Jul 14, 2021
European justice on Wednesday rejected an appeal by American sports equipment manufacturer Nike against the Commission’s decision to open an investigation into suspicions of undue tax advantages which the group would have benefited from in the Netherlands.
In a press release, the General Court, based in Luxembourg, defended the merits of the European Commission’s decision when it opened in 2019 this “formal examination procedure” of the suspicions weighing on Nike.
“In addition to complying with the procedural rules, the Commission has neither failed in its obligation to state reasons nor committed manifest errors of assessment”, underlined the court.
The court was speaking in connection with a dispute which had led to the opening of an “in-depth investigation” by the European Commission in January 2019 against Nike, which it suspects of having benefited from undue tax advantages from the part of the Netherlands.
The Netherlands, often accused of granting tax advantages to multinationals, is one of the European states particularly in the sights of Brussels, which has made the fight against tax evasion one of its priorities.
The case of Nike, which would benefit from a “hole” in Dutch law, was revealed in November 2017 by the press as part of the Paradise Papers, this investigation for tax evasion carried out by the International Consortium of Investigative Journalists ( ICIJ) bringing together 96 media from 67 countries.
The Commission’s investigation concerns the tax treatment granted to two companies of the Nike group based in the Netherlands, responsible for developing, promoting and recording sales of Nike and Converse products in Europe, the Middle East and Africa.
These two companies have obtained licenses to use intellectual property rights in exchange for royalties paid to two Dutch entities of the Nike group which are currently exempt from taxation in the Netherlands.
In January 2019, the European executive, responsible for enforcing competition law in the EU, expressed concern that the amount of royalties endorsed by tax rulings “does not reflect the economic reality”.
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