Monday 7 October 2019 2:48 pm

Ikea to face back tax payment order from EU

Ikea could be forced to pay millions of euros in back taxes by the end of the year as the European Union competition watchdog cracks down on unfair deals for multinational companies. 

The European Commission is preparing to complete its probe into Inter Ikea, the brand owner of the furniture store, however the investigation could face delays.

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The two-year investigation has focused on the company’s operations in the Netherlands, which operates the store’s franchise business and records revenue from its franchise fees worldwide. 

The probe was launched after a report by the European Parliament found that Ikea avoided paying €1bn over a six year period. 

Ikea told Reuters: “Just like all other companies working under the Ikea trademark, Inter Ikea Systems BV is committed to paying taxes in accordance with laws and regulations wherever we operate. 

“We believe that we also in these cases have paid the correct amount of tax.” 

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The European Commission has said that two tax rulings granted by the Dutch authorities in 2006 and 2011 has given the company an unfair advantage and reduced Ikea’s taxable profit in the Netherlands.

The first ruling meant a large part of Ikea’s franchise profits were moved to a Luxembourg unit and were not take, while the second ruling allowed a substantial part of franchise profits after 2011 to be transferred to a Liechtenstein parent company, the commission said.