POST Online Media Lite Edition



 

EC opens in-depth investigation into tax treatment of Nike in the Netherlands

Staff Writer |
The European Commission has opened an in-depth investigation to examine whether tax rulings granted by the Netherlands to Nike may have given the company an unfair advantage over its competitors, in breach of EU State aid rules.

Article continues below




The Commission's formal investigation concerns the tax treatment in the Netherlands of two Nike group companies based in the Netherlands, Nike European Operations Netherlands BV and Converse Netherlands BV.

These two operating companies develop, market and record the sales of Nike and Converse products in Europe, the Middle East and Africa (the EMEA region).

Nike European Operations Netherlands BV and Converse Netherlands BV obtained licenses to use intellectual property rights relating to, respectively, Nike and Converse products in the EMEA region.

The two companies obtained the licenses, in return for a tax-deductible royalty payment, from two Nike group entities, which are currently Dutch entities that are "transparent" for tax purposes (i.e., not taxable in the Netherlands).The Nike group's corporate structure itself is outside the remit of EU State aid rules.

From 2006 to 2015, the Dutch tax authorities issued five tax rulings, two of which are still in force, endorsing a method to calculate the royalty to be paid by Nike European Operations Netherlands and Converse Netherlands for the use of the intellectual property.

As a result of the rulings, Nike European Operations Netherlands BV and Converse Netherlands BV are only taxed in the Netherlands on a limited operating margin based on sales.

At this stage, the Commission is concerned that the royalty payments endorsed by the rulings may not reflect economic reality.

They appear to be higher than what independent companies negotiating on market terms would have agreed between themselves in accordancewith the arm's length principle.

In particular, a preliminary analysis of the companies' activities found that:

Nike European Operations Netherlands BV and Converse Netherlands BV have more than 1,000 employees and are involved in the development, management and exploitation of the intellectual property. For example, Nike European Operations Netherlands BV actively advertises and promotes Nike products in the EMEA region, and bears its own costs for the associated marketing and sales activities.

In contrast, the recipients of the royalty are Nike group entities that have no employees and do not carry out any economic activity.

The Commission investigation will focus on whether the Netherlands' tax rulings endorsing these royalty payments may have unduly reduced the taxable base in the Netherlands of Nike European Operations Netherlands BV and Converse Netherlands BV since 2006. As a result, the Netherlands may have granted a selective advantage to the Nike group by allowing it to pay less tax than other stand-alone or group companies whose transactions are priced in accordance with market terms. If confirmed, this would amount to illegal State aid.

The opening of an in-depth investigation gives the Netherlands and interested third parties an opportunity to submit comments. It does not prejudge the outcome of the investigation.


What to read next

Eight weeks of paid leave for full-time Nike workers
SSE, Npower merger referred for in-depth investigation in UK
CMA refers Experian acqusition of ClearScore for in-depth investigation

Venture Life buys HL Healthcare in a deal worth up to 13 million pounds

 
HL Healthcare, a Warwick-based business selling over-the-counter ear, nose and throat (ENT) products in 23 countries worldwide, has been acquired by self-care manufacturer Venture Life in a deal worth up to £13 million.
 
 

Latest

Germany approves tax benefits for small solar installations
Octopus Energy Generation acquires Zestec Renewable Energy
MarineMax acquires Midcoast Construction Enterprises
Atlas Copco buys Chinese manufacturer of oxygen generators Shandong Meditech Medical Technology

NEWS

U.S.: Locally heavy snow and rain in some spots

Arctic blast set to freeze Britain as temperatures plunge to -8C
Poland: CBA detained two more persons in financial pyramid case
Flight from Poland diverted to Prague after possible bomb threat
Spain dismantles criminal organization dedicated to "CEO fraud" that operated nationally and internationally
UK rail dispute continues, union rejects latest offer from employers
 

BUSINESS

Payday loans market to reach $6.8 billion

U.S. preliminarily finds some companies circumventing solar tariffs
Switzerland watchdog investigates labour market in banking sector
EU’s embargo on Russian oil shipments, price cap mechanism come into force
Worldwide PC shipments declined 19.5% in third quarter of 2022
Highlights: November 28, 2022 - December 2, 2022
 

Trending Now

Payday loans market to reach $6.8 billion

RWE buys East Celtic Wind Farm

Octopus Energy Generation acquires Zestec Renewable Energy

Atlas Copco buys Chinese manufacturer of oxygen generators Shandong Meditech Medical Technology


POLITICS

New York: Five transformational projects in Rochester

Commission opens in-depth investigation into Lithuanian measure to compensate Litgas for operation of LNG terminal
Indonesia plans to build nuclear power plant
€13.5 billion French scheme to compensate energy-intensive companies for indirect emission costs
UK: Business Secretary launches review to prevent small firms from being ripped off by larger companies
UK government could bring in military to ease strike action, Sunak may prepare new ban on strike
 

