IKEA to face EU order it pay unpaid taxes

By Foo Yun Chee

Ikea brand owner Inter Ikea could be ordered to pay millions in Dutch back taxes by the end of the year, two sources said, as EU competition enforcers push on with their crackdown against unfair tax deals granted to multinationals.

The European Commission is now racing to wrap up the two-year investigation into the brand owner of Ikea, known for giant out-of-town budget furniture stores, but the timing may still slip as it weighs the scope of the case, the people said.

Launched in 2017, the EU’s investigation focuses on Inter Ikea Systems in the Netherlands, which operates Ikea’s franchise business and records all revenue from its franchise fees worldwide collected from Ikea shops.

The commission said at the time its probe was triggered by a 2016 report from European Parliament green lawmakers which estimated that Ikea avoided €1bn in taxes over six years.

“Just like all other companies working under the Ikea trademark, Inter Ikea Systems BV is committed to paying taxes in accordance with laws and regulations wherever we operate,” Inter Ikea said in a statement. “We believe that we also in these cases have paid the correct amount of tax,” it said

The spotlight is on two rulings granted by the Dutch tax authorities in 2006 and 2011. The EU competition enforcer said the first, which covered 2006 to 2011, resulted in a significant part of Inter Ikea Systems’ franchise profits shifting to a Luxembourg unit where it was not taxed. A 2011 ruling allowed a substantial part of the company’s franchise profits after 2011 to be transferred to its Liechtenstein parent.

Reuters