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Starbucks, Fiat First in Firing Line as EU Orders Tax Repayments

The Fiat 500X automobile at the Paris Motor Show.
  • Coffee company, Fiat unit must repay up to 30 million euros

Starbucks Corp. and a Fiat Chrysler Automobiles NV unit must each pay as much as 30 million euros ($34 million) in back taxes after the European Union said they were handed illegal fiscal deals by the Netherlands and Luxembourg.

The coffee company and the Italian carmaker are the first two companies facing repayment orders as EU regulators seek to clamp down on tax-dodging multinationals. The decision now sets up a showdown with Apple Inc. and, which are also embroiled in the two-year-long tax probe.

“Tax rulings that artificially reduce a company’s tax burden are not in line with EU state aid rules. They are illegal,” said Margrethe Vestager, the EU competition commissioner, said in an e-mailed statement. “I hope that, with today’s decisions, this message will be heard by member state governments and companies alike. All companies, big or small, multinational or not, should pay their fair share of tax.”

Starbucks, Fiat, Apple and Amazon may be the tip of the iceberg after revelations of widespread use of sweetheart tax deals hit the headlines last year. Documents leaked by group of investigative journalist showed that Luxembourg alone struck hundreds of secret fiscal deals known as tax rulings with companies from around the world, from PepsiCo Inc. to Walt Disney Co. Amazon, which has more than 1,000 people working in the tiny nation, said in July its taxes could increase in case of a negative decision by the EU in its case.

Tax Rulings

“The amounts to recover are 20-30 million euros for each company,”...