PARIS — The European Commission is looking into whether tax breaks in the Netherlands have given Nike an unfair advantage over competitors.
“Member states should not allow companies to set up complex structures that unduly reduce their taxable profits and give them an unfair advantage over competitors,” Margrethe Vestager, the commissioner in charge of competition policy, said in a statement.
Vestager said the commission will examine whether the way the Netherlands handles Nike’s taxes is in line with European Union state aid rules, but also noted she welcomed efforts by the country to reform corporate tax rules to ensure a level playing field in Europe.
“Nike is subject to and rigorously ensures that it complies with all the same tax laws as other companies operating in the Netherlands. We believe the European Commission’s investigation is without merit,” Nike said in an e-mailed statement.
The investigation centers around arrangements between Nike subsidiaries in the Netherlands for licenses for Nike and Converse products in Europe, the Middle East and Africa. Dutch tax authorities between 2006 and 2015 issued a series of tax rulings governing methods for calculating royalties paid between the companies, which has resulted in taxes based on a limited operating margin based on sales, and may not reflect “economic reality,” according to the commission.
The probe follows a series of investigations by the commission over the past several years. It has ruled that Luxembourg granted unfair tax advantages to Amazon, Fiat, Starbucks and Engie, for example, and that Ireland had granted undue tax benefits to Apple.