EU Court’s Landmark Rulings: Victory for Google and Starbucks, Setback for Commission

Written by | Wednesday, September 25th, 2019

Starbucks did not benefit from illegal tax breaks in the Netherlands, the EU General Court has ruled today, thus overturning an EU Commission decision from 2015. Judges in the EU’s second-highest court justified their conclusion on Tuesday (24 September) by arguing that a deal between the coffee giant and Dutch officials that allowed Starbucks to pay less tax does not amount to illegal state aid. In 2008, Dutch officials allowed Starbucks to shift profits by paying an unusual royalty to the company’s British subsidiary and selling beans to another subsidiary in Switzerland. The complicated deal reportedly brought down its taxes from the standard 25% to just 2.5%.

The EU Commission investigated the case and decided in 2015 that the arrangement was illegal, and ordered authorities in the Netherlands to collect up to 30 million Euros in unpaid taxes. “All companies, big or small, multinational or not, should pay their fair share of tax,” EU Competition Commissioner Margrethe Vestager said at the time. Both Starbucks and the Dutch government appealed the decision. However, while the EU General Court ruled that the Commission “was unable to demonstrate the existence of an advantage in favor of Starbucks”, it also upheld, in a separate ruling, a similar EU Commission’s order on Fiat and the government of Luxembourg. Without doubts, both of these legal cases are closely watched by another major US corporation, Apple, after it was ordered to repay Ireland €13 billion in unpaid taxes in 2016. Apple and the Irish government pledged to fight the decision and filed an appeal last week.

Meanwhile, another US tech giant, Google, has scored a victory when the European Court of Justice (ECJ) has ruled that the company doesn’t have to apply an EU law requiring the removal of search engine results upon request outside of EU borders. Europe’s top court decided that the “right-to-be-forgotten” rules do not apply outside the European Union, whereby Google will thus not be required to delete links to sensitive personal data upon request worldwide. The ruling comes after Google declined the request by French data watchdog CNIL to delete sensitive information from global Internet search results under the “right to be forgotten” rules. ECJ’s decision means that, outside of the EU, people do not have the right to control what appears when their name is searched online.

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