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Nike’s Dutch Tax Deals Under Scrutiny in Europe

The European Commission on Thursday opened an investigation into Nike Inc.’s tax deals with the Netherlands, a move that could potentially force the U.S. company to pay back millions of euros.

The probe by the European Union’s executive arm concerns two Nike group companies based in the Netherlands, Nike European Operations Netherlands BV and Converse Netherlands BV. The companies develop, market and record the sales of Nike and Converse products, respectively, in Europe, the Middle East and Africa.

From 2006 to 2015, Dutch tax authorities issued five tax rulings that allow the Nike companies to pay less tax than other competitors, a move which could amount to illegal state aid, according to the commission.

A Nike spokesman said the footwear manufacturer complies with the same tax laws as other companies operating in the Netherlands.

“We believe the European Commission’s investigation is without merit,” the spokesman said.

The probe comes after several U.S. companies were ordered to pay millions of euros to various European countries where they had struck sweetheart tax deals.

The biggest sum, €14.3 billion ($16.31 billion), was paid by Apple Inc. into an escrow account in Ireland after a 2016 ruling. Apple is challenging the decision. In 2017, Inc. had to pay €282.7 million to Luxembourg, while Starbucks Corp. was ordered to pay €25.7 million to the Netherlands in 2015.

The commission hasn’t yet calculated how much tax the Netherlands should recover from Nike.

The investigation could also result in the company being cleared, as was the case with McDonald’s Corp. in September. The commission closed its probe into the fast-food company’s tax arrangements with Luxembourg, concluding there had been no illegal state aid.

“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,” said EU Competition Commissioner Margrethe Vestager. The commissioner’s tax decisions have earned her the nickname “tax lady” from President Trump.

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