January,13,2019

The EU regulatory authorities started an investigation into NIKE, one of the biggest sports goods companies. The case includes two companies Nike European Operations Netherlands BV and Converse Netherlands BV about how they make tax agreement with Dutch government. 

What the investigation found was that NIKE used intellectual property in exchange for royalty payment; then they gained tax preference in the Netherlands. However, the royalty payment is significantly higher than that of other independent companies. If this is confirmed, the NIKE tax scheme will be considered illegal.

A NIKE spokesperson said that the European Commission's investigation was groundless. He said that NIKE and other companies are the same and follow the same tax laws and that it has the same attitude towards the tax issue as Google.

The Dutch authorities did not comment on the case directly. The Dutch Ministry of Finance stated that it would cooperate with the Commission's investigation. Besides, they agreed that the tax avoidance should provide tax ruling with certainty, not privilege.

However, this is not the first time the Netherlands being investigated. In 2015, the Netherlands also provided tax concessions to Starbucks. The final decision was that the Dutch authorities recovered $30 million. The EU is still executing an in-depth investigation between Netherlands government and IKEA right now. Other countries in the European Union, including Belgium, Gibraltar, Luxembourg, and Ireland, have the same problem, providing tax incentives, which may create unfairness.

Commissioner of the EU regulatory authority Margrethe Vestager pointed out that member states should avoid the establishment of complex structures and too much tax cuts brings unfairness to other member states. In addition, she encouraged the Dutch government to carry out tax reforms to ensure that the companies have a fair play.