// Ikea might be forced to pay a historic tax bill worth millions of euros following an EU probe
// Investigation focused on Dutch franchise business after the EU discovered Ikea avoided paying €1bn over a six-year period
// Ikea was given two tax rulings which allegedly gave it an unfair advantage & reduced its taxable profit in The Netherlands
Ikea might be forced to pay a historic tax bill worth millions of euros as a two-year investigation by the European Commission approaches its imminent conclusion.
The commission’s investigation could see Inter Ikea – The Netherlands-based operator of Ikea’s franchise business which records global franchise fees revenue – forced to pay back millions of euros in back tax.
According to City AM, the probe focused on Inter Ikea’s franchise business and came about after an EU parliament report discovered Ikea allegedly avoided paying €1 billion (£880 million) over a six-year period.
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The European Commission said Dutch authorities granted Ikea two tax rulings which reduced its taxable profit in The Netherlands and giving it an unfair advantage.
The first ruling in 2006 saw a large part of Ikea’s franchise profits were moved to a Luxemburg unit and not taxed.
A second ruling in 2011 led to a significant amount of franchise profits transferred to a Liechtenstein-based parent company.
Ikea believes it paid the correct amount of tax.
“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,” the retailer told Reuters.
“We believe that we also in these cases have paid the correct amount of tax.”