Point of view of the Netherlands at the General Court of the European Union on Starbucks

Point of view of the Netherlands at the hearing before the General Court of the European Union on 2 July 2018 on Starbucks Manufacturing BV

  • The Starbucks case concerns a tax ruling that the Netherlands granted to Starbucks Manufacturing BV. This is a Starbucks plant that roasts coffee beans.
  • In a settlement agreement, the Dutch Tax and Customs Administration provided Starbucks Manufacturing BV certainty in advance regarding its tax position, also referred to as a ruling.
  • In its decision of 21 October 2015, the Commission decided that this ruling qualifies as state aid to Starbucks B.V. According to the Commission, Starbucks Manufacturing BV paid too little tax in the Netherlands.
  • The Netherlands disagrees with this, and has brought an action before the General Court of the European Union against the Commission's decision.
  • At the core of the dispute lies the following question: Does the method used to calculate the taxable profit in the Netherlands of Starbucks Manufacturing B.V result in the right  correct remuneration?
  • The Netherlands put forward three key points during the court case:

1. The Netherlands is of the opinion that, in its decision, the Commission failed to carry out an analysis based on the arm's length principle as formulated in Dutch law and regulations.


  • To determine whether or not there is a state aid must be determined on the basis of national law.
  • After all, Member States are autonomous with regard to direct taxation.
  • With its analysis, the European Commission is taking it upon itself to impose its own interpretation of the arm's length principle on Member States. However, there is no basis for this in Article 107 of the Treaty.

2. NL is of the opinion that the profit determination in the ruling is at arm’s length


  • Starbucks Manufacturing BV is a coffee roaster and logistics and administrative service provider in the Netherlands, which performs simple, routine activities.
  • Under Dutch law, an arm’s length profit should be determined in case of transactions with affiliated companies. This arm’s length profit is determined on the basis of the rules set out in the law and in the Dutch Transfer Pricing Decree (Nederlandse Verrekenprijzenbesluit).
  • Because of the relatively simple functions it performs, Starbucks Manufacturing BV should receive a remuneration for its routine activities. To determine this remuneration, Starbucks Manufacturing BV has been compared with 20 independent coffee roasters. These coffee roasters were selected because they are very similar to Starbucks Manufacturing BV.
  • The 20 coffee roasters realise a net profit margin  that is similar to the remuneration agreed upon in the ruling.

 3. NL is of the opinion that the intercompany transactions that should have been assessed according to the Commission are not relevant for determining the arm’s length profit of Starbucks Manufacturing BV.


  • A part of the income that is earned by Starbucks Manufacturing BV is attributable to functions performed by Starbucks US in the United States. In the United States, these monies are then taxed at a 35% rate.
  • The State is of the opinion that this cash flow has no consequences for the business profit of Starbucks Manufacturing BV.

In general, the Court will deliver the judgement a few months after the hearing. It is possible to appeal to the Court of Justice of the European Union against the judgement of the General Court of the European Union.