Today We Recommend

Payday loans market to reach $6.8 billion


Highlights 

Iran’s shrimp exports to Russia up by 350% this year

Global food prices overall hold steady in November

Essar plans $4.9 bln petrochemical complex in Odisha


COMPANIES

RWE buys East Celtic Wind Farm

Germany: InvestEU - EIB invests in PBT’s eco-friendly battery material production
Currys: Amazon uses UK infrastructure while not paying enough tax
New Zealand mulls law to make Google, Meta pay for news content
John Lewis Partnership to build 1,000 rental homes
Trafigura enters $3 bln loan to supply Germany's Sefe with gas
 

CAREERS

Boeing appoints Brendan Nelson as Boeing International

Totally appoints John McMullan as medical director
Derby Building Products promotes Michael Morris to SVP
Former UK CMA CEO Andrea Coscelli to join Keystone
US Foods appoints Dave Flitman as CEO
G Mining Ventures appoints Carlos Vilhena to board
 

ECONOMY

CBI severely downgrades UK growth forecast

Japan services PMI continued to expand in November
Italy: GDP growth loses momentum in Q3
Indonesia: Inflation declines to lowest level since August in November
Australia retail sales contract in October
Cyprus' GDP growth estimated at 5.4 pct in Q3
 

EARNINGS

Genesco Q3 2023 GAAP earnings $1.66

Kirkland's Q3 sales $131.0 million
Cracker Barrel Old Country Store Q1 2023 revenue $839.5 million
Malvern Bancorp Q4 net income $2.6 million
Big Lots Q3 loss $4.33 million
Kroger Q3 profit decreases
 

OP-ED

Micromanaging is the worst enemy of efficiency and teamwork

Niger set to monetize massive gas reserves through Saharan natural gas pipeline
Putting the brakes on EV folly that choked the market
Oil discovery in Kavango Basin may mean huge benefits for Namibians
Cape Town and Dubai battle over Africa's energy future
Is America going to lose its superpower status?
 

AGRIFISH

Norwegian seafood exports in November increased

Iran’s shrimp exports to Russia up by 350% this year
High pathogenic avian influenza confirmed in Columbia County, Oregon
Sanitary certificate to export bovine meat from Argentina agreed with Mexico
Czech Republic detects first African swine fever case in 5 years
Dutch cattle herd size barely changed in 2022
 

LEADERSHIP

Only 32% of employees believe their pay is fair

Corporate duty waivers limit organic company growth and innovation
Women buy from women, men buy from women and men
How employee opinion impacts CEO dismissal
Keeping it in family can be good news when it comes to CEOs
Over a third of office workers are hybrid 'misfits'
 

CRIME

Glencore to pay Republic of Congo $180 mln over alleged corruption claims

Fraudsters target water infrastructure projects, OLAF closes several cases
Rhode Island man to pay more than $2.8 million in restitution for virtual currency fraud
Switzerland fines ABB $4.3 mn over South Africa bribery
New Mexico AG announces $58.5 million opioid settlement with Smith’s Food and drug parent Kroger
Florida AG announces multistate action against CarMax over the disclosure of safety recalls
 

Magazine

TRAVEL

All aboard the Heathrow Festive Express

Asuncion, Mother of Cities and Paraguay’s center of culture, music and shopping
"Pets with Love" Dog Adoption Carnival 2022 to be held in Hong Kong
Weather-resistant ArtWalk Downtown Billings, Montana
Dual branded Courtyard and Residence Inn by Marriott Hotel opens in Montreal
Candlewood Suites Hotel opens in Aberdeen, Md.
 

SEA, LAND, AIR

Lamborghini Huracán Sterrato, first super sports car for any terrain

New colorful Porsche 718 Style Edition models
2023 Toyota Prius Prime, solar panel roof and reliability
Volvo EX90, a car with updates
Cessna Citation CJ4 Gen2 jet, pursue your business goals while enjoying journey
GMC first Sierra EV marks turning point
 

DESIGN

Patchwork carpets, vintage Persian carpets made with unparalleled skill

Real life wallpapers, perfectly executed
A. Lange & Söhne, men's watches with true Saxonian DNA
Nella Vetrina, luxurious Italian designers bathroom vanities and furniture
Karastan rugs, durable and beautiful
Leather bags for every occasion and every life style
 

GADGETS

ASUS launches ExpertBook B9 for executives

Take Elektor Fortissimo and make your own high-end amplifier
RangeXTD, a Wi-Fi extender that actually works
Monitor II A.N.C. headphones, iconic Marshall sound
Zebra TC15, a clever mix of a mobile phone and a computer for business use
Bathroom speakers will make your relaxing even better
 

HEALTH

Cornwall first area in England to trial NHS Digital Health Check

Huge rise of scarlet fever cases in UK, 6 kids dead of Strep A
Neglecting COVID this year created perfect conditions for deadly new variant
EMA recommends withdrawal of pholcodine medicines from EU market
Nearly 200 sick in EU and UK Salmonella outbreak
FDA bans Eli Lilly, Regeneron antibody use in COVID-19 patients infected by omicron
 

MEANTIME

James Webb telescope produces an unparalleled view of the ghostly light in galaxy clusters

China's two meteorological satellites put into operation
Lagoon dries up as drought grips Peru
Mysteriously bright flash is black hole jet pointing straight toward Earth
Researchers discover Egypt's oldest tomb oriented to winter solstice
China's latest manned space mission blasts off