Europe will investigate Ikea's tax constructions

The European Commission has officially opened an investigation into Swedish furniture chain Ikea’s tax constructions. The company has a main office in the Netherlands, but also circulates its profits to Liechtenstein and Luxembourg.

1 billion euro

Thanks to these constructions, Ikea has allegedly avoided up to 1 billion euro in European taxes between 2009 and 2014. The European Commission will now investigate whether the Dutch government has given Ikea an unfair advantage: its subsidiary, Inter Ikea Systems, takes in all of the franchise fees and is based in the Netherlands. Thanks to local rulings in 2006 and 2011, it managed to lower its profit tax rate and the European Commission has long since fought against these type of rulings.

“All companies, big or small, multinational or not, should pay their fair share of tax. Member States cannot let selected companies pay less tax by allowing them to artificially shift their profits elsewhere”, Commissioner Margrethe Vestager in charge of competition policy said.

Ikea is not the first multinational to face a European investigation: Starbucks and Apple were also forced to pay late taxes after a EC investigation deemed that necessary. Apple was even forced to pay thirteen billion euro.