Brussels, Oct. 21, 2015: EU Competition Commissioner Margrethe Vestager argues that special tax breaks granted to Starbucks in the Netherlands and Fiat Chrysler in Luxembourg were illegal (source: dpa)

EU regulators target transfer pricing but real aim may be fiscal control

The European Commission’s crackdown last month on tax privileges for multinational corporations could be part of a bigger power play. The stakes could be much higher than preserving the autonomy of national tax authorities.

<i>European Union Competition Commissioner Margrethe Vestager is demanding that the Netherlands and Luxembourg recover 20 to 30 million euros in allegedly unwarranted tax privileges given to Starbucks and Fiat Chrysler Automobiles. If her ruling is confirmed, new precedents will be set. The EU will be given discretionary powers to investigate more tax matters, encroaching on the sovereignty of national governments and adding to legal confus...

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Professor Enrico Colombatto
The amounts are relatively modest (some 20-30 million euros in each case), but the case marks an important precedent for introducing the principles of retroactive taxation and limited fiscal sovereignty
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