On 27 June 2016, the European Commission published a non-confidential version of its 21 October 2015 decision that the Netherlands granted selective tax advantages to Starbucks in breach of EU State aid rules.

The decision mainly concerned a 2008 advance pricing agreement (APA) concluded with Netherlands-based Starbucks Manufacturing EMEA BV (SMBV), which provides roasted coffee and other coffee-related products to Starbucks outlets in Europe, the Middle East and Africa. SMBV purchased its beans from a Starbucks entity in Switzerland and paid royalties for the "know-how" to roast the beans to a Starbucks UK entity that is directly controlled by Starbucks' U.S. headquarters. According to the Commission investigation, the SMBV APA artificially lowered the amount of taxes paid by:

• Allowing an inflated price for the beans, with the margin on the beans more than tripling since 2011; and
• Allowing a substantial royalty payment for the roasting "know-how" that does not reflect market value, and without regard to the fact that no other Starbucks group company or independent roaster are required to pay a royalty for using the same "know-how" in essentially the same situation.

As a result of the decision, the Netherlands is required to recover the illegal State aid from SMBV, which amounts to EUR 20 to 30 million.

Click the following links for the letter and the case page on the European Commission website.