tax Committee. He urges the Dutch government to appeal.
The European Commission takes the view that the Netherlands has favored the US coffee shop giant Starbucks by determining the profits of Starbucks Manufacturing BV too favorably. The Commission rejects the transfer pricing method used by the Dutch tax authorities as being artificial and complex.
The Commission believes that in determining the transfer price, market prices should be used (CUP method). Because the TNMM method was used in the case of Starbucks, there is – according to the Commission – a selective advantage for Starbucks.
The American Chamber of Commerce in the Netherlands, AmCham, is concerned about this development. OECD rules for setting internal transfer prices constitute an international standard whereby double taxation is prevented.
These rules require that each transaction is assessed on the basis of the most appropriate transfer pricing method. The TNMM method can be used to establish an at arm’s length remuneration for production activities, such as those of the Dutch coffee roaster Starbucks Manufacturing BV, and is widely used internationally.
“This decision is a staggering,” says Arjan van der Linde, Chairman of AmCham’s Tax Committee and fiscal spokesman for AmCham. “By disregarding OECD rules, the European Commission is creating considerable uncertainty about the tax implications for foreign investment in the Netherlands.
This has a direct effect on new investments and future employment. Uncertainty about such a fundamental component of an investment is unacceptable for many companies,” predicts Van der Linde.
He also highlights the expertise of the Dutch tax authorities, “The Dutch tax authorities have years of experience with the application of OECD rules and work thorough and carefully in considering transfer pricing requests.
A separate APA practice exists. In addition, the Dutch tax authorities are consistent in their approach, with all sorts of coordination groups looking over the shoulder of the inspector. This thorough approach cannot simply be cast aside.”
AmCham urges the Dutch government to appeal the decision of the European Commission. To prevent interim uncertainty regarding the application of the OECD rules in the Netherlands, AmCham also urges the Dutch government to enter into direct dialogue with the European Commission. Van der Linde:
“The starting point should be that the Commission commits to harmonization of direct taxation within the EU on the basis of an anti-BEPS-directive and not through a disruptive autonomous interpretation of the widely accepted OECD rules.”
About AmCham
The American Chamber of Commerce in the Netherlands (AmCham) represents the international business community in the Netherlands since 1961. Over thirty tax directors of American and/or multinational companies participate in AmCham’s Tax Committee.
US companies generate approximately 450,000 jobs in the Netherlands.
