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EU regulators say Starbucks' Dutch tax deal may be illegal

A Starbucks location in New York.
Scott Mlyn | CNBC

Starbucks Corp's tax deal with Dutch authorities may be illegal state aid as it allows the world's biggest coffee chain to pay tax on a lower corporate income tax base, European Union antitrust regulators said on Friday.

The comments by the European Commission came five months after it opened an in-depth investigation into the case involving the company's Starbucks Manufacturing EMEA BV.

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"The Commission's preliminary view is that the Advanced Pricing Arrangements in favor of Starbucks Manufacturing EMEA BV constitutes State aid... The Commission has doubts about the compatibility of such aid with the internal market," the EU executive said.

The probe is one of four into so-called sweetheart deals which the Commission said may give the companies an unfair advantage. The other three firms are online retailer Amazon, Italian carmaker Fiat and iPhone maker Apple.

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In addition to the Netherlands, Luxembourg, Ireland, Malta, Belgium, Cyprus and Gibraltar are also in the regulatory sight over tax deals which substantially lower some firms' tax bills.

Regulators said this favorable treatment could breach EU state aid rules.