Ikea forced to pay back millions of avoided taxes?

Ikea must be fearing heavy tax liability

Inter Ikea (owner of the Ikea brand and manager of the franchise activities) may still have to pay millions of euros in taxes the company is said to have avoided, if two deals with the Dutch tax authorities are revoked.

 

Contested deals

In 2017, the European Commission launched an investigation into Inter Ikea, which manages the franchise activities of the furniture giant and records all income from global franchise fees. According to the Reuters press agency, the Commission is pressing ahead with the case in the hope of wrapping it up by the end of the year.

 

The subject of the investigation is two tax deals that the Dutch tax authorities agreed to in 2006 and 2011, which - according to the European Commission - have significantly reduced the taxable profits of Inter Ikea in the Netherlands and handed the company an unfair advantage. The furniture chain is said to have put in place arrangements where profits from franchise were transferred to Luxembourg and Liechtenstein, where they were either hardly taxed or not taxed at all.

 

Through these arrangements, Ikea is said to have avoided a billion euros in taxes over a period of six years. The furniture group has responded to these allegations, claiming that it has paid taxes in accordance with the local laws and regulations: "We believe that we [...] have paid the correct amount of tax."